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Cryptocurrency Evolution
- rrecuero 9y agoI'm happy to answer any follow-up questions.
- guiomie 9y agoWas that a Jurassic Park quote you finished on with?
- rrecuero 9y agoLoosely but Dr. Ian Malcolm definitely came to mind :)
- CJefferson 9y agoI don't understand the long-term aim of bitcoin. It currently costs $40/transaction, that seems far beyond any reasonable idea that bitcoin could ever be useful. How is this not a ponzi scheme, help up by mining fees?
- rrecuero 9y agoOne of the main use cases of Bitcoin is becoming a store of value. For that use case, transaction fees matter a lot less. If you want to store/move millions of dollars and protect them against inflation, those fees don't matter. Gold, also a store of value, has high transaction fees as well.
- atarian 9y agoIt's difficult to see mass adoption of Bitcoin from a purely store-of-value use case because most people don't (directly) own gold and probably don't think about hedging against inflation. I'd argue instead that the main use case is to buy a cup of coffee with Bitcoin anywhere in the world without having to deal with fees and red tape. So using your analogy of evolution, transaction scaling is probably going to be the biggest driver of who gets to be at the top of the crypto food chain.
- rrecuero 9y agoI agree with your points. Transaction scaling is going to play a big role. I wouldn't neglect the store of value use case so quickly. Even if it only does that, it's a trillion dollar market. https://www.fool.com/investing/2017/08/17/how-does-bitcoins-market-cap-stack-up-next-to-gold.aspx https://www.fool.com/investing/2017/08/17/how-does-bitcoins-...
- asciimo 9y agoBitcoin Cash was forked to handle the cup-of-coffee use case. It looks like a diverse ecosystem is forming, where the consumer can choose to transact with the best currency for that transaction, rather than the "best currency."
- nradov 9y agoOwning gold is not an effective hedge against inflation. If it was then we would see that gold returns would consistently be correlated with inflation rates, but in reality that hasn't happened. And there's no reason to expect that Bitcoin would be an effective inflation hedge either. If you want to actually hedge against inflation then TIPS or stock indexes are usually better choices for most investors.
- CJefferson 9y agoI can't imagine using bitcoin as a store-of-value, it's so massively volatile. Also, I don't fancy trusting my money to a small group of Chinese miners, who seem in practice to control the network.
- top256 9y agoYou can do actually things with gold. More than you'd expect (for instance http://geology.com/minerals/gold/uses-of-gold.shtml http://geology.com/minerals/gold/uses-of-gold.shtml ) BTC is quite different as it is only a "value store" and is inflationary (the supply of BTC is fixed and won't increase)
- kobeya 9y agoI think you mean non-inflationary?
- top256 9y agoyes my bad: https://bitcoin.stackexchange.com/questions/19961/is-bitcoin-deflationary-and-inflationary-at-the-same-time https://bitcoin.stackexchange.com/questions/19961/is-bitcoin...
- CJefferson 9y agoWell, except the supply of bitcoin goes is massively inflationary (miner's fees), and it is unclear the network can function without miner's fees. My personal suspision is at some point the miners will convince everyone to make a fork which keeps miner's fees forever.
- yarrel 9y ago"It currently costs $40/transaction" No it doesn't. "How is this not a ponzi scheme, help up by mining fees?" You misspelt "speculative bubble".
- ivanche 9y agoSo, how much it costs than? I'm genuinely interested because I've heard figures in the range of several cents up to $40.
- sf_rob 9y ago~$5 average right now, less for lower priority of course: https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#1y https://bitinfocharts.com/comparison/bitcoin-transactionfees...
- CJefferson 9y agoThat $5 doesn't include the mining fees. With, it is closer to $40.
- zby 9y agoBitcoin might become an 'internet gold': https://medium.com/@zby/proof-of-work-8d8265def194 https://medium.com/@zby/proof-of-work-8d8265def194 Moving a kilogram of gold from one part of the world to another would already be more expensive than sending equivalent in bitcoin. But I am waiting for a new wave of POS systems: https://medium.com/@zby/proof-of-stake-can-be-cheaper-than-proof-of-work-da14223a965 https://medium.com/@zby/proof-of-stake-can-be-cheaper-than-p...
- ghostbrainalpha 9y agoI was a little confused by the abrupt inclusion of a quote from Nassim Taleb. Is he so well known in this space he can referenced without introduction?
- rrecuero 9y agoIt has a footnote but the introduction could have been smoother
- gtrubetskoy 9y agoWhat about the argument that the only chain that deserves to be called Bitcoin is the one that is completely backwards compatible to all the versions of software dating back to the genesis block?
- rrecuero 9y agoIn the end, the majority would continue the established brand. For example, you can argue that Ethereum Classic is the most 'pure' implementation of Ethereum, however, Ethereum (ETH) gained much more support and kept the name. In the case of Bitcoin, it's not clear yet who it's going to keep the name at the next fork. You can see Coinbase blog post about this https://blog.coinbase.com/clarification-on-the-upcoming-segwit2x-fork-d3c0f545c3e0 https://blog.coinbase.com/clarification-on-the-upcoming-segw...
- gtrubetskoy 9y agoI'd take issue with Bitcoin being a brand. In my view it's a pretty well defined "thing". Brands are words that need to be trademarked, but "a cow" does not need to be, because everyone knows what a cow is, and if I sell you what I say is a cow but is actually a cat and then explain that that's now the established brand - you'd say it's cat, not a cow. The test for Bitcoin is very simple - fire up an old version of the Bitcoin software, and if it validates the blockchain, then the blockchain you have is Bitcoin. If it doesn't, it's not Bitcoin. And if/when Bitcoin Core ever changes the software such that it is a hard, backwards incompatible fork, then on that day they should stop referring to it as Bitcoin, because it is not the Bitcoin that Satoshi originally started.
- sgspace 9y agoTry that today and your old node/wallet will have trouble reading Segwit transactions.
- gtrubetskoy 9y ago> Try that today and your old node/wallet will have trouble reading Segwit transactions. If you mean starting an older version of Bitcoin Core after the on-disk storage has been converted by a newer version, then yes, of course. The way data is stored has changed, not the least of changes being Leveldb instead of Berkleydb. But at the network level newer nodes will communicate with older pre-Segwit nodes just fine.
- lowglow 9y agoHack Days talks a lot about this and how Bitcoin mirrors Linux in a lot of ways @ the 59 minute mark: https://www.facebook.com/hackdays4all/videos/545598169119184/ https://www.facebook.com/hackdays4all/videos/545598169119184...
- fro0116 9y agoI don't have anything against bitcoin and cryptocurrencies in general, but I wish the cryptocurrency community would stop trying to co-opt the term "crypto". It's a well-established (understatement of the century) shorthand for the term "cryptography", that no honest cryptocurrency enthusiast can claim in good faith to be ignorant of, because cryptography provides the technological foundations on which all cryptocurrencies are built. Conflating these terms can cause undue confusion that breeds disdain for the very technology you're trying to promote. I, for one, was expecting to read an article on the history of cryptography as it evolved over the years when I clicked the link. Despite all this, I just wanted to say the article itself was an interesting read, but you're doing yourself and the cryptocurrency community a disservice by unwittingly pulling a bait and switch like this on so many potential readers. At the very least, please avoid using it as a shorthand in contexts intended for communication to those outside your community.
- nerdponx 9y agoNow you know how the machine learning people have been feeling for the last five years.
- Walkman 9y agoI clicked the title hoping to read something interesting about cryptography.
- nerdponx 9y ago"Crypto-powered" is the new "AI-powered".
- cd0x23 9y agoExactly my feelings. This trend is also discrediting a scientific field. I've had multiple experiences where I was asked what I do at my job, I said I was working on crypto implementations and the person replied: "oh, be careful with crypto (referring to cryptocurrencies), I hear there are lot of scams going on."
- lucb1e 9y ago
- bousaid 9y agoI really don’t understand the point of this article. It’s quite rudimentary without much insight or new analysis.
- ilaksh 9y agoThe point is that there are still many people who don't understand or appreciate the value of cryptocurrency forks. I think these people are holding society back. So I hope that they will read articles like this.
- geetfun 9y agoSo serious question here. I kind of see myself as someone who doesn’t understand crypto currency. At the same time, I’m also quite experienced in investing, business, spotting trends, etc. I’ve read a bit on crypto currencies over the past 2 years to try and wrap my head around all of this. Reading articles like this, it seems like the whole thing is more philosophical in nature versus utilitarian. A currency’s role is to function as some mechanism for the transfer of value from one person to another. But in order for this transfer to occur, both parties must recognize the underlying asset. With cryptocurrency forks, it seems this doesn’t seem to offer enough stability most people would transactionally want. Other than the obvious speculative desires by the parties involved, how will crypto currencies evolve into becoming mainstream?
- trypt 9y ago-People used to barter raw goods -Then people used placeholders instead of goods to barter, like precious gems or sea shells -Then people used gold coins -Then people used government approved gold coins -Then people used government approved fiat currency backed by gold -Then people used government approved fiat currency backed by nothing -> Now comes the fancy technology -Then people don't even use paper anymore they use credit cards, essentially moving numbers around in files or computers -Then people don't even use credit cards anymore they use accounts like PayPal ...but all of these are fundamentally transferring around fiat USD currency Well the next iteration is for them to skip fiat and transfer around digital currency so no governments control you at all. Cryptocurrencies are truly global currencies, the only ones that will ever matter. There have been proposals in the past to introduce global fiat currencies, but that's an age long gone - it's too late for anyone to bother with anything but cryptocurrencies They are decentralized, non-censorable (just make a new wallet, buy crypto in person, then use Tor), deflationary (fixed supply = rising in price over time, the opposite of fiat) The list of benefits goes on and on. It's a foregone conclusion that cryprocurrencies are the future, it's only a matter of time. The technology is not yet mature but once someone makes a venmo-like app that the normies can use to easily utilize crypto, it's game over for every other system, period Swiss bank account on your flash drive, swiss bank account in your BRAIN if you memorize your wallet seed phrase. The utility is indescribably large and we will have to fundamentally change our entire government and taxation system to be consumption based (sales taxes not income taxes) once this becomes mainstream, there is no stopping it
- CrunchGo 9y agoThis is a great read!
- lifeformed 9y agoBitcoin is such a UX nightmare. I finally got my funds transferred to a MultiBitHD wallet, after a lot of effort. I had to pay some service $20 to accelerate my transaction because my other fee of $20 was taking weeks to go through? Now I'm trying to claim my Bitcoin Cash. How do I do this? According to the internet, I need to transfer it to a different kind of wallet first? There's a bunch to pick from, but make sure it's not a scammy wallet. Also I need to extract my private keys with some command line stuff (MultiBit doesn't use normal keys) and run some weird programs to convert them? Then I need to move the funds around again to get it working in a new kind of wallet. Also make sure to do all of this on a clean computer in case these unvetted programs are stealing your keys. Don't forget to pay an extra $40 if you want the transactions to not get stuck forever. Oh and I have to do a bunch of other steps again if I want to get Bitcoin Gold or whatever new fork is going on. I could eventually figure it out with enough time, but how any of this is supposed to be adopted by laymen baffles me. You'd think something with this much developer support would just let you click one button and have it all done.
- bdamm 9y agoRaw cryptocurrency is definitely not for the layman. Really it's for the financial processors. Personally I view the benefit of Bitcoin and its ilk to be the efficiency, transferability and accountability that comes with the blockchain. Those willing to invest time and energy can also carry raw bitcoins in their safe if they so choose, but this is a far way away from being accessible to the layman. Think HTML. How many laypeople know HTML? Yet they get the benefit of the web thanks to all of the developers that have built services using it. Those services wouldn't be available without it.
- CGamesPlay 9y agoCan you give an example? I'm having a lot of trouble following your comparison to HTML. HTML is a material which composes documents, and I don't have to understand the material to understand the value of the resulting document. What will bitcoin build that will be useful to me without needing to own bitcoin directly?
- deleted 9y ago[deleted]
- grandalf 9y agoFor someone who already owns cryptocurrency A, isn't there a perverse incentive to fork it into A', A'', A''', etc., because doing so multiplies the person's wealth. I'd expect that a fork will exist if: a) it has a nontrivial chance of survival, and b) if there is an exchange mechanism for cashing out. Another way of looking at it, what scenario creates an incentive for a fork to die once it has been created? There's no such thing as free money. On the other hand, forking is a way of bootstrapping a new cryptocurrency variant without becoming a billionaire like Satoshi and needing to worry about would-be adopters questioning your motives. The "exploit" of forking to generate a wealth multiplier generates a lot of wealth, just not Satoshi level wealth. In a sense, forking is a signal of too much centralization, as those benefitting from that centralization fork to cash out on their accumulated influence. With such a large percentage of cryptocurrency economic activity being speculation, the incentive to fork is ripe. On the other hand, if Satoshi wanted to sell of all his Bitcoin Cash and sink it, he could easily do so to protect his original creation, so perhaps we learn more about Satoshi's stewardship intent by watching what he doesn't do rather than what he does.
- misterHN 9y agoyes, it is perverse, this is a scam
- sf_rob 9y ago>What scenario creates an incentive for a fork to die once it has been created? If mining fees get low enough to not be profitable, mining will cease and the fork will be dead (even if the chain still exists on inactive Nodes). >Because doing so multiplies the person's wealth. I don't think you can necessarily extrapolate this. In theory this should be something like when a public company splits or pays a dividend; the value of the parts should be equal to the whole. You're correct that it's not that way right now. That probably speaks to the inefficiency of the cryptocurrency markets currently but I would hope that that will improve.
- wmf 9y agoisn't there a perverse incentive to fork it into A', A'', A''', etc., because doing so multiplies the person's wealth. As the article says, this worked once but don't expect it to work indefinitely. Arguably forks that allow new use cases (e.g. Bitcoin Cash is supposed to re-enable low-value transactions) create value while other forks (e.g. Ethereum Classic, Bitcoin Gold) should be more zero-sum. what scenario creates an incentive for a fork to die once it has been created? Looks like the death process is low exchange volume -> delisting -> zero liquidity -> zero value. https://medium.com/@EthereumRussian/why-cryptocurrencies-get-delisted-tenx-bitshares-digix-monaco-iconomi-66b32cda4c24 https://medium.com/@EthereumRussian/why-cryptocurrencies-get...
- deleted 9y ago[deleted]
- baby 9y agoI'd suggest changing the title as I thought this was related to Cryptography. Cryptocurrencies is more appropriate than just crypto. (Note that there are a bunch of cryptographers and cryptographer wannabes (like me) on HN who are not just (or not at all) into cryptocurrencies).
- sctb 9y agoThanks! Yes, we've tacked on a "currency" to clarify.
- deleted 9y ago[deleted]
- loup-vaillant 9y agoCrypto currency evolution, dammit!
- cyphunk 9y agoOh my, if it is valid to compare crypto forks to biological evolution, then I'm left to wonder how awesome humans would have been today if all the great forks didnt get killed off by lousy first-network effects.
- paulsutter 9y agoThe linked article from Nassim Taleb is fascinating. He's discussing Lebanon vs Syria, but he could just as easily be talking about bitcoin vs the traditional financial system: "Simply put, fragility is aversion to disorder. Things that are fragile do not like variability, volatility, stress, chaos, and random events, which cause them to either gain little or suffer. A teacup, for example, will not benefit from any form of shock. It wants peace and predictability, something that is not possible in the long run, which is why time is an enemy to the fragile. What’s more, things that are fragile respond to shock in a nonlinear fashion. With humans, for example, the harm from a ten-foot fall in no way equals ten times as much harm as from a one-foot fall. In political and economic terms, a $30 drop in the price of a barrel of oil is much more than twice as harmful to Saudi Arabia as a $15 drop. "For countries, fragility has five principal sources: a centralized governing system, an undiversified economy, excessive debt and leverage, a lack of political variability, and no history of surviving past shocks. Applying these criteria, the world map looks a lot different. Disorderly regimes come out as safer bets than commonly thought—and seemingly placid states turn out to be ticking time bombs.
- rrecuero 9y agoGlad you enjoyed it. I had similar thoughts while reading it
- cableshaft 9y agoI'd recommend reading Antifragile, although read it with a bit of a grain of salt. I read it for the first time earlier this year, and I was drawing all sorts of comparisons to cryptocurrencies (as well as how I should approach my professional career) while reading it. That being said, the part that really threw the rest of the book into question for me was that Taleb is very anti-academia and spends several pages in the book claiming that academia had basically zero involvement in the development of computers, which just sounds like he'd never heard of Alan Turing, Charles Babbage, Ada Lovelace, John von Neumann, John McCarthy, and many others. It really made me wonder how much of the rest of the book he was claiming to be an authority on could be trusted, even though most of it seemed to make sense intuitively.