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As somebody who has held cryptocurrency for years and codes Solidity, never before have I seen a dumber market than this. Every time valid criticisms come forwa

As somebody who has held cryptocurrency for years and codes Solidity, never before have I seen a dumber market than this. Every time valid criticisms come forward, they're met with articles like this. The articles are usually convincing to people with limited understanding of economics or technology, so they keep quiet. "Open source money" and "blockchain is the future" sound like very convincing arguments to justify these ludicrous sums of money. What they neglect to address is that... A) Bitcoin is congested with transactions and takes hours to process some of them B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it C) The upgrades to fix these problems are extremely slow - scaling hasn't been solved for years, because different parties keep fighting for control over the currency codebase and shooting down each others' attempts to upgrade it D) Bitcoin is still, objectively, centralized. Almost all of the miners are based in industrial regions like China, and belong to a small monopoly of mining pools. All of the exchanges are centralized, and are well-known for losing clients' money. The big banks are replaced by big whales, who will do anything in their power to manipulate markets for their gain. E) Bitcoin addresses the technology perspective of sending money, but doesn't address any of the macroeconomic problems that arise from a deflationary, uncontrolled currency. F) Bitcoin is not actually anonymous. Data science techniques can parse the blockchain and see sending patterns between different accounts. They map these patterns to various identities. If those identities can be mapped to a real person, say, when they cash out of an exchange, then it's known exactly how much Bitcoin they have. If someone could write an article addressing these facts, rather than throwing out slogans like 'open source money', that would be nice.

merrickread 9y ago
Couldn't agree more. We're using some blockchain technology to solve specific problems at my company. It's a part of our stack, but we don't mention blockchain unless someone specifically asks. Blockchain is sensationalized beyond belief. I can't wait for the rose tinted glasses to fall off and we realize it's just a data management technology for specific use cases. I think the biggest danger to the technology is that the community focuses on "blockchain will change the world" not "how can we make this better".
- neilwilson 9y ago
  I'm rather more impressed by the DAG systems than the chain. A tree always seems more sensible that a linked list.
  - merrickread 9y ago
    If you're into consensus algorithms take a look at Algorand: https://people.csail.mit.edu/nickolai/papers/gilad-algorand-eprint.pdf https://people.csail.mit.edu/nickolai/papers/gilad-algorand-... It has some novel approaches to node / data agreement. Also take a look at the many projects Hyperledger projects. Hyperledger is incubated by The Linux Foundation. Their attitude towards open source development is that of purely technical curiosity and experimentation. Brian Behlendorf is directing the project so it's in good hands. He speaks about this attitude here: https://www.youtube.com/watch?v=pr4Hb0jb0lo https://www.youtube.com/watch?v=pr4Hb0jb0lo
- pfftcst 9y ago
  I've always wondered about this- all the hype about 'Blockchain'. Can you explain this a little bit more? How do you have a blockchain without bitcoin/ether or at least mining? Isn't that just a glorified database? What does a (I assume centralized) blockchain do for your company that a database or any type of electronic ledger cannot do?
  - TazeTSchnitzel 9y ago
    how to get people to care about your computer science work 1. s/Merkle tree/blockchain/ 2. there is no step 2
  - merrickread 9y ago
    Yes, right now it is completely a glorified database. It's always been a database. It's a different database. We're using it for compliant sharing of and collaboration on private information records between non trusting organizations and businesses. You could do this with something like a highly distributed Cassandra cluster. But some of the inherent rules to a blockchain allow us to provide higher security, higher data persistence and availability between nodes, auditable records, and accountable participants / contributors. And it's not centralized, it's completely distributed - just not publicly available to anyone who can download a mobile app.
gruez 9y ago
>A) Bitcoin is congested with transactions and takes hours to process some of them >B) Bitcoin fees are through the roof actually that pretty much fizzled out. https://jochen-hoenicke.de/queue/#30d https://jochen-hoenicke.de/queue/#30d >it sometimes costs as much as 25% of the value of a transaction to send it sometimes even cost 99% of the value you're sending (if you were sending 1000 satoshis 2 weeks ago). >F) Bitcoin is not actually anonymous strawman. bitcoin is pesduo-anonymous. anyone who did 5 mins of research would know this.
- aitrean 9y ago
  You are correct about F. Pseudo-anonymous is what I was trying to emphasize. But by itself, Bitcoin's anonymity would crumble under pressure to identify users at PoS endpoints.
  - tzakrajs 9y ago
    Exactly, it's trivial for governments to unmask anyone who wants to legally deal in Bitcoin. They will probably make it illegal to hold at all, but we shall see.
runeks 9y ago
> A) Bitcoin is congested with transactions and takes hours to process some of them Hours to process transactions sounds relatively good to me, considering international bank transfers take 3-5 business days. We're talking about a decentralized protocol performing better than a centralized one which has all the advantages on its side. > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it Bitcoin is definitely not suitable for small-value transactions (the fee does not depend on the amount sent). Here's a graph of median Bitcoin fees for the past year: https://bitinfocharts.com/comparison/bitcoin-median_transaction_fee.html#1y https://bitinfocharts.com/comparison/bitcoin-median_transact... > C) The upgrades to fix these problems are extremely slow - scaling hasn't been solved for years, because different parties keep fighting for control over the currency codebase and shooting down each others' attempts to upgrade it This is a misrepresentation of the issue. The lack of a solution is not due to in-fightning, but that absence of an obvious "fix". The smaller the block size, and thus transaction throughput of Bitcoin, the more decentralized it is, because the more people can download and verify the blockchain using commodity hardware. It would be simple to increase throughput, but this would occur at the cost of increased centralization. At the moment, consensus seems to favor decentralization over increased throughput. Bear in mind, that if hardware capabilities continue to increase at historic rates over the next 30 years, 1GB blocks will probably be doable, which will be roughly sufficient to support the world's population (with the addition of consumer-to-merchant clearing protocols). Some people think this is too slow, but I think the world needs at least 30 years to get used to a new monetary system anyway, so it can't happen any faster than this. > D) Bitcoin is still, objectively, centralized. Almost all of the miners are based in industrial regions like China, and belong to a small monopoly of mining pools. All of the exchanges are centralized, and are well-known for losing clients' money. The Bitcoin protocol is decentralized, because it does not define a central party. Saying Bitcoin is centralized because large mining firms exist is equivalent to saying that Git is centralized because of GitHub, or email is centralized because of GMail. Each individual miner (and exchange) is centralized, but on the whole they comprise a decentralized network of miners -- just like Gmail, Yahoo and Hotmail (together with all other email servers and providers) comprise a global, decentralized network. That being said, Bitcoin is vulnerable to a constant 51% attack. It cannot withstand this (unless something fundamental changes about the protocol). So far, no one has bothered to carry out such an attack, but Bitcoin is vulnerable to this type of attack. > E) Bitcoin addresses the technology perspective of sending money, but doesn't address any of the macroeconomic problems that arise from a deflationary, uncontrolled currency. This is not fact, but opinion of Keynesian economists. The entire basis of Keynesian economics is this sentence. For people interested in a much more meaningful explanation than Keynes' story of "things suddenly broke in 1929, and we had to ban gold to fix this", I recommend the following series of essays[1], which explain how the gold standard failed because it depended on a clearing market that was closed down at the start of WWI (in 1914) and kept closed at the end of the war (in 1918). This market cleared the "bill of exchange", which was a financial instrument that acted as a means of payment between retail merchants and producers of semi-finished goods, allowing the gold standard to scale as production became increasingly specialized. When bill of exchange clearing market in London was closed, producers were no longer able to pay each other using the bill of exchange, which caused demand for gold to surge (since it became the only means of payment between producers), causing deflation (an increase in the value of money is equivalent to a decrease in the price of goods). [1] http://professorfekete.com/moneycredit.asp http://professorfekete.com/moneycredit.asp
gchokov 9y ago
Thank you for the comment. A fresh breath of air.
colordrops 9y ago
I could go down the list and agree and disagree with some of your comments, but how does that address the article? Despite being a trite statement, and despite it's flaws, bitcoin _is_ open source money.
- deleted 9y ago
  [deleted]
- aitrean 9y ago
  You are correct, and if the article said "Bitcoin is open source money", I would say "yeah, I knew that". But the article uses such a statement as the core component of an article arguing that cryptocurrencies aren't a speculative bubble. Perhaps part of my frustration is that this is the latest in a long series of articles that beats around the bushes and fails to address any kind of meaty argument. They attack the weakest arguments, and lie or misdirect the stronger ones. Yes, we all know Warren Buffett and Jamie Dimon aaren't so great with computers, so why does that make Bitcoin any less of a speculative bubble?
- neilwilson 9y ago
  Bottles of wine are money. But they are not currency. Currency is what you settle your tax bills in. And ultimately you need to get hold of some at some point.
  - colordrops 9y ago
    Ok, but how does that make the statement wrong? Gimp is open source photo editing, and many people have criticisms against it compared to photo shop, but it's still open source photo editing.
    - mannykannot 9y ago
      Aitrean pointed out the irrelevance of that fact 25 minutes ago, in response to your original post.
      - deleted 9y ago
simonebrunozzi 9y ago
Finally, someone that speaks directly and honestly about it. I 100% agree with you, there's a problem. Unfortunately, this problem means that a lot of naive investors will jump on the crypto bandwagon only to get hurt.
- tzakrajs 9y ago
  It's clear this is going to be the epicenter of the next asset bubble, but people need something exciting to live for, even if it is a lie.
deleted 9y ago
[deleted]
nuncanada 9y ago
Curious, what are you coding Solidity for?
- aitrean 9y ago
  Smart contract auditing and development work is massively in-demand thanks to these speculative valuations. I'm doing a certification in Solidity development from B9 Lab to target this market. Don't get me wrong, Blockchain is valuable - but I feel like it's in the same delusional market state as the internet was in the late 90's.
hudon 9y ago
Sure: > A) Bitcoin is congested with transactions and takes hours to process some of them > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it 1- Average fees are not as high as people claim. See https://p2sh.info/dashboard/db/fee-estimation?orgId=1&from=now-7d&to=now https://p2sh.info/dashboard/db/fee-estimation?orgId=1&from=n... 2- Adoption of SegWit, which allows more transactions per block, will help lower fees 3- No one is forced to use Bitcoin. It is trivial to buy Litecoin instead and use that. However, users choosing to pay high fees shows how much more they value Bitcoin transactions. > C) The upgrades to fix these problems are extremely slow - scaling hasn't been solved for years, because different parties keep fighting for control over the currency codebase and shooting down each others' attempts to upgrade it Your definition of an "upgrade" conflicts with the Bitcoin project's definition, that's all. The core developers are not against a block size increase. However, they have decided to try scaling in ways that do not harm security or decentralization first. It's a matter of priorities. Bitcoin Cash may prioritize low fees over everything else, but Bitcoin prioritizes decentralization and security first. > D) Bitcoin is still, objectively, centralized. Almost all of the miners are based in industrial regions like China, and belong to a small monopoly of mining pools. All of the exchanges are centralized, and are well-known for losing clients' money. The big banks are replaced by big whales, who will do anything in their power to manipulate markets for their gain. Mining is centralized, but Bitcoin nodes are not. This is evident when you look at the success of deploying SegWit by a UASF or the success of fighting off a corporate takeover such as the NYA. > E) Bitcoin addresses the technology perspective of sending money, but doesn't address any of the macroeconomic problems that arise from a deflationary, uncontrolled currency. Bitcoin does not need to be a currency. Most people still invested in it view it as a "digital gold". I think it'll more be a reference point for fiat money, something that forces fiat moneys to have more sane monetary policies, not as a day-to-day currency itself. > F) Bitcoin is not actually anonymous. Data science techniques can parse the blockchain and see sending patterns between different accounts. They map these patterns to various identities. If those identities can be mapped to a real person, say, when they cash out of an exchange, then it's known exactly how much Bitcoin they have. Today, tumblers exist and are fairly easy to use. So yes, Bitcoin can be totally anonymous if you choose to use it that way. For the future, features like Confidential Transactions, MimbleWimble, MAST, Tumble Bit, and so on are in the works.
onecooldev24 9y ago
https://en.wikipedia.org/wiki/The_Fox_and_the_Grapes https://en.wikipedia.org/wiki/The_Fox_and_the_Grapes
not_a_terrorist 9y ago
Your reply contains several errors, but I will pick one. > D) Bitcoin is still, objectively, centralized. Not only you, but this whole thread is missing one critical word: incentive. Miners are incentivised to play ball, as trying to play games will result in the rejection of their hashing work. Wherever they are, it does not matter (up to a point, ie geographical risk repartition). But in actuality, we know there are miners all over the planet, and that there are thousands of them. Parenthesis: by the way, non-mining full nodes add precisely ZERO value to the network, and they actually slow it down. Before you guys start yelling, please see reference at the end of my comment for details. That's another urban legend purported by Bitcoin Core. Anyways, don't get me started. OK, back to miners: yes, as time will pass, there will be mining consolidation, it's inevitable. But it will not matter. In addition to miners, there will be large service providers (thousands of them) who will be -incentivised- to run either small mining nodes (more secure) or non-mining nodes (less secure) for verification of their own transaction. That alone will be more than enough to ensure the security of the network. From the start, Satoshi was predicting the apparition of large mining server farms, no farther than in the very FIRST email he wrote to the world!! http://satoshi.nakamotoinstitute.org/emails/cryptography/2/#selection-75.16-83.14 http://satoshi.nakamotoinstitute.org/emails/cryptography/2/#... quote: At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node. Bitcoin Network Topology Description (provides visual explanatino as to why non-mining nodes are totally useless, and even detrimental. https://fr.scribd.com/document/359522859/Bitcoin-Network-Topology-ELI5 https://fr.scribd.com/document/359522859/Bitcoin-Network-Top...
- drewm1980 9y ago
  The world would have been better off without wasting resources on server farms full of specialized hardware computing sha256 over and over. Shame on him!
- sp527 9y ago
  I find it amazing that there’s any reasonably intelligent person left in the world who can so dramatically underestimate the wanton interventionism of the Chinese government. Every packet in and out of that country is monitored. The state can and will impose any arbitrary regulation on any corporation at any time. People literally disappear if they start making too much noise. And now, entities within the country are amassing a substantial and effectively unassailable combined position in a major new asset class and possible alternative monetary system, and you think the Chinese government WON’T one day manipulate that to their own advantage?
Sir_Substance 9y ago
>A) Bitcoin is congested with transactions and takes hours to process some of them It regularly takes /days/ for visa transactions to go from "confirmed at the counter" to "arriving and unlocking in my bank account so I can use it to pay my rent". Over Christmas in Australia it's common for visa to just flat fail to keep up with demand, forcing shops to keep offline dockets for up to weeks after the product has left the store on the /trust/ that visa will let them redeem those pieces of thermopaper for actual spendable money. Mere hours is, from the perspective of the merchant, amazing. >B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it When I send money from Iceland to Australia, it takes about a week to arrive. I've had a transaction magically blink out of existence once (both banks told me it was the other banks fault), and while it is in transit approximately $70AUD is removed from it. This number is not exact and varies by up to $15 each time you send it, which means you have to send $90 more than you intend to pay in order to make sure you've paid at least as much as you intend to. Mere hours is again amazing, and a 25% fee (that's probably not correct by the way, segwit has reduced fees from approx $5USD to approx 25c USD, check your wallet settings) is rather tolerable by comparison. In the process of paying Australian government bills and bank charges from Iceland (which are usually in the order of $20-50), I have definitely spent at least 1.5x as much on transaction fees as actual payments. You're focused on the "coffee problem". You want to buy a coffee in person and have the transaction validated immediately so you can leave the till. Bitcoin is not great at this. However, the coffee problem is only one very narrow subset of how money is used, and you're also only considering it from a consumer-centric perspective. Bitcoin is considerably better than fiat at a lot of things, and in a lot of other areas it offers a different set of tradeoffs that might or might not work for you.
- mirimir 9y ago
  > "coffee problem" It's pretty common to accept small payments with zero confirmations. Maybe there's some fraud, but overall that's minor.
  - Sir_Substance 9y ago
    You can also do what credit cards often do when you first start using an online store. First transaction takes about an hour while the entire transaction is fully verified, card checked, whole nine yards. Subsequent transactions, you get the benefit of the doubt and it clears with only the checks that can be done in a few seconds. I guess maybe the credit card company has insurance to cover the fraud or something. There might even be a business model in rapid address check + fraud insurance for sub-$25 zero confirmation bitcoin transactions.
lawn 9y ago
I agree. These are good questions to ask, which everyone should at least consider. Some quick comments on some of your points: A + B) Bitcoin is currently congested because the Core development team refuses to raise the block size which forces up the fees. They instead want scaling to happen systems (like the Lightning Network) which are far from ready, if they work at all. They even state that Bitcoin doesn't work without full blocks because they are worried about hypothetical scenarios decades into the futures. They want Bitcoin to only become a "store of value" instead of money. Completely disregarding that something that is only a store of value only becomes a ponzi like scheme where everything hinges on greater fools pumping in more money to the system. This is of course insane and other cryptocurrencies tries to solve this. Bitcoin Cash is a direct result of this behavior which I believe is either incompetence, maliciousness or both. C) Yes scaling isn't "solved" and likely cannot be completely solved. The only way forward is small steps at the time until an acceptable level is reached or the system fails. The limits of on-chain scaling for Bitcoin has never been tested (or even sufficiently researched) and then there's off-chain scaling which may help. D) As with all things "decentralization" is an elusive term. It is in my opinion sufficiently decentralized because not one single actor can dictate the network. We must never forget why decentralization is so important for a system like Bitcoin. It is to allow secure peer to peer permissionless transactions which cannot be censored. Bitcoin still fulfills this. Decentralization for decentralization's sake is inane. Bitcoin's security also relies on a single miner (or a gang of miners) control >50% of the hashrate as they can then attack the network by starting to rewind transactions or block newer transactions. E) Agreed. For the uninitiated there are cryptocurrencies who tries to alter the coin emission schedule controlling how many coins are created over time. For example Monero has a tail emission which makes sure there will always be some amount of new coins, although it may not completely avoid the deflationary side. F) Agreed. You must be very careful if you want to truly stay anonymous on Bitcoin. A single misstep will leave a permanent trace on the blockchain allowing someone all the time in the world to analyze all breadcrumbs which may lead to you de-anonymization. Bitcoin isn't fungible either as you can tell two coins apart. This can potentially completely undermine Bitcoin as a currency if some coins become tainted and significantly less valuable. Say for example after a hack. Fungibility is a fundamental property of money and cash is actually made fungible by law.
pfftcst 9y ago
Your arguments are extremely valid but to me it is like someone arguing against a penny stock scam with a long reasoned arguments about why it is hard to beat the S&P index in the long run. The icos touted in the original post are little more than pump and dump schemes as are most of the current crop of icos. Probably only about half a dozen or so are really viable, and half of those are probably way ahead of their time
xorcist 9y ago
Bitcoin is not centralized in any meaningful definition of the term. It is one of a select few, if not the only one, cryptocurrencies that are multi stakeholder open source projects. Releases are regular, all the necessary maintenance takes place and there is healthy discussion on the mailing list. Despite what some people would like to tell you, it is not unheard of that a newcomer starts working on something or comes with a proposal that gathers interest. (Which is also the reason you don't see scaling improvements in big bangs, just like Linux doesn't magically scale better in one release. Such improvements are slow and steady, and the latest release of Bitcoin scales better than the previous, which scales better than the one before that.) A coin where a single stakeholder could, by paychecks or otherwise, change the rules of the network would not be remotely as interesting. It could still be _useful_, especially for payments, but that's not necessarily something that blockchains does best. Cue the usual discussion about store of value versus currency, everybody has heard that already and Bitcoin can be both or neither. That's not the interesting axis to measure, trustless consensus and permissionless innovation is.
frandroid 9y ago
> A) Bitcoin is congested with transactions and takes hours to process some of them > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it It's going to be fun to watch when a market crash happens and everyone tries to sell off at once.

merrickread 9y ago

Couldn't agree more. We're using some blockchain technology to solve specific problems at my company. It's a part of our stack, but we don't mention blockchain unless someone specifically asks. Blockchain is sensationalized beyond belief. I can't wait for the rose tinted glasses to fall off and we realize it's just a data management technology for specific use cases. I think the biggest danger to the technology is that the community focuses on "blockchain will change the world" not "how can we make this better".

neilwilson 9y ago
I'm rather more impressed by the DAG systems than the chain. A tree always seems more sensible that a linked list.
- merrickread 9y ago
  If you're into consensus algorithms take a look at Algorand: https://people.csail.mit.edu/nickolai/papers/gilad-algorand-eprint.pdf https://people.csail.mit.edu/nickolai/papers/gilad-algorand-... It has some novel approaches to node / data agreement. Also take a look at the many projects Hyperledger projects. Hyperledger is incubated by The Linux Foundation. Their attitude towards open source development is that of purely technical curiosity and experimentation. Brian Behlendorf is directing the project so it's in good hands. He speaks about this attitude here: https://www.youtube.com/watch?v=pr4Hb0jb0lo https://www.youtube.com/watch?v=pr4Hb0jb0lo
pfftcst 9y ago
I've always wondered about this- all the hype about 'Blockchain'. Can you explain this a little bit more? How do you have a blockchain without bitcoin/ether or at least mining? Isn't that just a glorified database? What does a (I assume centralized) blockchain do for your company that a database or any type of electronic ledger cannot do?
- TazeTSchnitzel 9y ago
  how to get people to care about your computer science work 1. s/Merkle tree/blockchain/ 2. there is no step 2
- merrickread 9y ago
  Yes, right now it is completely a glorified database. It's always been a database. It's a different database. We're using it for compliant sharing of and collaboration on private information records between non trusting organizations and businesses. You could do this with something like a highly distributed Cassandra cluster. But some of the inherent rules to a blockchain allow us to provide higher security, higher data persistence and availability between nodes, auditable records, and accountable participants / contributors. And it's not centralized, it's completely distributed - just not publicly available to anyone who can download a mobile app.

gruez 9y ago

>A) Bitcoin is congested with transactions and takes hours to process some of them >B) Bitcoin fees are through the roof actually that pretty much fizzled out. https://jochen-hoenicke.de/queue/#30d https://jochen-hoenicke.de/queue/#30d >it sometimes costs as much as 25% of the value of a transaction to send it sometimes even cost 99% of the value you're sending (if you were sending 1000 satoshis 2 weeks ago). >F) Bitcoin is not actually anonymous strawman. bitcoin is pesduo-anonymous. anyone who did 5 mins of research would know this.

aitrean 9y ago
You are correct about F. Pseudo-anonymous is what I was trying to emphasize. But by itself, Bitcoin's anonymity would crumble under pressure to identify users at PoS endpoints.
- tzakrajs 9y ago
  Exactly, it's trivial for governments to unmask anyone who wants to legally deal in Bitcoin. They will probably make it illegal to hold at all, but we shall see.

runeks 9y ago

> A) Bitcoin is congested with transactions and takes hours to process some of them Hours to process transactions sounds relatively good to me, considering international bank transfers take 3-5 business days. We're talking about a decentralized protocol performing better than a centralized one which has all the advantages on its side. > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it Bitcoin is definitely not suitable for small-value transactions (the fee does not depend on the amount sent). Here's a graph of median Bitcoin fees for the past year: https://bitinfocharts.com/comparison/bitcoin-median_transaction_fee.html#1y https://bitinfocharts.com/comparison/bitcoin-median_transact... > C) The upgrades to fix these problems are extremely slow - scaling hasn't been solved for years, because different parties keep fighting for control over the currency codebase and shooting down each others' attempts to upgrade it This is a misrepresentation of the issue. The lack of a solution is not due to in-fightning, but that absence of an obvious "fix". The smaller the block size, and thus transaction throughput of Bitcoin, the more decentralized it is, because the more people can download and verify the blockchain using commodity hardware. It would be simple to increase throughput, but this would occur at the cost of increased centralization. At the moment, consensus seems to favor decentralization over increased throughput. Bear in mind, that if hardware capabilities continue to increase at historic rates over the next 30 years, 1GB blocks will probably be doable, which will be roughly sufficient to support the world's population (with the addition of consumer-to-merchant clearing protocols). Some people think this is too slow, but I think the world needs at least 30 years to get used to a new monetary system anyway, so it can't happen any faster than this. > D) Bitcoin is still, objectively, centralized. Almost all of the miners are based in industrial regions like China, and belong to a small monopoly of mining pools. All of the exchanges are centralized, and are well-known for losing clients' money. The Bitcoin protocol is decentralized, because it does not define a central party. Saying Bitcoin is centralized because large mining firms exist is equivalent to saying that Git is centralized because of GitHub, or email is centralized because of GMail. Each individual miner (and exchange) is centralized, but on the whole they comprise a decentralized network of miners -- just like Gmail, Yahoo and Hotmail (together with all other email servers and providers) comprise a global, decentralized network. That being said, Bitcoin is vulnerable to a constant 51% attack. It cannot withstand this (unless something fundamental changes about the protocol). So far, no one has bothered to carry out such an attack, but Bitcoin is vulnerable to this type of attack. > E) Bitcoin addresses the technology perspective of sending money, but doesn't address any of the macroeconomic problems that arise from a deflationary, uncontrolled currency. This is not fact, but opinion of Keynesian economists. The entire basis of Keynesian economics is this sentence. For people interested in a much more meaningful explanation than Keynes' story of "things suddenly broke in 1929, and we had to ban gold to fix this", I recommend the following series of essays[1], which explain how the gold standard failed because it depended on a clearing market that was closed down at the start of WWI (in 1914) and kept closed at the end of the war (in 1918). This market cleared the "bill of exchange", which was a financial instrument that acted as a means of payment between retail merchants and producers of semi-finished goods, allowing the gold standard to scale as production became increasingly specialized. When bill of exchange clearing market in London was closed, producers were no longer able to pay each other using the bill of exchange, which caused demand for gold to surge (since it became the only means of payment between producers), causing deflation (an increase in the value of money is equivalent to a decrease in the price of goods). [1] http://professorfekete.com/moneycredit.asp http://professorfekete.com/moneycredit.asp

gchokov 9y ago

Thank you for the comment. A fresh breath of air.

colordrops 9y ago

I could go down the list and agree and disagree with some of your comments, but how does that address the article? Despite being a trite statement, and despite it's flaws, bitcoin _is_ open source money.

deleted 9y ago
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aitrean 9y ago
You are correct, and if the article said "Bitcoin is open source money", I would say "yeah, I knew that". But the article uses such a statement as the core component of an article arguing that cryptocurrencies aren't a speculative bubble. Perhaps part of my frustration is that this is the latest in a long series of articles that beats around the bushes and fails to address any kind of meaty argument. They attack the weakest arguments, and lie or misdirect the stronger ones. Yes, we all know Warren Buffett and Jamie Dimon aaren't so great with computers, so why does that make Bitcoin any less of a speculative bubble?
neilwilson 9y ago
Bottles of wine are money. But they are not currency. Currency is what you settle your tax bills in. And ultimately you need to get hold of some at some point.
- colordrops 9y ago
  Ok, but how does that make the statement wrong? Gimp is open source photo editing, and many people have criticisms against it compared to photo shop, but it's still open source photo editing.
  - mannykannot 9y ago
    Aitrean pointed out the irrelevance of that fact 25 minutes ago, in response to your original post.
    - deleted 9y ago

simonebrunozzi 9y ago

Finally, someone that speaks directly and honestly about it. I 100% agree with you, there's a problem. Unfortunately, this problem means that a lot of naive investors will jump on the crypto bandwagon only to get hurt.

tzakrajs 9y ago
It's clear this is going to be the epicenter of the next asset bubble, but people need something exciting to live for, even if it is a lie.

deleted 9y ago

[deleted]

nuncanada 9y ago

Curious, what are you coding Solidity for?

aitrean 9y ago
Smart contract auditing and development work is massively in-demand thanks to these speculative valuations. I'm doing a certification in Solidity development from B9 Lab to target this market. Don't get me wrong, Blockchain is valuable - but I feel like it's in the same delusional market state as the internet was in the late 90's.

hudon 9y ago

Sure: > A) Bitcoin is congested with transactions and takes hours to process some of them > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it 1- Average fees are not as high as people claim. See https://p2sh.info/dashboard/db/fee-estimation?orgId=1&from=now-7d&to=now https://p2sh.info/dashboard/db/fee-estimation?orgId=1&from=n... 2- Adoption of SegWit, which allows more transactions per block, will help lower fees 3- No one is forced to use Bitcoin. It is trivial to buy Litecoin instead and use that. However, users choosing to pay high fees shows how much more they value Bitcoin transactions. > C) The upgrades to fix these problems are extremely slow - scaling hasn't been solved for years, because different parties keep fighting for control over the currency codebase and shooting down each others' attempts to upgrade it Your definition of an "upgrade" conflicts with the Bitcoin project's definition, that's all. The core developers are not against a block size increase. However, they have decided to try scaling in ways that do not harm security or decentralization first. It's a matter of priorities. Bitcoin Cash may prioritize low fees over everything else, but Bitcoin prioritizes decentralization and security first. > D) Bitcoin is still, objectively, centralized. Almost all of the miners are based in industrial regions like China, and belong to a small monopoly of mining pools. All of the exchanges are centralized, and are well-known for losing clients' money. The big banks are replaced by big whales, who will do anything in their power to manipulate markets for their gain. Mining is centralized, but Bitcoin nodes are not. This is evident when you look at the success of deploying SegWit by a UASF or the success of fighting off a corporate takeover such as the NYA. > E) Bitcoin addresses the technology perspective of sending money, but doesn't address any of the macroeconomic problems that arise from a deflationary, uncontrolled currency. Bitcoin does not need to be a currency. Most people still invested in it view it as a "digital gold". I think it'll more be a reference point for fiat money, something that forces fiat moneys to have more sane monetary policies, not as a day-to-day currency itself. > F) Bitcoin is not actually anonymous. Data science techniques can parse the blockchain and see sending patterns between different accounts. They map these patterns to various identities. If those identities can be mapped to a real person, say, when they cash out of an exchange, then it's known exactly how much Bitcoin they have. Today, tumblers exist and are fairly easy to use. So yes, Bitcoin can be totally anonymous if you choose to use it that way. For the future, features like Confidential Transactions, MimbleWimble, MAST, Tumble Bit, and so on are in the works.

onecooldev24 9y ago

https://en.wikipedia.org/wiki/The_Fox_and_the_Grapes https://en.wikipedia.org/wiki/The_Fox_and_the_Grapes

not_a_terrorist 9y ago

Your reply contains several errors, but I will pick one. > D) Bitcoin is still, objectively, centralized. Not only you, but this whole thread is missing one critical word: incentive. Miners are incentivised to play ball, as trying to play games will result in the rejection of their hashing work. Wherever they are, it does not matter (up to a point, ie geographical risk repartition). But in actuality, we know there are miners all over the planet, and that there are thousands of them. Parenthesis: by the way, non-mining full nodes add precisely ZERO value to the network, and they actually slow it down. Before you guys start yelling, please see reference at the end of my comment for details. That's another urban legend purported by Bitcoin Core. Anyways, don't get me started. OK, back to miners: yes, as time will pass, there will be mining consolidation, it's inevitable. But it will not matter. In addition to miners, there will be large service providers (thousands of them) who will be -incentivised- to run either small mining nodes (more secure) or non-mining nodes (less secure) for verification of their own transaction. That alone will be more than enough to ensure the security of the network. From the start, Satoshi was predicting the apparition of large mining server farms, no farther than in the very FIRST email he wrote to the world!! http://satoshi.nakamotoinstitute.org/emails/cryptography/2/#selection-75.16-83.14 http://satoshi.nakamotoinstitute.org/emails/cryptography/2/#... quote: At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node. Bitcoin Network Topology Description (provides visual explanatino as to why non-mining nodes are totally useless, and even detrimental. https://fr.scribd.com/document/359522859/Bitcoin-Network-Topology-ELI5 https://fr.scribd.com/document/359522859/Bitcoin-Network-Top...

drewm1980 9y ago
The world would have been better off without wasting resources on server farms full of specialized hardware computing sha256 over and over. Shame on him!
sp527 9y ago
I find it amazing that there’s any reasonably intelligent person left in the world who can so dramatically underestimate the wanton interventionism of the Chinese government. Every packet in and out of that country is monitored. The state can and will impose any arbitrary regulation on any corporation at any time. People literally disappear if they start making too much noise. And now, entities within the country are amassing a substantial and effectively unassailable combined position in a major new asset class and possible alternative monetary system, and you think the Chinese government WON’T one day manipulate that to their own advantage?

Sir_Substance 9y ago

>A) Bitcoin is congested with transactions and takes hours to process some of them It regularly takes /days/ for visa transactions to go from "confirmed at the counter" to "arriving and unlocking in my bank account so I can use it to pay my rent". Over Christmas in Australia it's common for visa to just flat fail to keep up with demand, forcing shops to keep offline dockets for up to weeks after the product has left the store on the /trust/ that visa will let them redeem those pieces of thermopaper for actual spendable money. Mere hours is, from the perspective of the merchant, amazing. >B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it When I send money from Iceland to Australia, it takes about a week to arrive. I've had a transaction magically blink out of existence once (both banks told me it was the other banks fault), and while it is in transit approximately $70AUD is removed from it. This number is not exact and varies by up to $15 each time you send it, which means you have to send $90 more than you intend to pay in order to make sure you've paid at least as much as you intend to. Mere hours is again amazing, and a 25% fee (that's probably not correct by the way, segwit has reduced fees from approx $5USD to approx 25c USD, check your wallet settings) is rather tolerable by comparison. In the process of paying Australian government bills and bank charges from Iceland (which are usually in the order of $20-50), I have definitely spent at least 1.5x as much on transaction fees as actual payments. You're focused on the "coffee problem". You want to buy a coffee in person and have the transaction validated immediately so you can leave the till. Bitcoin is not great at this. However, the coffee problem is only one very narrow subset of how money is used, and you're also only considering it from a consumer-centric perspective. Bitcoin is considerably better than fiat at a lot of things, and in a lot of other areas it offers a different set of tradeoffs that might or might not work for you.

mirimir 9y ago
> "coffee problem" It's pretty common to accept small payments with zero confirmations. Maybe there's some fraud, but overall that's minor.
- Sir_Substance 9y ago
  You can also do what credit cards often do when you first start using an online store. First transaction takes about an hour while the entire transaction is fully verified, card checked, whole nine yards. Subsequent transactions, you get the benefit of the doubt and it clears with only the checks that can be done in a few seconds. I guess maybe the credit card company has insurance to cover the fraud or something. There might even be a business model in rapid address check + fraud insurance for sub-$25 zero confirmation bitcoin transactions.

lawn 9y ago

I agree. These are good questions to ask, which everyone should at least consider. Some quick comments on some of your points: A + B) Bitcoin is currently congested because the Core development team refuses to raise the block size which forces up the fees. They instead want scaling to happen systems (like the Lightning Network) which are far from ready, if they work at all. They even state that Bitcoin doesn't work without full blocks because they are worried about hypothetical scenarios decades into the futures. They want Bitcoin to only become a "store of value" instead of money. Completely disregarding that something that is only a store of value only becomes a ponzi like scheme where everything hinges on greater fools pumping in more money to the system. This is of course insane and other cryptocurrencies tries to solve this. Bitcoin Cash is a direct result of this behavior which I believe is either incompetence, maliciousness or both. C) Yes scaling isn't "solved" and likely cannot be completely solved. The only way forward is small steps at the time until an acceptable level is reached or the system fails. The limits of on-chain scaling for Bitcoin has never been tested (or even sufficiently researched) and then there's off-chain scaling which may help. D) As with all things "decentralization" is an elusive term. It is in my opinion sufficiently decentralized because not one single actor can dictate the network. We must never forget why decentralization is so important for a system like Bitcoin. It is to allow secure peer to peer permissionless transactions which cannot be censored. Bitcoin still fulfills this. Decentralization for decentralization's sake is inane. Bitcoin's security also relies on a single miner (or a gang of miners) control >50% of the hashrate as they can then attack the network by starting to rewind transactions or block newer transactions. E) Agreed. For the uninitiated there are cryptocurrencies who tries to alter the coin emission schedule controlling how many coins are created over time. For example Monero has a tail emission which makes sure there will always be some amount of new coins, although it may not completely avoid the deflationary side. F) Agreed. You must be very careful if you want to truly stay anonymous on Bitcoin. A single misstep will leave a permanent trace on the blockchain allowing someone all the time in the world to analyze all breadcrumbs which may lead to you de-anonymization. Bitcoin isn't fungible either as you can tell two coins apart. This can potentially completely undermine Bitcoin as a currency if some coins become tainted and significantly less valuable. Say for example after a hack. Fungibility is a fundamental property of money and cash is actually made fungible by law.

pfftcst 9y ago

Your arguments are extremely valid but to me it is like someone arguing against a penny stock scam with a long reasoned arguments about why it is hard to beat the S&P index in the long run. The icos touted in the original post are little more than pump and dump schemes as are most of the current crop of icos. Probably only about half a dozen or so are really viable, and half of those are probably way ahead of their time

xorcist 9y ago

Bitcoin is not centralized in any meaningful definition of the term. It is one of a select few, if not the only one, cryptocurrencies that are multi stakeholder open source projects. Releases are regular, all the necessary maintenance takes place and there is healthy discussion on the mailing list. Despite what some people would like to tell you, it is not unheard of that a newcomer starts working on something or comes with a proposal that gathers interest. (Which is also the reason you don't see scaling improvements in big bangs, just like Linux doesn't magically scale better in one release. Such improvements are slow and steady, and the latest release of Bitcoin scales better than the previous, which scales better than the one before that.) A coin where a single stakeholder could, by paychecks or otherwise, change the rules of the network would not be remotely as interesting. It could still be _useful_, especially for payments, but that's not necessarily something that blockchains does best. Cue the usual discussion about store of value versus currency, everybody has heard that already and Bitcoin can be both or neither. That's not the interesting axis to measure, trustless consensus and permissionless innovation is.

frandroid 9y ago

> A) Bitcoin is congested with transactions and takes hours to process some of them > B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the value of a transaction to send it It's going to be fun to watch when a market crash happens and everyone tries to sell off at once.