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> Bitcoin is a poor currency and a crazy investment -- but the technology behind it is a real breakthrough. I feel like that should be the other way around. Wh

> Bitcoin is a poor currency and a crazy investment -- but the technology behind it is a real breakthrough. I feel like that should be the other way around. When all the "blockchain startups" and ICOs blow up, Bitcoin will be left standing. The true innovation behind the "blockchain" was its decentralised consensus mechanism. That mechanism is only secure as long as no single entity controls over 50% of the hash rate. Some of the largest Bitcoin miners have so much hash rate today that they could attack any (SHA-256 based) blockchain but the Bitcoin one. "The Internet is a poor network and a crazy investment -- but TCP/IP is a real breakthrough."... Sure!

rdslw 9y ago
the problem many praising blockchain minus bitcoin people forget, is that blockchain strength (distributed reconciliation) is possible only because of incentive (sth you get in exchange for doing all the etahashes per second). The moment you take incentive (bitcoin) out of the equation, whole blockchain will lose its strenght. You can not take out greed^H^H^Hincentive out of the picture. p.s. this is black and white written in bitcoin whitepaper.
- nettdata 9y ago
  Then how do you explain the Maersk blockchain-based insurance trial that they found very successful? Bitcoin is not the only incentive that can be had in implementing blockchain technology. There are a number of very promising use cases for blockchain, in education, healthcare, energy... none of which involve bitcoin at all.
  - kirykl 9y ago
    Hype, Consultants, Buzzwords baffling executives
  - ambicapter 9y ago
    Were any of these trials interesting enough to be attacked?
  - nordsieck 9y ago
    All "block chain" is is a Merkle tree. You can do all sorts of productive, interesting stuff with Merkle trees. If you want to do interesting things with a trust-less, decentralized system, you need the mining and mining rewards.
    - Franciscouzo 9y ago
      It's more of a linked-list of Merkle trees.
    - Retric 9y ago
      There are a few file sharing applications that do interesting things with trust-less, decentralized systems, without any sort of mining or mining rewards. Mining allows for high value transactions in a low trust environment, but lower value transactions are very possible without that. IMO Tit for Tat is a much more interesting form of consensus building as it can be very low resource. But it's really all about the goals not the protocol.
  - retox 9y ago
    >education, healthcare, energy I'm not asking for dissertations but could someone briefly explain how any of these problems/industries will be effected by blockchain.
- ambicapter 9y ago
  My roommate gave me a book to read about blockchain yesterday, and that was my thought exactly. A lot of 'advocates' like to tout the decentralized consensus as useful for all kinds of application, but imo they constantly overlook the -financial- incentive that supports the bitcoin network (you could attack the network with a bunch of hashpower...but it would be more profitable for you to mine).
  - Lordarminius 9y ago
    What was the name of the book ?
- baby 9y ago
  Do you mean that if the value of bitcoin goes too low, nobody is going to mine because it won't be worth it vis a vis of the difficulty? If fees are too high nobody will use the system as well. But then the value would go low enough that the fees wouldn't be that bad and miners would probably still get their worth from it. It would be a strange blockchain though :/
- zby 9y ago
  That is true for one meaning of blockchain - what I observe is that blockchain became a great case of a https://en.wikipedia.org/wiki/Floating_signifier https://en.wikipedia.org/wiki/Floating_signifier In particular most of the 'serious' business people don't really mean a distributed system that anyone can join at any time - but rather a closed system, a permissioned blockchain, basically a database with authoritative local copies.
- grandalf 9y ago
  > The moment you take incentive (bitcoin) out of the equation, whole blockchain will lose its strength. This assumes that the compute power of the miners who are left after the incentive is gone will not be sufficient to prevent attacks. It also assumes that the miners who quit, whose hardware would seemingly be ripe for use in attacks, would have no other purpose to use it for, such as another cryptocurrency. FWIW I'd also point out that I would not be surprised if a fork were to occur that prolonged the incentive. Consider the finite incentive something that was necessary to create the initial coordination among participants in Bitcoin, but once it reaches sufficient scale if continuing to have an incentive benefits the ecosystem then surely it will (by then).
- basseq 9y ago
  The need for incentives is true, but the community has—erroneously, in my opinion—conflated 'incentive' with 'currency'. Follow this: - The core technology here is a crypto-backed distributed ledger. We call this the 'blockchain'. - You need a unit of trust to enable the blockchain to work. We call this unit of trust a 'bitcoin', or to be more precise, the smallest divisible unit thereof. (1 Satoshi = 0.00000001 BTC) - These units of trust have value, which also gives you incentive to create ('mine') them. If we stop here, that's all well and good. The problem with 'bitcoin' and the currency argument is that we're basically going back to the barter system. Instead of gold or foodstuffs, we're trading one good (a unit of trust) for another (whatever you're buying with BTC). Then, on top of that (and as a result), we've created a speculative commodities market in BTC. There's no true scarcity here. This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. ----- Then you also get gems like this, from the article: A more radical idea is to use digital currency, issued and supervised by the central bank, at the retail level to replace physical cash. What percentage of retail transactions today are in physical cash? What percentage of USD holdings (bank deposits, etc.) can be backed up with physical notes and coins? (Hint: not 100%). USD is already a digital currency.
  - jstanley 9y ago
    > This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. If you really think that, you don't understand bitcoin. How do you load your USD on to this hypothetical block chain? How do you prove you destroyed the physical notes? Is there a mechanism to turn it back into physical notes? How do you hand out a block reward without creating counterfeit USD? For bitcoin to work, it needs to be its own currency.
    - basseq 9y ago
      (Point of pedantic clarification: I'm really using lowercase-B 'blockchain' to really mean 'distributed ledger', of which the capital-B 'Blockchain' is a form. Distributed ledgers that do not rely on mining or 'coins' have been proposed, but obviously haven't been implemented broadly. So let's limit this to the Bitcoin/Blockchain archetype.) So to answer your question, a couple points: 0. You can use the blockchain without bitcoin as the token of choice. You create your own limited tokens and go from there. This has already happened with various altcoins. 1. You can create private chains. Bitcoin mining and the associated value (currency) therein is one way to create a (public) ledger, but not the only way. 2. You don't 'load your USD' onto the blockchain. That ignores the point of a distributed ledger. Emphasis on that last word, because what we're talking about here is a trusted record of transactions. That's why the blockchain isn't just about currency, and gives participants a way to immutably record all kinds of things.
nlperguiy 9y ago
largest bitcoin miners can't attack blockchains whose proof of work algorithm is ASIC resistant or just a completely different calculation algorithm. Monero is a one good example (feasible only on GPU and CPU, probably needs some R&D for ASICs with memory). litecoin is BTC-ASIC resistant with ASICs tailored for litecoin are coming.
- jacobush 9y ago
  Agree except that Litecoin had ASIC for years.
igorgue 9y ago
That's why Altcoins moved out of SHA-256 since Doge and Namecoin days. Find a coin in the top 100 that's not a Bitcoin fork and uses SHA256.
raiflip 9y ago
The reason Bitcoin will never be a replacement for a Central Bank based currency like the USD is the fact that it is in permanent deflation.
- simonsarris 9y ago
  Funny thought: Imagine taking bitcoin so seriously that you signed a union contract in 2012 to pay 1 bitcoin per hour.
  - AnimalMuppet 9y ago
    Imagine your employer becoming bankrupt well before today, due to that contract...
  - sverhagen 9y ago
    Would it matter if your employer did all their business in Bitcoin?
    - function_seven 9y ago
      Yes, assuming they're transacting business with the outside world, where the value of a Bitcoin has risen.
  - eyeinthepyramid 9y ago
    Along those lines, can you imagine getting a home loan in bitcoin?
    - anonymous5133 9y ago
      We have already figured out how to do that with crypto. You simply use a smart contract that dynamically adjusts to variables. In essence, the home loan lender is interested in getting back the initial value they lent plus interest, another form of value. The price of bitcoin per unit doesn't matter. The only thing that matters is how much value each unit represents. Thus, you can use a smart contract to dynamically adjust the mortgage payment at the time of payment. The contract could be written such that it says "borrower is to pay $3,500 in USD equivalent value in bitcoin each month". Assuming bitcoin price is increasing, your mortgage payment each month would require less bitcoins to pay and the lender would be happy too because they are still getting their $3,500 of value per month. The lender could immediately sell their bitcoins if they want physical cash. Also this is already being done with point of sale machines that accept bitcoin. The POS machine simply goes to an exchange to see how much one bitcoin is worth then tells the buyer to pay xyz amount in bitcoin that is equivalent to the value that USD represents.
tootie 9y ago
I think a more apt analogy would be all the nonsense web 1.0 companies that got tons of investment from people not savvy enough to understand what they were doing. Much like all the tech nerds who think they are great currency traders because they are riding a lucky streak.
ryanSrich 9y ago
Why Bitcoin? It's a single application of the blockchain. It would make more sense that a platform like Ethereum would remain after the dust settles. That's a better analogy to your internet quote.
- anonymous5133 9y ago
  It isn't mutually exclusive. The crypto that will collapse are all the little alts that don't have any significant market caps. There are a few scam coins that will collapse as well like bitconnect.
tehsauce 9y ago
Blockchain =! Internet Proponents of bitcoin as well as skeptics love to compare bitcoin to the internet. A skeptic will say "bitcoin is in a bubble, it has to burst because the dot com bubble did". Then a supporter will rebut saying "early internet companies also bubbled, but afterwords the amount of growth far exceeded the initial bubble." Frankly I don't think any of this is relevant. Blockchain is very impressive technology that solves the really tricky infrastructural problem of creating large secure systems. But unless your life involves building these systems, or you are unfortunate enough to live in a region without access to (or operating outside of for legal reasons) existing stable systems, blockchain will have have no noticeable impact on your life. Remember, the internet connected everyone in the world together. The blockchain makes large systems easier to secure. When comparing history to the present, pay attention to the differences, not just the similarities. On that note I'm going to bring in some more historical context that may also be questionably relevant, but at least is less spoken of. Many people today are still adjusting to the culture shock caused by the internet and computer technology in general. As this area is finally starting to settle somewhat (how many huge companies came up in 2000s vs 2010s?), everyone seems to be hunting for the next big thing. Is it virtual reality? Artificial intelligence? Self driving cars? Blockchain? Some kind of biotech? Investors are dumping money into all kinds of new ideas, hoping for them to change the world. And that's a good thing. But the last 20 years made innovation an expectation, so don't expect another internet just because it feels due.
nerfhammer 9y ago
If you think bitcoin is a good currency, imagine what happens if you were to have any debts denominated in bitcoin. E.g. your bitcoin denominated student loans suddenly cost the equivalent of millions or billions of dollars to pay back. Good speculative vehicles and good currencies are not identical sets.
hw 9y ago
> Bitcoin is a poor currency and a crazy investment Bitcoin has long moved away from being a currency and is now more of a value store like gold. Yes, Bitcoin is horrible as a currency, and that has been the fact for a long time now. This just shows how little Wall Street understands Bitcoin and crypto in general, and is struggling to find their footing. It's also not a crazy investment. It is about as crazy an investment as gold is. This current 'bubble' is akin to the gold rush days, but look where gold is now, and the purpose it served since. Crypto currencies are still in its infancy, and I have used them to make purchases and it has been a smooth experience. The fact that I can make purchases from other countries without paying cross border transaction fees and currency conversion fees... let's just leave it at that.
- bdod6 9y ago
  Gold has centuries of historical data as a sensible value store. The 'gold rush' didn't RAISE the value gold; gold rushes happened because the value of gold was already high. If anything, gold rushes devalued gold because of the increase in supply. That's very different from what's happening with crypto, in which the run-ups now are happening from speculation. And speculation run-ups ALWAYS burst at some point. While Bitcoin might have some floor as an investment at this point, it's nowhere near as stable as gold. Equating the two makes very little sense. It would more accurate to compare this to the Tulip bubble than to the gold rush days.

rdslw 9y ago

the problem many praising blockchain minus bitcoin people forget, is that blockchain strength (distributed reconciliation) is possible only because of incentive (sth you get in exchange for doing all the etahashes per second). The moment you take incentive (bitcoin) out of the equation, whole blockchain will lose its strenght. You can not take out greed^H^H^Hincentive out of the picture. p.s. this is black and white written in bitcoin whitepaper.

nettdata 9y ago
Then how do you explain the Maersk blockchain-based insurance trial that they found very successful? Bitcoin is not the only incentive that can be had in implementing blockchain technology. There are a number of very promising use cases for blockchain, in education, healthcare, energy... none of which involve bitcoin at all.
- kirykl 9y ago
  Hype, Consultants, Buzzwords baffling executives
- ambicapter 9y ago
  Were any of these trials interesting enough to be attacked?
- nordsieck 9y ago
  All "block chain" is is a Merkle tree. You can do all sorts of productive, interesting stuff with Merkle trees. If you want to do interesting things with a trust-less, decentralized system, you need the mining and mining rewards.
  - Franciscouzo 9y ago
    It's more of a linked-list of Merkle trees.
  - Retric 9y ago
    There are a few file sharing applications that do interesting things with trust-less, decentralized systems, without any sort of mining or mining rewards. Mining allows for high value transactions in a low trust environment, but lower value transactions are very possible without that. IMO Tit for Tat is a much more interesting form of consensus building as it can be very low resource. But it's really all about the goals not the protocol.
- retox 9y ago
  >education, healthcare, energy I'm not asking for dissertations but could someone briefly explain how any of these problems/industries will be effected by blockchain.
ambicapter 9y ago
My roommate gave me a book to read about blockchain yesterday, and that was my thought exactly. A lot of 'advocates' like to tout the decentralized consensus as useful for all kinds of application, but imo they constantly overlook the -financial- incentive that supports the bitcoin network (you could attack the network with a bunch of hashpower...but it would be more profitable for you to mine).
- Lordarminius 9y ago
  What was the name of the book ?
baby 9y ago
Do you mean that if the value of bitcoin goes too low, nobody is going to mine because it won't be worth it vis a vis of the difficulty? If fees are too high nobody will use the system as well. But then the value would go low enough that the fees wouldn't be that bad and miners would probably still get their worth from it. It would be a strange blockchain though :/
zby 9y ago
That is true for one meaning of blockchain - what I observe is that blockchain became a great case of a https://en.wikipedia.org/wiki/Floating_signifier https://en.wikipedia.org/wiki/Floating_signifier In particular most of the 'serious' business people don't really mean a distributed system that anyone can join at any time - but rather a closed system, a permissioned blockchain, basically a database with authoritative local copies.
grandalf 9y ago
> The moment you take incentive (bitcoin) out of the equation, whole blockchain will lose its strength. This assumes that the compute power of the miners who are left after the incentive is gone will not be sufficient to prevent attacks. It also assumes that the miners who quit, whose hardware would seemingly be ripe for use in attacks, would have no other purpose to use it for, such as another cryptocurrency. FWIW I'd also point out that I would not be surprised if a fork were to occur that prolonged the incentive. Consider the finite incentive something that was necessary to create the initial coordination among participants in Bitcoin, but once it reaches sufficient scale if continuing to have an incentive benefits the ecosystem then surely it will (by then).
basseq 9y ago
The need for incentives is true, but the community has—erroneously, in my opinion—conflated 'incentive' with 'currency'. Follow this: - The core technology here is a crypto-backed distributed ledger. We call this the 'blockchain'. - You need a unit of trust to enable the blockchain to work. We call this unit of trust a 'bitcoin', or to be more precise, the smallest divisible unit thereof. (1 Satoshi = 0.00000001 BTC) - These units of trust have value, which also gives you incentive to create ('mine') them. If we stop here, that's all well and good. The problem with 'bitcoin' and the currency argument is that we're basically going back to the barter system. Instead of gold or foodstuffs, we're trading one good (a unit of trust) for another (whatever you're buying with BTC). Then, on top of that (and as a result), we've created a speculative commodities market in BTC. There's no true scarcity here. This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. ----- Then you also get gems like this, from the article: A more radical idea is to use digital currency, issued and supervised by the central bank, at the retail level to replace physical cash. What percentage of retail transactions today are in physical cash? What percentage of USD holdings (bank deposits, etc.) can be backed up with physical notes and coins? (Hint: not 100%). USD is already a digital currency.
- jstanley 9y ago
  > This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. If you really think that, you don't understand bitcoin. How do you load your USD on to this hypothetical block chain? How do you prove you destroyed the physical notes? Is there a mechanism to turn it back into physical notes? How do you hand out a block reward without creating counterfeit USD? For bitcoin to work, it needs to be its own currency.
  - basseq 9y ago
    (Point of pedantic clarification: I'm really using lowercase-B 'blockchain' to really mean 'distributed ledger', of which the capital-B 'Blockchain' is a form. Distributed ledgers that do not rely on mining or 'coins' have been proposed, but obviously haven't been implemented broadly. So let's limit this to the Bitcoin/Blockchain archetype.) So to answer your question, a couple points: 0. You can use the blockchain without bitcoin as the token of choice. You create your own limited tokens and go from there. This has already happened with various altcoins. 1. You can create private chains. Bitcoin mining and the associated value (currency) therein is one way to create a (public) ledger, but not the only way. 2. You don't 'load your USD' onto the blockchain. That ignores the point of a distributed ledger. Emphasis on that last word, because what we're talking about here is a trusted record of transactions. That's why the blockchain isn't just about currency, and gives participants a way to immutably record all kinds of things.

nlperguiy 9y ago

largest bitcoin miners can't attack blockchains whose proof of work algorithm is ASIC resistant or just a completely different calculation algorithm. Monero is a one good example (feasible only on GPU and CPU, probably needs some R&D for ASICs with memory). litecoin is BTC-ASIC resistant with ASICs tailored for litecoin are coming.

jacobush 9y ago
Agree except that Litecoin had ASIC for years.

igorgue 9y ago

That's why Altcoins moved out of SHA-256 since Doge and Namecoin days. Find a coin in the top 100 that's not a Bitcoin fork and uses SHA256.

raiflip 9y ago

The reason Bitcoin will never be a replacement for a Central Bank based currency like the USD is the fact that it is in permanent deflation.

simonsarris 9y ago
Funny thought: Imagine taking bitcoin so seriously that you signed a union contract in 2012 to pay 1 bitcoin per hour.
- AnimalMuppet 9y ago
  Imagine your employer becoming bankrupt well before today, due to that contract...
- sverhagen 9y ago
  Would it matter if your employer did all their business in Bitcoin?
  - function_seven 9y ago
    Yes, assuming they're transacting business with the outside world, where the value of a Bitcoin has risen.
- eyeinthepyramid 9y ago
  Along those lines, can you imagine getting a home loan in bitcoin?
  - anonymous5133 9y ago
    We have already figured out how to do that with crypto. You simply use a smart contract that dynamically adjusts to variables. In essence, the home loan lender is interested in getting back the initial value they lent plus interest, another form of value. The price of bitcoin per unit doesn't matter. The only thing that matters is how much value each unit represents. Thus, you can use a smart contract to dynamically adjust the mortgage payment at the time of payment. The contract could be written such that it says "borrower is to pay $3,500 in USD equivalent value in bitcoin each month". Assuming bitcoin price is increasing, your mortgage payment each month would require less bitcoins to pay and the lender would be happy too because they are still getting their $3,500 of value per month. The lender could immediately sell their bitcoins if they want physical cash. Also this is already being done with point of sale machines that accept bitcoin. The POS machine simply goes to an exchange to see how much one bitcoin is worth then tells the buyer to pay xyz amount in bitcoin that is equivalent to the value that USD represents.

tootie 9y ago

I think a more apt analogy would be all the nonsense web 1.0 companies that got tons of investment from people not savvy enough to understand what they were doing. Much like all the tech nerds who think they are great currency traders because they are riding a lucky streak.

ryanSrich 9y ago

Why Bitcoin? It's a single application of the blockchain. It would make more sense that a platform like Ethereum would remain after the dust settles. That's a better analogy to your internet quote.

anonymous5133 9y ago
It isn't mutually exclusive. The crypto that will collapse are all the little alts that don't have any significant market caps. There are a few scam coins that will collapse as well like bitconnect.

tehsauce 9y ago

Blockchain =! Internet Proponents of bitcoin as well as skeptics love to compare bitcoin to the internet. A skeptic will say "bitcoin is in a bubble, it has to burst because the dot com bubble did". Then a supporter will rebut saying "early internet companies also bubbled, but afterwords the amount of growth far exceeded the initial bubble." Frankly I don't think any of this is relevant. Blockchain is very impressive technology that solves the really tricky infrastructural problem of creating large secure systems. But unless your life involves building these systems, or you are unfortunate enough to live in a region without access to (or operating outside of for legal reasons) existing stable systems, blockchain will have have no noticeable impact on your life. Remember, the internet connected everyone in the world together. The blockchain makes large systems easier to secure. When comparing history to the present, pay attention to the differences, not just the similarities. On that note I'm going to bring in some more historical context that may also be questionably relevant, but at least is less spoken of. Many people today are still adjusting to the culture shock caused by the internet and computer technology in general. As this area is finally starting to settle somewhat (how many huge companies came up in 2000s vs 2010s?), everyone seems to be hunting for the next big thing. Is it virtual reality? Artificial intelligence? Self driving cars? Blockchain? Some kind of biotech? Investors are dumping money into all kinds of new ideas, hoping for them to change the world. And that's a good thing. But the last 20 years made innovation an expectation, so don't expect another internet just because it feels due.

nerfhammer 9y ago

If you think bitcoin is a good currency, imagine what happens if you were to have any debts denominated in bitcoin. E.g. your bitcoin denominated student loans suddenly cost the equivalent of millions or billions of dollars to pay back. Good speculative vehicles and good currencies are not identical sets.

hw 9y ago

> Bitcoin is a poor currency and a crazy investment Bitcoin has long moved away from being a currency and is now more of a value store like gold. Yes, Bitcoin is horrible as a currency, and that has been the fact for a long time now. This just shows how little Wall Street understands Bitcoin and crypto in general, and is struggling to find their footing. It's also not a crazy investment. It is about as crazy an investment as gold is. This current 'bubble' is akin to the gold rush days, but look where gold is now, and the purpose it served since. Crypto currencies are still in its infancy, and I have used them to make purchases and it has been a smooth experience. The fact that I can make purchases from other countries without paying cross border transaction fees and currency conversion fees... let's just leave it at that.

bdod6 9y ago
Gold has centuries of historical data as a sensible value store. The 'gold rush' didn't RAISE the value gold; gold rushes happened because the value of gold was already high. If anything, gold rushes devalued gold because of the increase in supply. That's very different from what's happening with crypto, in which the run-ups now are happening from speculation. And speculation run-ups ALWAYS burst at some point. While Bitcoin might have some floor as an investment at this point, it's nowhere near as stable as gold. Equating the two makes very little sense. It would more accurate to compare this to the Tulip bubble than to the gold rush days.