7 ms·

They didn't know what they were buying; bits in a database. A very poorly implemented database that was - not scalable - not rare - didn't have any governme

They didn't know what they were buying; bits in a database. A very poorly implemented database that was - not scalable - not rare - didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000 - easily hackable (tether, fake trades, scam exchanges, etc) - too expensive to do a single transaction this applies to most crytocurrency

tanilama 9y ago
> not rare Interesting. Don't really know how crytos work, but isn't rarity is guaranteed by the BitCoin algorithm itself?
- castis 9y ago
  In what context are you using rarity?
- carry_bit 9y ago
  Bitcoin itself is rare, but cryptocurrency as a whole is not because it's easy to create another blockchain.
  - aviv 9y ago
    This right there is exactly why long term it's doomed and cannot be a reliable store of value. You don't see banks and random geeks inventing new precious metals out of thin air. So you have gold, silver, platinum and palladium and that's about it as far as store of values are concerned.
    - stinkytaco 9y ago
      I mean, I suppose anyone can create a currency out of thin air. In fact, I'd wager there's hundreds of currencies, as nearly every sovereign state has one. It's not meant to be a store of value, which is why this bubble will burst, but that doesn't mean it's doomed. It has the characteristics of a currency: 1. scarce. 2. useful.
      - vec 9y ago
        But not 3. fast and easy to transfer ownership of or 4. stable in value over time. Plenty of things (houses, human toes, pre-release copies of films, etc.) Are both scarce and useful without also being good candidates for a medium of exchange.
        stinkytaco 9y ago
        Fair enough, but Bitcoin certainly can be either of those things, even if it's not right now. History shows us any currency can have those problems. Inflation can become so high that as a medium of exchange it's pointless. It can become so unstable in value that people use something else. Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
        vec 9y ago
        Paying for a $5 cup of coffee with a debt card takes about 10 seconds and invites about $0.10 in transaction fees. Paying in physical currency is even faster and costs approximately $0. According to https://bitcoinexchangerate.org/fees https://bitcoinexchangerate.org/fees, getting a single transaction committed within the next hour costs just under $50. I've heard plenty of ideas to make the Bitcoin network a little cheaper or a little faster. Occasionally both! I've yet to hear a good theory for how the Bitcoin network can ever get both 500x cheaper and 500x faster.
    - sowbug 9y ago
      Same is true about Facebook. Someone could clone the features and create facebook2.com, and everyone would flock to it. That's why Facebook stock is a Ponzi scheme. Anyone who thinks Facebook has a value above $0 is insane.
      - aviv 9y ago
        Nope. People use Facebook. People simply don't use Bitcoin for payments or any other use that benefits from its "network effect".
        Klathmon 9y ago
        Look, i'm not convinced that bitcoin is worth the price it's at right even right now either, but that's just not true. The network effect is extremely strong in the cryptocurrency space. Everything in the cryptocurrency space supports bitcoin, and fractions of everything support anything else. Payment processors, exchanges, hardware wallets, software wallets, secure storage and backup systems, etc... All of it is focused on bitcoin first, and adds others later (if ever). If you want to buy or sell bitcoin, you've got tons of repudible options, you want to buy or sell monero? You've got 1/3 of the options, and most of them are small and shady or don't deal with fiat currencies in any way. If that's not a network effect, I don't know what is.
        aviv 9y ago
        One could argue the exact opposite - that all the infrastructure around Bitcoin makes it an inferior store of value. For example, the fact that Litecoin does not (yet) have ETFs and other financial vehicles that can be used to manipulate its price without actually dealing with "physical" Litecoins, makes it a more stable store of value.
        sowbug 9y ago
        Speak for yourself. We do. It took a while for 28.8K modems to catch up with bandwidth needs, and that's part of the reason people thought the internet sucked and was a joke compared to all its promises. I think even today people snort about pets.com as the poster child of the dot-com boom. Then their Amazon Pantry order arrives, which they consume without irony.
    - spraak 9y ago
      Those metals are only valuable because because people agree that they are. The price of gold etc. is just as inherently meaningless as BTC etc.
- mutteraloo 9y ago
  there are hundreds of crytocurrencies. what makes one of them rare?
  - Klathmon 9y ago
    There are hundreds of elements, what makes some of them rare?
    - mutteraloo 9y ago
      there could be thousands of crytocurrency next month.
      - Klathmon 9y ago
        And I could make thousands of kinds of physical coins next month, it doesn't mean physical money is worth less... I feel like I'm crazy here, how is the ability to make a new "thing" make something else less valuable? A toyota isn't worth less because I can make a new car company next week, Facebook isn't worth less because I could make a clone of it tomorrow, A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow... What am I missing? Why would the ability to make something new affect the rarity of an unrelated "thing"? Why isn't the value determined by what that "thing" does, how it does it, the number of people that believe in it's ability to do the thing it says it will do, and more? Why do you think it matters that someone can create a new currency?
        UncleMeat 9y ago
        There are two kinds of rarity. There is rarity of the thing itself and rarity of things like the thing. Consider an extremely rare thing used for some industrial application. It is very expensive because there is little supply. But if there is another thing that functions just as well then the price of the first thing drops, even though the supply of that thing is fixed. The only differences between bitcoin and bitcoin2 after a fork are the miners. If the number of miners is sufficiently large to be confident in transactions, original bitcoins and bitcoin2s are just as good at being used for whatever. This is even worse if bitcoin2 has some new desirable properties that bitcoin does not have.
- fwdpropaganda 9y ago
  Yes. But anyone can create a blockchain exactly like that of Bitcoin and call it Bitcoin-B, Bitcoin-C etc, etc.
  - monocasa 9y ago
    Bitcoin Cash...
- dithering 9y ago
  Algorithm is defined by consensus. Changing the algorithm just means gaining consensus amongst the miners. "Would you like to continue printing free money?" sounds like an easy sell to me.
  - IkmoIkmo 9y ago
    I doubt it's that easy to gain consensus on that. Half a decade of billion-dollar incentives have already provided a real-life experiment in which this issue didn't come up, although it may in the future. The reasons are that bitcoin's value is derived from its scarcity and decentralised properties. If you completely break that philosophy, it's sorta-kinda just a digital ledger controlled by a small group of powerful companies like any other system you could think of. So you'd momentarily print money that'd soon lose much of its value. And you'd be doing it on specialised mining equipment which are purpose-built by all the big mining companies, that can just has a single algorithm that bitcoin uses (and is useless for mining many other coins), which then also all lose their value. Again, it could happen, but the incentive structure certainly isn't designed for this to occur naturally. Even a small printing of money would be immediately noticed. Rather, the rarity to me stems from the fact that indeed, anyone can run a blockchain. It's just software on 1 or more computers. I can run 100 blockchain clones on my computer with trillions of tokens. And bitcoin tokens themselves can be split to ridiculous numbers, as you can send 0.000001 bitcoin. That fraction of a bitocin is a token that can carry information and put it on the blockchain, and you can agree that this information represents any asset. As such, there's no scarcity of databases (blockchains) or tokens (bitcoin fractions), and thereby it isn't 'rare'. Of course, most blockchains have no security strength because there's not enough value to incentivise a large group of independent miners like with bitcoin. But the idea that you can clone/improve bitcoin, run your own and create a healthy market is reality, and it means that ultimately there's no real rarity for bitcoin usecases that couldn't happen on another chain that's supported by users.
  - Robotbeat 9y ago
    You know what? That's a good point, and a problem with the Bitcoin end game. As Bitcoin mining gets harder and more of the value ends up entirely in the already-mined BTC, those with all this mining infrastructure are going to realize they can maximize this otherwise-stranded-asset by monopolizing mining power and developing a consensus to allow them to continue printing money. "But transaction fees!" Okay, but if transaction fees go way up, that will encourage people to move away from BTC anyway or find some other way to reduce their exposure to transaction fees. Once mining draws to a close, miners will consolidate. Just like in every other industry after a bust. Cryptocurrencies are still, of course, very interesting and powerful.
- deleted 9y ago
  [deleted]
- cm2187 9y ago
  The algorithm is just a convention. The algorithm can be easily forked or modified by law / regulation / consensus among a few key market participants (mostly large miners). Also Bitcoin is just one blockchain. Even with the same algorithm I can create an infinity of other bitcoin blockchains. Why would one have more value than the others? It's like if you generated an RSA key and then said, this RSA key is special, it has lots of value, you can't replicate it because you don't have the private key. No one else can recreate this key, it is enforced by cryptography. Well yes. But it's just a key. I can create a million others with an average laptop.
edem 9y ago
What is the problem with Tether? Do you refer to USDT?
- ac29 9y ago
  Read some of the posts here: https://medium.com/@bitfinexed/ https://medium.com/@bitfinexed/
bogomipz 9y ago
>"- not rare" Its not a commodity it's a currency. Why does it need to be "rare"? The US dollar is also not backed by anything "rare" and hasn't been since Nixon abandoned the gold standard in 1973. >"didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000" You realize this is the exact reason it was created right? That's the whole point. It's not coincidence that bitcoin was released on the heels of the 2008 financial crisis.
- apcragg 9y ago
  The dollar is essentially backed by oil and the fact that it's needed to trade with the largest economy in the world, not to mention the country with the largest military.
  - em3rgent0rdr 9y ago
    Sure those things help give value to the dollar by increasing its demand. Whether of not this constitutes "backing" depends on the definition of backing. There is no underlying asset that directly backs the dollar, which is the whole point of fiat currencies. The fundamental source of demand is the requirement that US Taxes must be paid in dollars. The utility of using dollars to trade with the US economy is simply a consequence of this fact.
    - em3rgent0rdr 9y ago
      If such a loose definition of "backing" is going to be used, then one could also say that bitcoin is "essentially backed" by its utility as a medium of exchange. That utility is a consequence of: (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). (2) The ease of making a transaction.* *Aside: since the bitcoin transaction volume currently exceeds the limits it was specifically designed to handle, that means that transactions currently either cost a lot of money or take a long time to be confirmed. But those are issues that could be resolved either with lightning network (or other off-chain solutions), side-chains, forks (soft and hard), or even by a whole new variation of the blockchain concept. Although bitcoin transactions admittedly currently aren't cheap or fast doesn't mean blockchain necessarily will always be like that.
gruez 9y ago
>- didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000 in other words, the fed isn't going to bail you out?

tanilama 9y ago

> not rare Interesting. Don't really know how crytos work, but isn't rarity is guaranteed by the BitCoin algorithm itself?

castis 9y ago
In what context are you using rarity?
carry_bit 9y ago
Bitcoin itself is rare, but cryptocurrency as a whole is not because it's easy to create another blockchain.
- aviv 9y ago
  This right there is exactly why long term it's doomed and cannot be a reliable store of value. You don't see banks and random geeks inventing new precious metals out of thin air. So you have gold, silver, platinum and palladium and that's about it as far as store of values are concerned.
  - stinkytaco 9y ago
    I mean, I suppose anyone can create a currency out of thin air. In fact, I'd wager there's hundreds of currencies, as nearly every sovereign state has one. It's not meant to be a store of value, which is why this bubble will burst, but that doesn't mean it's doomed. It has the characteristics of a currency: 1. scarce. 2. useful.
    - vec 9y ago
      But not 3. fast and easy to transfer ownership of or 4. stable in value over time. Plenty of things (houses, human toes, pre-release copies of films, etc.) Are both scarce and useful without also being good candidates for a medium of exchange.
      - stinkytaco 9y ago
        Fair enough, but Bitcoin certainly can be either of those things, even if it's not right now. History shows us any currency can have those problems. Inflation can become so high that as a medium of exchange it's pointless. It can become so unstable in value that people use something else. Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
        vec 9y ago
        Paying for a $5 cup of coffee with a debt card takes about 10 seconds and invites about $0.10 in transaction fees. Paying in physical currency is even faster and costs approximately $0. According to https://bitcoinexchangerate.org/fees https://bitcoinexchangerate.org/fees, getting a single transaction committed within the next hour costs just under $50. I've heard plenty of ideas to make the Bitcoin network a little cheaper or a little faster. Occasionally both! I've yet to hear a good theory for how the Bitcoin network can ever get both 500x cheaper and 500x faster.
  - sowbug 9y ago
    Same is true about Facebook. Someone could clone the features and create facebook2.com, and everyone would flock to it. That's why Facebook stock is a Ponzi scheme. Anyone who thinks Facebook has a value above $0 is insane.
    - aviv 9y ago
      Nope. People use Facebook. People simply don't use Bitcoin for payments or any other use that benefits from its "network effect".
      - Klathmon 9y ago
        Look, i'm not convinced that bitcoin is worth the price it's at right even right now either, but that's just not true. The network effect is extremely strong in the cryptocurrency space. Everything in the cryptocurrency space supports bitcoin, and fractions of everything support anything else. Payment processors, exchanges, hardware wallets, software wallets, secure storage and backup systems, etc... All of it is focused on bitcoin first, and adds others later (if ever). If you want to buy or sell bitcoin, you've got tons of repudible options, you want to buy or sell monero? You've got 1/3 of the options, and most of them are small and shady or don't deal with fiat currencies in any way. If that's not a network effect, I don't know what is.
        aviv 9y ago
        One could argue the exact opposite - that all the infrastructure around Bitcoin makes it an inferior store of value. For example, the fact that Litecoin does not (yet) have ETFs and other financial vehicles that can be used to manipulate its price without actually dealing with "physical" Litecoins, makes it a more stable store of value.
      - sowbug 9y ago
        Speak for yourself. We do. It took a while for 28.8K modems to catch up with bandwidth needs, and that's part of the reason people thought the internet sucked and was a joke compared to all its promises. I think even today people snort about pets.com as the poster child of the dot-com boom. Then their Amazon Pantry order arrives, which they consume without irony.
  - spraak 9y ago
    Those metals are only valuable because because people agree that they are. The price of gold etc. is just as inherently meaningless as BTC etc.
mutteraloo 9y ago
there are hundreds of crytocurrencies. what makes one of them rare?
- Klathmon 9y ago
  There are hundreds of elements, what makes some of them rare?
  - mutteraloo 9y ago
    there could be thousands of crytocurrency next month.
    - Klathmon 9y ago
      And I could make thousands of kinds of physical coins next month, it doesn't mean physical money is worth less... I feel like I'm crazy here, how is the ability to make a new "thing" make something else less valuable? A toyota isn't worth less because I can make a new car company next week, Facebook isn't worth less because I could make a clone of it tomorrow, A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow... What am I missing? Why would the ability to make something new affect the rarity of an unrelated "thing"? Why isn't the value determined by what that "thing" does, how it does it, the number of people that believe in it's ability to do the thing it says it will do, and more? Why do you think it matters that someone can create a new currency?
      - UncleMeat 9y ago
        There are two kinds of rarity. There is rarity of the thing itself and rarity of things like the thing. Consider an extremely rare thing used for some industrial application. It is very expensive because there is little supply. But if there is another thing that functions just as well then the price of the first thing drops, even though the supply of that thing is fixed. The only differences between bitcoin and bitcoin2 after a fork are the miners. If the number of miners is sufficiently large to be confident in transactions, original bitcoins and bitcoin2s are just as good at being used for whatever. This is even worse if bitcoin2 has some new desirable properties that bitcoin does not have.
fwdpropaganda 9y ago
Yes. But anyone can create a blockchain exactly like that of Bitcoin and call it Bitcoin-B, Bitcoin-C etc, etc.
- monocasa 9y ago
  Bitcoin Cash...
dithering 9y ago
Algorithm is defined by consensus. Changing the algorithm just means gaining consensus amongst the miners. "Would you like to continue printing free money?" sounds like an easy sell to me.
- IkmoIkmo 9y ago
  I doubt it's that easy to gain consensus on that. Half a decade of billion-dollar incentives have already provided a real-life experiment in which this issue didn't come up, although it may in the future. The reasons are that bitcoin's value is derived from its scarcity and decentralised properties. If you completely break that philosophy, it's sorta-kinda just a digital ledger controlled by a small group of powerful companies like any other system you could think of. So you'd momentarily print money that'd soon lose much of its value. And you'd be doing it on specialised mining equipment which are purpose-built by all the big mining companies, that can just has a single algorithm that bitcoin uses (and is useless for mining many other coins), which then also all lose their value. Again, it could happen, but the incentive structure certainly isn't designed for this to occur naturally. Even a small printing of money would be immediately noticed. Rather, the rarity to me stems from the fact that indeed, anyone can run a blockchain. It's just software on 1 or more computers. I can run 100 blockchain clones on my computer with trillions of tokens. And bitcoin tokens themselves can be split to ridiculous numbers, as you can send 0.000001 bitcoin. That fraction of a bitocin is a token that can carry information and put it on the blockchain, and you can agree that this information represents any asset. As such, there's no scarcity of databases (blockchains) or tokens (bitcoin fractions), and thereby it isn't 'rare'. Of course, most blockchains have no security strength because there's not enough value to incentivise a large group of independent miners like with bitcoin. But the idea that you can clone/improve bitcoin, run your own and create a healthy market is reality, and it means that ultimately there's no real rarity for bitcoin usecases that couldn't happen on another chain that's supported by users.
- Robotbeat 9y ago
  You know what? That's a good point, and a problem with the Bitcoin end game. As Bitcoin mining gets harder and more of the value ends up entirely in the already-mined BTC, those with all this mining infrastructure are going to realize they can maximize this otherwise-stranded-asset by monopolizing mining power and developing a consensus to allow them to continue printing money. "But transaction fees!" Okay, but if transaction fees go way up, that will encourage people to move away from BTC anyway or find some other way to reduce their exposure to transaction fees. Once mining draws to a close, miners will consolidate. Just like in every other industry after a bust. Cryptocurrencies are still, of course, very interesting and powerful.
deleted 9y ago
[deleted]
cm2187 9y ago
The algorithm is just a convention. The algorithm can be easily forked or modified by law / regulation / consensus among a few key market participants (mostly large miners). Also Bitcoin is just one blockchain. Even with the same algorithm I can create an infinity of other bitcoin blockchains. Why would one have more value than the others? It's like if you generated an RSA key and then said, this RSA key is special, it has lots of value, you can't replicate it because you don't have the private key. No one else can recreate this key, it is enforced by cryptography. Well yes. But it's just a key. I can create a million others with an average laptop.

edem 9y ago

What is the problem with Tether? Do you refer to USDT?

ac29 9y ago
Read some of the posts here: https://medium.com/@bitfinexed/ https://medium.com/@bitfinexed/

bogomipz 9y ago

>"- not rare" Its not a commodity it's a currency. Why does it need to be "rare"? The US dollar is also not backed by anything "rare" and hasn't been since Nixon abandoned the gold standard in 1973. >"didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000" You realize this is the exact reason it was created right? That's the whole point. It's not coincidence that bitcoin was released on the heels of the 2008 financial crisis.

apcragg 9y ago
The dollar is essentially backed by oil and the fact that it's needed to trade with the largest economy in the world, not to mention the country with the largest military.
- em3rgent0rdr 9y ago
  Sure those things help give value to the dollar by increasing its demand. Whether of not this constitutes "backing" depends on the definition of backing. There is no underlying asset that directly backs the dollar, which is the whole point of fiat currencies. The fundamental source of demand is the requirement that US Taxes must be paid in dollars. The utility of using dollars to trade with the US economy is simply a consequence of this fact.
  - em3rgent0rdr 9y ago
    If such a loose definition of "backing" is going to be used, then one could also say that bitcoin is "essentially backed" by its utility as a medium of exchange. That utility is a consequence of: (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). (2) The ease of making a transaction.* *Aside: since the bitcoin transaction volume currently exceeds the limits it was specifically designed to handle, that means that transactions currently either cost a lot of money or take a long time to be confirmed. But those are issues that could be resolved either with lightning network (or other off-chain solutions), side-chains, forks (soft and hard), or even by a whole new variation of the blockchain concept. Although bitcoin transactions admittedly currently aren't cheap or fast doesn't mean blockchain necessarily will always be like that.

gruez 9y ago

>- didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000 in other words, the fed isn't going to bail you out?