5 ms·

Why Bitcoin will fail

38 points by mihvoi 9y ago

julvo 9y ago
You are talking about a short time horizon. Yes, bitcoin will possibly crash, but that is when a large part of the speculative play money will leave the eco system. Bitcoin could still gain value afterwards if there will be an increasing utility.
- vinchuco 9y ago
  you mean like dogecoin ?
overcast 9y ago
It's already failed. It's gone from the currency of the future, to a store of a value, to just a pure speculative commodity. Nothing more or less. Use it to make money, and get out.
- agumonkey 9y ago
  maybe local blockchain cryptocurrencies may stay useful without turning into gambling..
- nske 9y ago
  No, you see that's not Bitcoin. That's how different numbers of people perceive or use Bitcoin at different times. Bitcoin is ever adjusting and changing, often making short-term sacrifices and failing to meet certain expectations that people have at the time. It would really fail if a fundamental technical flaw was discovered or if it hit a brick wall where realistic solutions to current problems stopped being actively worked on. So far that hasn't been the case. So what matters is the technical side, things that are actively being developed, such as the Lightning network, and that at least some entrepreneurs understand this technical side sufficiently enough to build services that translate its fundamental value into things that people can more easily understand and appreciate. Much like the internet in early days. Someone could go back 20 years and say "where are all these revolutionary things we keep reading about that would be possible? Wild speculations, Internet has failed." Of course Bitcoin might fail, but I believe something like Bitcoin will succeed -and Bitcoin itself seems like the best candidate at the moment.
chamza 9y ago
Good read. There are more mature cryptocurrencies emerging that are based on 'loans' as the author describes. The Maker Project's stable coin 'Dai' is an example, which is only created by collateralized debt positions. However, the debt position is currently based on ETH, which is 'backed' by speculation.
sanbor 9y ago
In Poloniex you can lend money. Would that count as loans? There are pre-mined cryptocurrencies like Ripple and Stellar that doesn't need proof of work to solve the double spending problem, and thus doesn't need lots of electricity to work.
djsumdog 9y ago
The thing about loans, that is borrowed capital that you use to try and create more capital, is that there isn't enough capital to go around. Capitalism does depend on a certain percentages of businesses failing, and that debt being written off. You also can't make loans with BTC because debt needs to be enforceable. There must be violence behind debt. In the past that meant someone turns you into a slave or breaks your legs. Today the violence has been reduced (you get bad credit score and debt collectors keep calling), but it's still there. States have to have a monopoly on violence to enforce debt. I don't really agree with where this guy is going, because the entire way loans are used to generate fiat currency isn't really sustainable. David Graeber has talked a lot about every great civilization has needed some form of debt relief at some point, either when a new leader comes in or when the civilization collapses. People in the ancient world knew the empires they lived under would eventually end. Today in many high income countries, most people cannot see the end.
- deleted 9y ago
  [deleted]
- kintamanimatt 9y ago
  Debt collectors calling and having your credit score dinged isn’t the definition of violence.
  - SerLava 9y ago
    I mean, ultimately if you try to keep your stuff, people will break into your house, beat you, throw you into a cage and lock you in close proximity with rapists. If you try to keep your stuff and resist them, they will blow your brains out.
- 0x445442 9y ago
  Yeah one has to buy into the premise that debt based money is a good thing but I reject that premise. At least each BTC represents a certain amount of work (in the form of electricity expended) that's already been performed. Debt is great as long as there is enough work to be performed to square the accounts.
matthewbauer 9y ago
Has anyone tried to “peg” a cryptocurrency to USD? That seems like an ideal thing to have... Somehow change reward size based on exchange rate. That is increase supply when above 1:1 and decrease when below.
- yathern 9y ago
  Yes, there is Tether - which is pegged to USD - and somewhat controversial for reasons I don't fully understand.
  - ascom 9y ago
    The controversy is that it is unclear whether every Tether is backed by real USD. See: Tether's TOS, Bitfinex's banking issues, etc.
    - mercer 9y ago
      I found this article on the matter very interesting: https://medium.com/@untetheredbtc/how-the-tether-usdt-distribution-system-works-84a5c673bec0 https://medium.com/@untetheredbtc/how-the-tether-usdt-distri...
- rewtraw 9y ago
  MakerDAO just launched its stablecoin, DAI. It maintains stability by a complex system of smart contracts and CDPs. The problem is much more difficult than simply increasing/decreasing supply. https://makerdao.com/ https://makerdao.com/
  - matthewbauer 9y ago
    Looks interesting! The trusted oracle part seems concerning as a single point of failure but I suppose it’s necessary.
    - berberous 9y ago
      There's also BaseCoin, another attempt at a "stable coin" with prominent investors: https://www.coindesk.com/basecoin-revealed-a16z-metastable-seek-crypto-holy-grail-stable-token/ https://www.coindesk.com/basecoin-revealed-a16z-metastable-s...
noncoml 9y ago
Bitcoin looks like a ponzi scheme to me as there is no value to a Bitcoin other than that of itself. Currencies used to represent the gold stored by each government. These days currency represent the trust that the system that uses the currency, will trade goods for it. However we had to go through the gold equivalent to get here. Bitcoin doesn’t represent anything and has nothing to back it up.
- proofofanalysis 9y ago
  Bitcoin's value is connected to the costs to continuously mine it and consequently keep the blockchain intact and secure. These costs include electricity, mining equipment, personnel, and warehousing. As with normal equity valuation, these costs would be transparent, allowing for valuation to take place. Since Bitcoin is decentralized and its "employees", or miners, are disparate; costs are not known. This information asymmetry is one cause of Bitcoin's unbounded price discovery.
  - noncoml 9y ago
    What value do they create? Sure they burn electricity and energy but they don’t create any value other than the bitcoin value itself.
    - proofofanalysis 9y ago
      The incorruptibility of the ledger is the value.
      - noncoml 9y ago
        > The incorruptibility of the ledger is the value. It cannot feed me, it cannot protect me from the elements, I cannot grow food on it and is not a tool to help me create something desirable by the others. Hence it has no value.
        proofofanalysis 9y ago
neals 9y ago
I've been putting up over 200 of my btc in various loans for over 15 months now. I do this on Bitfinex. It's a double blind loan and can only be used by the receiving party for margin trading. That party has to have maintain a certain reserve to be able to allow an automated stop-loss. This system is fully automated and I've gotten some interesting rates on btc that would otherwise just have been idle.
- MuffinFlavored 9y ago
  200 BTC * $15k/BTC = $3,000,000 You have $3m of BTC?
  - loblollyboy 9y ago
    200 of
cechjozef36 9y ago
"IG Weekly INVESTMENT TRADING PROGRAM" After 7 days (a week) On investing: $100 you earn back $900 $200 you earn back $1,900 $300 you earn back $2,900 $400 you earn back $3,900 $500 you earn back $4,900 $600 you earn back $5,900 (......more... & .....more......) IG has been a worldwide RATED investment trading company to have succeeded over the years in the following areas : 1)Making money from home 2)Making money online 3)Investments & business starters 4)Binary option trading and many More. "IG" in affiliations with other top "companies" provides your invested/startup capital for trusted companies to trade and produce good profits back to all investors in a week, which is 100% risks free. All maximum returns are paid to you on the 8th day after your investment is confirmed by any convenient method Such as Western Union, Money Gram, Paypal, transfers to a country Bank. To know More and get started on this, contact, Email: iginvestorsguides@gmail.com

38 points by mihvoi 9y ago

You are talking about a short time horizon. Yes, bitcoin will possibly crash, but that is when a large part of the speculative play money will leave the eco system. Bitcoin could still gain value afterwards if there will be an increasing utility.

vinchuco 9y ago
you mean like dogecoin ?

overcast 9y ago

It's already failed. It's gone from the currency of the future, to a store of a value, to just a pure speculative commodity. Nothing more or less. Use it to make money, and get out.

agumonkey 9y ago
maybe local blockchain cryptocurrencies may stay useful without turning into gambling..
nske 9y ago
No, you see that's not Bitcoin. That's how different numbers of people perceive or use Bitcoin at different times. Bitcoin is ever adjusting and changing, often making short-term sacrifices and failing to meet certain expectations that people have at the time. It would really fail if a fundamental technical flaw was discovered or if it hit a brick wall where realistic solutions to current problems stopped being actively worked on. So far that hasn't been the case. So what matters is the technical side, things that are actively being developed, such as the Lightning network, and that at least some entrepreneurs understand this technical side sufficiently enough to build services that translate its fundamental value into things that people can more easily understand and appreciate. Much like the internet in early days. Someone could go back 20 years and say "where are all these revolutionary things we keep reading about that would be possible? Wild speculations, Internet has failed." Of course Bitcoin might fail, but I believe something like Bitcoin will succeed -and Bitcoin itself seems like the best candidate at the moment.

chamza 9y ago

Good read. There are more mature cryptocurrencies emerging that are based on 'loans' as the author describes. The Maker Project's stable coin 'Dai' is an example, which is only created by collateralized debt positions. However, the debt position is currently based on ETH, which is 'backed' by speculation.

sanbor 9y ago

In Poloniex you can lend money. Would that count as loans? There are pre-mined cryptocurrencies like Ripple and Stellar that doesn't need proof of work to solve the double spending problem, and thus doesn't need lots of electricity to work.

djsumdog 9y ago

The thing about loans, that is borrowed capital that you use to try and create more capital, is that there isn't enough capital to go around. Capitalism does depend on a certain percentages of businesses failing, and that debt being written off. You also can't make loans with BTC because debt needs to be enforceable. There must be violence behind debt. In the past that meant someone turns you into a slave or breaks your legs. Today the violence has been reduced (you get bad credit score and debt collectors keep calling), but it's still there. States have to have a monopoly on violence to enforce debt. I don't really agree with where this guy is going, because the entire way loans are used to generate fiat currency isn't really sustainable. David Graeber has talked a lot about every great civilization has needed some form of debt relief at some point, either when a new leader comes in or when the civilization collapses. People in the ancient world knew the empires they lived under would eventually end. Today in many high income countries, most people cannot see the end.

deleted 9y ago
[deleted]
kintamanimatt 9y ago
Debt collectors calling and having your credit score dinged isn’t the definition of violence.
- SerLava 9y ago
  I mean, ultimately if you try to keep your stuff, people will break into your house, beat you, throw you into a cage and lock you in close proximity with rapists. If you try to keep your stuff and resist them, they will blow your brains out.
0x445442 9y ago
Yeah one has to buy into the premise that debt based money is a good thing but I reject that premise. At least each BTC represents a certain amount of work (in the form of electricity expended) that's already been performed. Debt is great as long as there is enough work to be performed to square the accounts.

matthewbauer 9y ago

Has anyone tried to “peg” a cryptocurrency to USD? That seems like an ideal thing to have... Somehow change reward size based on exchange rate. That is increase supply when above 1:1 and decrease when below.

yathern 9y ago
Yes, there is Tether - which is pegged to USD - and somewhat controversial for reasons I don't fully understand.
- ascom 9y ago
  The controversy is that it is unclear whether every Tether is backed by real USD. See: Tether's TOS, Bitfinex's banking issues, etc.
  - mercer 9y ago
    I found this article on the matter very interesting: https://medium.com/@untetheredbtc/how-the-tether-usdt-distribution-system-works-84a5c673bec0 https://medium.com/@untetheredbtc/how-the-tether-usdt-distri...
rewtraw 9y ago
MakerDAO just launched its stablecoin, DAI. It maintains stability by a complex system of smart contracts and CDPs. The problem is much more difficult than simply increasing/decreasing supply. https://makerdao.com/ https://makerdao.com/
- matthewbauer 9y ago
  Looks interesting! The trusted oracle part seems concerning as a single point of failure but I suppose it’s necessary.
  - berberous 9y ago
    There's also BaseCoin, another attempt at a "stable coin" with prominent investors: https://www.coindesk.com/basecoin-revealed-a16z-metastable-seek-crypto-holy-grail-stable-token/ https://www.coindesk.com/basecoin-revealed-a16z-metastable-s...

noncoml 9y ago

Bitcoin looks like a ponzi scheme to me as there is no value to a Bitcoin other than that of itself. Currencies used to represent the gold stored by each government. These days currency represent the trust that the system that uses the currency, will trade goods for it. However we had to go through the gold equivalent to get here. Bitcoin doesn’t represent anything and has nothing to back it up.

proofofanalysis 9y ago
Bitcoin's value is connected to the costs to continuously mine it and consequently keep the blockchain intact and secure. These costs include electricity, mining equipment, personnel, and warehousing. As with normal equity valuation, these costs would be transparent, allowing for valuation to take place. Since Bitcoin is decentralized and its "employees", or miners, are disparate; costs are not known. This information asymmetry is one cause of Bitcoin's unbounded price discovery.
- noncoml 9y ago
  What value do they create? Sure they burn electricity and energy but they don’t create any value other than the bitcoin value itself.
  - proofofanalysis 9y ago
    The incorruptibility of the ledger is the value.
    - noncoml 9y ago
      > The incorruptibility of the ledger is the value. It cannot feed me, it cannot protect me from the elements, I cannot grow food on it and is not a tool to help me create something desirable by the others. Hence it has no value.
      - proofofanalysis 9y ago

neals 9y ago

I've been putting up over 200 of my btc in various loans for over 15 months now. I do this on Bitfinex. It's a double blind loan and can only be used by the receiving party for margin trading. That party has to have maintain a certain reserve to be able to allow an automated stop-loss. This system is fully automated and I've gotten some interesting rates on btc that would otherwise just have been idle.

MuffinFlavored 9y ago
200 BTC * $15k/BTC = $3,000,000 You have $3m of BTC?
- loblollyboy 9y ago
  200 of

cechjozef36 9y ago

"IG Weekly INVESTMENT TRADING PROGRAM" After 7 days (a week) On investing: $100 you earn back $900 $200 you earn back $1,900 $300 you earn back $2,900 $400 you earn back $3,900 $500 you earn back $4,900 $600 you earn back $5,900 (......more... & .....more......) IG has been a worldwide RATED investment trading company to have succeeded over the years in the following areas : 1)Making money from home 2)Making money online 3)Investments & business starters 4)Binary option trading and many More. "IG" in affiliations with other top "companies" provides your invested/startup capital for trusted companies to trade and produce good profits back to all investors in a week, which is 100% risks free. All maximum returns are paid to you on the 8th day after your investment is confirmed by any convenient method Such as Western Union, Money Gram, Paypal, transfers to a country Bank. To know More and get started on this, contact, Email: iginvestorsguides@gmail.com