5 ms·

> It remains an open question whether even much, much lower fees would be viable in the long run. The problem is not fees rather usability. If today I speak to

> It remains an open question whether even much, much lower fees would be viable in the long run. The problem is not fees rather usability. If today I speak to a layman about bitcoin he is confused. It doesn't help that people start talking about hardware wallets, multisigs, Segwit etc. Most of those guys find that using cryptocurrency is a pain and want to stick to real money. Yes, it doesn't stop them from speculating by putting some money in these coins. One thing has to be noted, while there is a constant parallel drawn with dot com people forget that there was at least 7-8 years head start for a layman to understand "internet". There has been no run up here, things have just exploded.

acdha 9y ago
> One thing has to be noted, while there is a constant parallel drawn with dot com people forget that there was at least 7-8 years head start for a layman to understand "internet". Bitcoin has been around for 8 years so it's not like there hasn't been enough time. The difference is that the internet was easy to explain to people because it had a number of immediately useful applications: you could almost immediately send email, read the news or stream audio content (by 1995), lookup stock information and place trades, download software, buy things, chat, find a date or adult content, etc. — in most cases things people had been able to do starting at some point in the late 1970s using online services like CompuServ or bulletin boards, only easier and cheaper. Most of these were also easy to explain because they had familiar analogues: buying a book or CD online in the early 90s was immediately familiar — it's like buying from a catalog except that you don't have the delays receiving the catalog and mailing or phoning in your order. The difference is that Bitcoin doesn't solve a problem which the average person has. To the average person it sounds like using a credit card except that most places don't take it, the fees are orders of magnitude higher, and there's no fraud protection. How many people have a legal reason to prefer it other than paying ransomware or speculating on its price?
- viggity 9y ago
  Doesn't solve a problem that average american has right now. The key feature of crypto currency (to me) has always been that it can't be easily manipulated by a government. Specifically with bitcoin, were it not so expensive and have such high fees, it could be of real use in countries with hyperinflation and black markets (Venezuela, Zimbabwe, etc). Hopefully bitcoin and the myriad of alt-coins can fill the gap. Once it takes a foothold in a failed state, I can only imagine it spreading. I hope that hyperinflation and/or economic collapse don't come to America/Western Europe. But i'm not so naive to think that it can't.
  - api 9y ago
    But it can absolutely be easily manipulated by a government. Governments have the resources to pump/dump coins, buy huge amounts of mining hardware, etc. Even a smaller nation state could, if it wanted to waste the money, launch a 51% attack against Bitcoin or any other cryptocurrency by just buying enough mining hardware. Beyond direct manipulation you have the ability of competent intelligence agencies to execute mass cyber attacks. "Code as law" is pretty dangerous when code is so vulnerable. Other well-heeled organizations can do these things as well: corporations, hedge funds, organized crime, ... People seem to think that currency manipulation and other financial games were invented in the 20th century with modern fiat currency. The price of gold absolutely was manipulated in the past in a variety of ways: secret hoarding, spoofing reserves, false transactions, etc. Every currency or medium of exchange has been manipulated. In many ways central banking and fiat currency was invented to defend against many types of market manipulation by non-state or foreign state actors (as well as against undesirable emergent behaviors in markets). I once read someone talking about US vs. China trade and Chinese currency manipulation state that for the US to abolish the Fed would amount to "unilateral disarmament." We would suddenly have no coherent way to defend ourselves against other nations armed with the ability to manipulate their own currencies (and ours!).
    - sl33k_ 9y ago
      Actually, no. Current estimates rate the cost of a 51% attack at approximatly 4.656.671.184$ for hardware only which is not a sum which even large countries will have easy (and certainly not unnoticed) access to. This estimate is based on the current hash rate at 14.975.580.960 GHash/s and the fastest mining hardware available which is the AntMiner S5+ at ~2300$ with a hashrate of 7.722 GHash/s. That means you'll need about ~1.939.340 AntMiners which will consume 3436W each. At an electricty cost of 0.05ct/kwh (this is china, US is at about ~0.20ct/kwh) this gives you an additional cost of ~7.996.185$ per day not factoring in any labor/location costs and most notably no cooling costs which will be high with this kind of high performance asic. This estimate only holds true though if you buy every bit of hardware yourself, in reality its probably more practical to simple coerce big mining pool owners to work for you, but thats another problem :) edit: relevant xkcd: https://xkcd.com/538/ https://xkcd.com/538/
- oneeyedpigeon 9y ago
  The potential use really clicked with me recently when I was browsing someone's site and came across a linked bitcoin address. One tap/click on that link followed by an amount and another button press, and I could pay that person money, directly: that's a very low barrier to payments. And with the same wallet, I can also scan a QR code on someone's phone and pay them money. I think these benefits are tangible, but whilst the current block chain mechanism might demonstrate the utility, what we really need are the fee/transaction time problem to be resolved. I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo.
  - acdha 9y ago
    Resolving the fee/latency issues seems like a hugely important problem since networks like that: that's closer to the convenience offered by credit cards with e.g. Square/Venmo/etc. or Apple Pay for the web but the main thing is that it presupposes people have accounts, which really means giving small businesses a reason to switch. If the fees could be lower than what Visa et al. are willing to offer, that could happen but otherwise it seems like a hard sell. > I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo. The hard part is trying to do it without central authorities and pseudo-anonymity. Using PKI makes that a much easier problem.
adventured 9y ago
I fully agree re usability. It only took about five years, from early 1996 to 2000, for most lay persons in the US to grasp the value of the Internet and begin routinely using it at home or work. Internet usage in the US went from ~10% of adults to over 50% of adults in that time. The browser largely extracted away the need for a person to understand much of anything about how it worked. Today most people do not understand very much about the Internet. They know how to use it because browsers are simple and easy to use. Most likely the lay person will never know anything substantial about how crypto coins actually work. The complexity will be extracted away by services and that'll be that. Bitcoin has had a several year run up at this point, just as the dotcom era did starting in ~1995. Bitcoin was showing up on national news sources in the US four to five years ago when it first climbed above $100 and then again (at a far more dramatic level) as it climbed toward $1k. I was discussing it with lay persons in 2012 and 2013, they understood it then about as well as they do now, which is to say not at all (imo). My take is that they end up picturing it vaguely as some kind of digital token, while largely not understanding any of the underlying technology. I expect that to mostly continue to be the case.
- deleted 9y ago
  [deleted]
prostoalex 9y ago
It did not seem that the road to adoption was as obstacle-heavy, when Silk Road was around, with its customer, I'm guessing, coming mainly from the mainstream https://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Sales https://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Sales "From February 6, 2011 to July 23, 2013 there were approximately 1,229,465 transactions completed on the site. The total revenue generated from these sales was 9,519,664 Bitcoins, and the total commissions collected by Silk Road from the sales amounted to 614,305 Bitcoins. These figures are equivalent to roughly $1.2 billion in revenue and $79.8 million in commissions, at current Bitcoin exchange rates..." Granted, the number of buyers was at somewhat measly 146,946. The "store of value" and "investment opportunity" spiel only started when transaction fees became too onerous for everyday usage.
Goladus 9y ago
Frankly, I was more optimistic about Bitcoin before I knew the technical details. What I heard back in 2009 was that it was a way to trade money using cryptographic hashes without a central authority. I didn't really think about it more deeply than that. I didn't bother setting up a wallet or anything like that as I didn't have any extra cash to waste on new technology. But I kept a halfhearted eye on it as an alternate way of making payments over the internet. When I finally went and looked at the mechanisms and the algorithm I thought "wow this is a bad joke." It's inherently deflationary and will never be an accepted currency outside a narrow niche of (mostly illicit) users. It's price relative to USD will always be volatile due to its astronomically high gini coefficient, and anyone not on the high end of that inverse exponential distribution will _never_ prefer bitcoin over USD. BTC printing mining will eventually cease entirely, meaning the transactions will require transaction fees that scale up depending on the size of the network, which will further discourage adoption until ultimately the whole scheme collapses (the founders having cashed out a long time ago). Fees are Bitcoin's problem now, and will likely be its biggest problem (along with continued volatility) until the network ceases to function entirely. https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html https://bitinfocharts.com/comparison/bitcoin-mining_profitab... There are two interesting points. First, is that early mining was exponentially more lucrative than later mining. Second, is that somewhere around 2014, mining profitability seriously plummeted (this can be seen more easily in logarithmic view). Before 2014, the lowest profitability rate was somewhere around $200/day for 1 THash/s. During 2014, the profitability plummeted and since then has not gone above $4/day per 1THash/s. There was a slight bump in 2017, probably due to the speculative bubble, but profitability still did not go above $3/day. The point is: everything you might think you know about bitcoin's viability based on how it worked from 2009-2014 doesn't apply from then on. The scarcity and hype led to a speculative bubble, but from my perspective it appears doomed. Whatever niche it might have had on Dark Web black markets will be replaced by some other mechanism. When speculation stops its value will plummet and no longer subsidize mining. Mining will stop, which will make the difficulty easier again, but the reward rate continues to dwindle, forcing miners to require higher transaction fees. If those transaction fees aren't enough to cover the costs of mining, then more miners will stop. And so the block chain network will erode.

acdha 9y ago

> One thing has to be noted, while there is a constant parallel drawn with dot com people forget that there was at least 7-8 years head start for a layman to understand "internet". Bitcoin has been around for 8 years so it's not like there hasn't been enough time. The difference is that the internet was easy to explain to people because it had a number of immediately useful applications: you could almost immediately send email, read the news or stream audio content (by 1995), lookup stock information and place trades, download software, buy things, chat, find a date or adult content, etc. — in most cases things people had been able to do starting at some point in the late 1970s using online services like CompuServ or bulletin boards, only easier and cheaper. Most of these were also easy to explain because they had familiar analogues: buying a book or CD online in the early 90s was immediately familiar — it's like buying from a catalog except that you don't have the delays receiving the catalog and mailing or phoning in your order. The difference is that Bitcoin doesn't solve a problem which the average person has. To the average person it sounds like using a credit card except that most places don't take it, the fees are orders of magnitude higher, and there's no fraud protection. How many people have a legal reason to prefer it other than paying ransomware or speculating on its price?

viggity 9y ago
Doesn't solve a problem that average american has right now. The key feature of crypto currency (to me) has always been that it can't be easily manipulated by a government. Specifically with bitcoin, were it not so expensive and have such high fees, it could be of real use in countries with hyperinflation and black markets (Venezuela, Zimbabwe, etc). Hopefully bitcoin and the myriad of alt-coins can fill the gap. Once it takes a foothold in a failed state, I can only imagine it spreading. I hope that hyperinflation and/or economic collapse don't come to America/Western Europe. But i'm not so naive to think that it can't.
- api 9y ago
  But it can absolutely be easily manipulated by a government. Governments have the resources to pump/dump coins, buy huge amounts of mining hardware, etc. Even a smaller nation state could, if it wanted to waste the money, launch a 51% attack against Bitcoin or any other cryptocurrency by just buying enough mining hardware. Beyond direct manipulation you have the ability of competent intelligence agencies to execute mass cyber attacks. "Code as law" is pretty dangerous when code is so vulnerable. Other well-heeled organizations can do these things as well: corporations, hedge funds, organized crime, ... People seem to think that currency manipulation and other financial games were invented in the 20th century with modern fiat currency. The price of gold absolutely was manipulated in the past in a variety of ways: secret hoarding, spoofing reserves, false transactions, etc. Every currency or medium of exchange has been manipulated. In many ways central banking and fiat currency was invented to defend against many types of market manipulation by non-state or foreign state actors (as well as against undesirable emergent behaviors in markets). I once read someone talking about US vs. China trade and Chinese currency manipulation state that for the US to abolish the Fed would amount to "unilateral disarmament." We would suddenly have no coherent way to defend ourselves against other nations armed with the ability to manipulate their own currencies (and ours!).
  - sl33k_ 9y ago
    Actually, no. Current estimates rate the cost of a 51% attack at approximatly 4.656.671.184$ for hardware only which is not a sum which even large countries will have easy (and certainly not unnoticed) access to. This estimate is based on the current hash rate at 14.975.580.960 GHash/s and the fastest mining hardware available which is the AntMiner S5+ at ~2300$ with a hashrate of 7.722 GHash/s. That means you'll need about ~1.939.340 AntMiners which will consume 3436W each. At an electricty cost of 0.05ct/kwh (this is china, US is at about ~0.20ct/kwh) this gives you an additional cost of ~7.996.185$ per day not factoring in any labor/location costs and most notably no cooling costs which will be high with this kind of high performance asic. This estimate only holds true though if you buy every bit of hardware yourself, in reality its probably more practical to simple coerce big mining pool owners to work for you, but thats another problem :) edit: relevant xkcd: https://xkcd.com/538/ https://xkcd.com/538/
oneeyedpigeon 9y ago
The potential use really clicked with me recently when I was browsing someone's site and came across a linked bitcoin address. One tap/click on that link followed by an amount and another button press, and I could pay that person money, directly: that's a very low barrier to payments. And with the same wallet, I can also scan a QR code on someone's phone and pay them money. I think these benefits are tangible, but whilst the current block chain mechanism might demonstrate the utility, what we really need are the fee/transaction time problem to be resolved. I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo.
- acdha 9y ago
  Resolving the fee/latency issues seems like a hugely important problem since networks like that: that's closer to the convenience offered by credit cards with e.g. Square/Venmo/etc. or Apple Pay for the web but the main thing is that it presupposes people have accounts, which really means giving small businesses a reason to switch. If the fees could be lower than what Visa et al. are willing to offer, that could happen but otherwise it seems like a hard sell. > I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo. The hard part is trying to do it without central authorities and pseudo-anonymity. Using PKI makes that a much easier problem.

adventured 9y ago

I fully agree re usability. It only took about five years, from early 1996 to 2000, for most lay persons in the US to grasp the value of the Internet and begin routinely using it at home or work. Internet usage in the US went from ~10% of adults to over 50% of adults in that time. The browser largely extracted away the need for a person to understand much of anything about how it worked. Today most people do not understand very much about the Internet. They know how to use it because browsers are simple and easy to use. Most likely the lay person will never know anything substantial about how crypto coins actually work. The complexity will be extracted away by services and that'll be that. Bitcoin has had a several year run up at this point, just as the dotcom era did starting in ~1995. Bitcoin was showing up on national news sources in the US four to five years ago when it first climbed above $100 and then again (at a far more dramatic level) as it climbed toward $1k. I was discussing it with lay persons in 2012 and 2013, they understood it then about as well as they do now, which is to say not at all (imo). My take is that they end up picturing it vaguely as some kind of digital token, while largely not understanding any of the underlying technology. I expect that to mostly continue to be the case.

deleted 9y ago
[deleted]

prostoalex 9y ago

It did not seem that the road to adoption was as obstacle-heavy, when Silk Road was around, with its customer, I'm guessing, coming mainly from the mainstream https://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Sales https://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Sales "From February 6, 2011 to July 23, 2013 there were approximately 1,229,465 transactions completed on the site. The total revenue generated from these sales was 9,519,664 Bitcoins, and the total commissions collected by Silk Road from the sales amounted to 614,305 Bitcoins. These figures are equivalent to roughly $1.2 billion in revenue and $79.8 million in commissions, at current Bitcoin exchange rates..." Granted, the number of buyers was at somewhat measly 146,946. The "store of value" and "investment opportunity" spiel only started when transaction fees became too onerous for everyday usage.

Goladus 9y ago

Frankly, I was more optimistic about Bitcoin before I knew the technical details. What I heard back in 2009 was that it was a way to trade money using cryptographic hashes without a central authority. I didn't really think about it more deeply than that. I didn't bother setting up a wallet or anything like that as I didn't have any extra cash to waste on new technology. But I kept a halfhearted eye on it as an alternate way of making payments over the internet. When I finally went and looked at the mechanisms and the algorithm I thought "wow this is a bad joke." It's inherently deflationary and will never be an accepted currency outside a narrow niche of (mostly illicit) users. It's price relative to USD will always be volatile due to its astronomically high gini coefficient, and anyone not on the high end of that inverse exponential distribution will _never_ prefer bitcoin over USD. BTC printing mining will eventually cease entirely, meaning the transactions will require transaction fees that scale up depending on the size of the network, which will further discourage adoption until ultimately the whole scheme collapses (the founders having cashed out a long time ago). Fees are Bitcoin's problem now, and will likely be its biggest problem (along with continued volatility) until the network ceases to function entirely. https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html https://bitinfocharts.com/comparison/bitcoin-mining_profitab... There are two interesting points. First, is that early mining was exponentially more lucrative than later mining. Second, is that somewhere around 2014, mining profitability seriously plummeted (this can be seen more easily in logarithmic view). Before 2014, the lowest profitability rate was somewhere around $200/day for 1 THash/s. During 2014, the profitability plummeted and since then has not gone above $4/day per 1THash/s. There was a slight bump in 2017, probably due to the speculative bubble, but profitability still did not go above $3/day. The point is: everything you might think you know about bitcoin's viability based on how it worked from 2009-2014 doesn't apply from then on. The scarcity and hype led to a speculative bubble, but from my perspective it appears doomed. Whatever niche it might have had on Dark Web black markets will be replaced by some other mechanism. When speculation stops its value will plummet and no longer subsidize mining. Mining will stop, which will make the difficulty easier again, but the reward rate continues to dwindle, forcing miners to require higher transaction fees. If those transaction fees aren't enough to cover the costs of mining, then more miners will stop. And so the block chain network will erode.