10 ms·

I've heard smart people say bitcoin will plummet because it has no intrinsic value. Well of course it doesn't! It's a currency. Currencies are an abstraction fo

I've heard smart people say bitcoin will plummet because it has no intrinsic value. Well of course it doesn't! It's a currency. Currencies are an abstraction for value. Sure, right now bitcoin is not a good day-to-day currency because of high transaction fees and slow verification speeds. But there are new altcoins that have solved both of these, that exist right now! The real win for cryptocurrencies, in my opinion, is that it's public-key internet money, while debit cards are private-key internet money. With debit cards, you have to give someone your private key (16 digit combo+exp date+security code) in order to transact. Giving away your private key is prone to fraud, and the fraud-protection mechanism is to give a centralized authority access to everything you've ever purchased, and they look for anything "suspicious". On the other hand, with public-key money, when you give someone funds, there's no risk of them exposing you to fraud or unwanted transactions afterwards. Even though I understood the public-key mechanism for bitcoin early on, I didn't realize the full implications for the financial system until recently.

wildbunny 9y ago
The easy way to express this is: cryptocurrencies are true, digital cash
- JumpCrisscross 9y ago
  > cryptocurrencies are true, digital cash I just wired money from my brokerage account to my checking account at a different institution. It happened in thirty minutes and I was charged no fees. Digital cash has been the bulk of cash for many, many years.
  - taway1929293 9y ago
    That meets the /digital/ criteria but not the /cash/ criteria. consider that there are banks and accounts that you can't wire to, or that an account can be frozen. cash & bitcoin don't suffer this. there are a number of desirable properties that bitcoins have, and some downsides as well - digital is only half the equation.
  - tenaciousDaniel 9y ago
    Yeah I remember reading that around 80% of the world's currency is now digital. Although I think the key word in the original comment was "true". As in, it is the first currency that is entirely digital, which before bitcoin wasn't possible. Regardless of how valuable you think that notion is, it's still a very interesting technological development.
    - JumpCrisscross 9y ago
      > [Bitcoin] is the first currency that is entirely digital, which before bitcoin wasn't possible It is absolutely possible. Sweden is close to achieving it [1]. The hurdle isn't technological. People like physical cash. Consider the shitstorm that would erupt in America if the Treasury announced it would stop printing and minting physical currency. > it's still a very interesting technological development I agree. [1] https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-apps-leading-europe https://www.theguardian.com/business/2016/jun/04/sweden-cash...
      - tenaciousDaniel 9y ago
        Fair enough, although "entirely digital" has broader implications than whether the currency itself is physical. It's more that the backing of the currency is digital. In Sweden's case, the backing is still the government. And there are physical representations of crypto in the form of QR codes and such.
  - 659087 9y ago
    Had you wired that money from Coinbase, you'd still be waiting for it months later. Maybe they're just trying to avoid being faster than Bitcoin.
    - Mtinie 9y ago
      > Had you wired that money from Coinbase, you'd still be waiting for it months later. While this may be the case in some wire transfers into Coinbase/GDAX, this is certainly not the case in all cases. I've made three wire transfers of differing amount within the past three months and in each case the funds were deposited into my Coinbase account within 36 hours. Two close associates of mine have had similar experiences depositing via wire transfer in the mid- and late-December, 2017 time frame. Granted, I have not deeply investigated all of the "my wire transfer has been pending for multiple [days/weeks/months] and still hasn't been deposited" complaints I've read on Reddit or the Coinbase forums, so it could be that I'm an unusual case vs. the norm.
  - zeroxfe 9y ago
    Out of curiosity, where do you live? I do wire transfers regularly and have never not paid fees (often, both on the sending and receiving ends.) Also, I've never had a wire settle in under 24 hours. It's typically 2 - 7 days depending on destination and currency.
    - iooi 9y ago
      I can give an example, at Chase bank in the United States, if your account balance is over $65k in your combined checking + savings accounts, or you have an investment portfolio through them via Chase Private Client of at least $250k, all wires are free.
    - sfifs 9y ago
      not GP but in both India and Signapore, instant settlement with little or no fees is the norm for nomimal amounts like rent etc.
      - digi_owl 9y ago
        Similar from Norway, and why it increasingly hurts to think that USA is considered the leader in technological development. It may be the leader in consumer hype of technological development, but dear deity so much of the actual daily operations seems almost third world.
    - saosebastiao 9y ago
      Typically if the sending institution or receiving institution maintains a nostro account at the other end of the transaction, they'll process the transfer immediately.
    - workthrowaway27 9y ago
      Not OP, but I live in the US and don't pay fees on transfers between my brokerage account and checking account. They take a few days to clear though.
      - JumpCrisscross 9y ago
  - deweller 9y ago
    What you did there was use digital credit. It is very useful but it is different than digital cash.
- cornyNetHandle 9y ago
  No, they are a digital ledger. A true digital cash transaction would only need communication between the two parties involved, rather than a working connection to a third entity.
arcanus 9y ago
> But there are new altcoins that have solved both of these, that exist right now! What cryptos do you believe have solved these problems?
- zeroxfe 9y ago
  Stellar, NEO, Ark, Ripple, Lisk, IOTA, RaiBlocks -- all using novel variations dPoS/PoW/PoS and making different tradeoffs w.r.t. centralization.
  - rspeer 9y ago
    You're just listing names of coins that have been pumped recently. IOTA isn't even real cryptography.
    - zeroxfe 9y ago
      I have no opinion w.r.t. they have been pumped or not. I'm just saying that they all use novel consensus mechanisms that don't rely on huge amounts of work or long finalization windows. NEO, for example uses dBFT consensus (which is a type of dPoS), and trades off availability for consistency (the opposite of Bitcoin). It has a block time of about 20 seconds and can do thousands of transactions per second. IOTA, uses a block DAG (which it calls Tangle) instead of a chain, and uses a novel PoW mechanism to validate transactions that allows for parallelism, and it's throughput grows with the size of the network. (I don't know what you mean by "isn't even real cryptography.") There is a huge amount of research in this area, and some of the ideas coming out are really interesting (from a distributed consensus perspective.) (/me worked on paxos-based consensus systems for a decade.)
      - rspeer 9y ago
        My view of all these cryptocurrencies is that the math and CS they're originally based on is pretty cool, and they do provide a proof of concept of a rather difficult distributed consensus task. But all the speculation right now cares about none of that. They only care about optimizing how quickly people can be convinced to throw money at the coin. They don't need to do the math right, they just need it to sound right. IOTA is a prime example. IOTA does cryptography like a literal cargo cult does aviation. They just went through the motions without understanding what they're doing. They rolled their own hash function, in ternary for some dumb reason. It turned out to be vulnerable to attacks known for decades the moment a cryptographer looked at it. The spin they've come up with after that indicates that they don't fundamentally understand why not to roll your own crypto, especially not a hash function. They are amateurs, screwing around. Any research you've read in distributed consensus, I guarantee you that the IOTA team doesn't understand it. The fact that you included IOTA in your list undermines the credibility of your entire list, and makes me at least think that you haven't applied your expertise in consensus systems to looking at what these coins actually do. More information: https://www.media.mit.edu/posts/iota-response/ https://www.media.mit.edu/posts/iota-response/
ufo 9y ago
Chip-based cards do use public key cryptography. The actual problem here is that for internet purchasing it is possible to just use the card number without necessarily having physical access to the card chip. This is an intentional security vs convenience tradeoff :/
jaequery 9y ago
Or maybe Buffett is just trying to protect his long term $1B assets in VISA
Strom 9y ago
While the public key concept is indeed useful, you don't need a blockchain or cryptocurrency to have this. My country's banking system already works with public key crypto. I can pay local merchants with my bank account by signing the transaction with my private key, which is stored on a smartcard protected by a PIN. The private key doesn't leave the smartcard. When I take my smartcard out of the reader, nobody can fraudulently authorize payments from my bank account even if they had a trojan on the PC I used.
- corpMaverick 9y ago
  We are talking about the credit/debit cards with chips. right? https://en.wikipedia.org/wiki/Smart_card https://en.wikipedia.org/wiki/Smart_card This is becoming standard in the USA. I am glad to know that this is how they work.
  - digi_owl 9y ago
    He lives in Estonia, that is a very "strange" place when it comes to the use of public key encryption. Most places using chips for payment is a continuation of the magnetic strip and pin, only that now the chip can attempt to verify that the payment terminal and bank connection is functioning correctly before accepting the pin and approving the transaction details the terminal is sending to the bank. In the end the transactions are basically ledger entries, be them manual or digital.
    - corpMaverick 9y ago
      So the ones used in the USA are susceptible to a man in the middle attack? i.e. Somebody stealing the CC, pin or other secret while using a merchants terminal.
      - digi_owl 9y ago
        Yes and no. A chip can't be copied like a mag strip can, so it is safe from the classic skimmers. Also a pin is worthless on its own. I have however read about a kind of mitm attack that was demoed in the UK. It involved a device sitting between the card and the terminal, and it made the chip think the terminal was doing a signature payment, while the terminal thought the chip had validated the pin.
jdc0589 9y ago
> Well of course it doesn't! It's a currency. Currencies are an abstraction for value. This is true. However, most traditional currencies started out as something that was an abstraction for value, but was backed by something of tangible value (e.g. gold standard). This isn't true anymore, we aren't on the gold standard, but if nothing else that lack of transition from tangible to "imaginary" value never happening with bitcoin is part of what fuels the uncertainty and skepticism. Bitcoin will likely continue to succeed even with its lack of "intrinsic" value and no backing by a traditional organization/govt simply because it was first. I don't think any of the alt-coins that don't also bring something else to the table are going to succeed long term though.
brlewis 9y ago
With normal fiat currencies a government is behind both the supply of that currency (central bank) and the demand for that currency (taxes). With bitcoin, supply is controlled by mathematics and technology, and demand is entirely unpredictable. I would not venture to predict the future value of any cryptocurrency until a government or some other powerful entity adopts it.
- saosebastiao 9y ago
  I don't think it will be possible to predict the future value of a cryptocurrency either, but gold seems to be the proxy for the direction, if not magnitude. Gold isn't significantly controlled by governments, but due to hoarding, the intrinsic value of gold (by actual consumers of gold) has been outpaced by the trade value of it for decades, if not centuries. As long as inflationary currencies inflate, deflationary currencies will be around. And I would assume that a mathematical guarantee of fixed supply would be more valuable to those people than monetary policy by gold miners. Not that I think bitcoin and others are truly deflationary, as the presence of derivatives and fractional reserve deposits means that overall they could still be inflationary, in the same way that M0 could experience deflation while M2 experiences inflation.
  - beberlei 9y ago
    in terms of metal we have gold, silver, platinum. In cryptocurrencies we have 1000. If cryptocurrencies persist over this current hype, then its still open which of the +1000 ones will be the "gold" and which ones will go to 0.
    - saosebastiao 9y ago
      The analogy between an ICO and a stock is pretty apt: they're both tradable contracts. One is enforced via math (as well as luck/naivety), while one is enforced via governments and financial institutions. And a huge portion of those 1000+ cryptocurrencies are really just ICO tokens. I think crypto is in a huge bubble, and I think ICOs are dumb and will eventually die off or be killed off, but saying that there are 1000+ cryptocurrencies is pretty misleading. It would be like saying that due to the various stock exchanges we have millions of fiat currencies. It's only true given a particular definition of cryptocurrency. Outside of ICOs, there are probably only a couple dozen cryptocurrencies that are not piggybacking off of some other cryptocurrency's smart contract infrastructure.
bradleyjg 9y ago
In the old days, government issued currencies had value because you could trade them in for gold or silver. In contemporary times, they have some value because everyone that lives in a particular country is legally required to pay taxes and those taxes can only be paid in the relevant government issued currency. Gold is just about the only thing around that acts somewhat like money but isn't premised on much of anything except social constructed value. Though even there, there are jewelry and electronic uses. I could believe that we could could get something else like gold that would be bootstrapped into having a relatively stable purely social constructed value. But as you point out, there isn't just one altcoin that has solved (some of) the problems of bitcoins, there are lots. There are huge incentives to issue new altcoins and for speculators to buy new altcoins in hopes of being the winner. And those speculators and creators are all hoping for this huge volatility (albeit in one direction) while what's strongly preferred for a medium of exchange is value stability. I don't see how we get there from here. What process or trends out there look convergent and stabilizing to you?
- digi_owl 9y ago
  Gold, and silver, was nice metals for making durable tokens off back in the day. What made said tokens currency was not the metal, but the stamp. That said, daily, local, transactions were likely done either using simpler copper tokens or basically a verbal or written IOU.
  - Chaebixi 9y ago
    > What made said tokens currency was not the metal, but the stamp. No, at least not always. IIRC, in Ancient Greece the money was the precious metal itself and its value of a coin was reckoned based on its weight and purity. The stamp was just an indicator of purity. The very largest amounts of money were measured using weight units (e.g. talents). It would have been impossible for it to be otherwise, since there were so many competing coin standards (e.g. a drachma in one city could be made to a very different standard to another, with standard weights possibly varying by as much as 50% or something).
    - 9y ago
criddell 9y ago
> With debit cards, you have to give someone your private key (16 digit combo+exp date+security code) Just because that's how it works now doesn't mean it has to always work that way. There's no reason why the "private key" couldn't be different for each transaction.
BearGoesChirp 9y ago
>I've heard smart people say bitcoin will plummet because it has no intrinsic value. Well of course it doesn't! It's a currency. Currencies are an abstraction for value. Currencies have certain values as currency. This includes factors like limited supply, having some level of enforcement of its use as a currency, ease of use, and also factors such as if it has other applications. Take a gold coin. Low ease of use, but high limited supply and gold has numerous other uses. Depending upon the actual coin, and the ability to authenticate, it could be worth only its weight as gold, or it could be worth more because of rarity. Take a dollar. High ease of use, mostly limit supply, has the US government backing it, has almost no other use. Crypto has value as well. Harder to use in many situations, but easier in some. It has greater ability to remove the identity of the user and their funds, which is something most other electronic payment systems don't have. It doesn't have much backing it except the crypto algorithms (which most don't understand), but it does appear to have a limited supply. I think crypto currencies do have intrinsic value. But there is a problem. Years ago this intrinsic value wasn't known. As we slowly worked out what value crypto provides, its price has gone up. This has attracted some people who place value in it not as a currency, but as an asset that rises in price. As more people see it as an asset to invest in instead of a currency, it further drives up the price. At the same time, the intrinsic value of crypto is still being discovered. So the question becomes, for any given crypto-currency, is the discovered intrinsic value + increase in value from being used as an investment greater than, less than, or roughly equal to the future intrinsic value. If the intrinsic value that will be discovered ends up being far less than the current price inflation driven by using it as an investment asset, we will eventually see a correct/crash. When, and how far it goes before then, is something I'm not at all comfortable predicting, even if that was the case. But I will say, when people with no tech interests are coming to me asking about bitcoin and investing in it, it makes me think it is over-hyped. There is also the possibility of value in just possessing it, but I personally think this is near 0 for crypto (unlike foreign currency where some people pay a little just to have a framed collection of bills on our wall even if those bills have no value).
spookthesunset 9y ago
> But there are new altcoins that have solved both of these, that exist right now! Any of them solve the fact that you have a eternal database fully replicated across hundreds of thousands of machines which could, by design, grow to infinite size? How about the fact that every one of those machines have to verify the integrity of every transaction ever made? Any of those could scale to handle even hundreds of transactions per second? How about any that solve the absolute piss-awful amount of energy wasted by PoW? Any of those not pre-mined scams designed to enrich the people who "invented" the coin? Any of those useful for anything outside of paying for murder, fentanyl, or unlocking cryptoransomware? What real-world problem, exactly, does any of this solve anyway? All of the problems we have in the financial world are political and social problems. You gotta solve those before you can start throwing tech at it...
- dkonofalski 9y ago
  This is exactly my problem with Bitcoin. The process for securing Bitcoin was fascinating to me because I thought mining was a clever way of staggering the growth of the currency. Unfortunately, you quickly realize that there's nothing to back the value of the currency and anything that could is disproportionately devalued when China builds farms for nothing but mining and the exploitation of the currency. Blockchain, on the other hand, is awesome and will continue to be a key piece of tech for things like voting and records where trust can be shared amongst all the users.
- icelancer 9y ago
  >>How about any that solve the absolute piss-awful amount of energy wasted by PoW? Any of those not pre-mined scams designed to enrich the people who "invented" the coin? Any of those useful for anything outside of paying for murder, fentanyl, or unlocking cryptoransomware? These inflammatory questions have legitimate answers, and the fact you ask them in this forum mean you haven't done any honest work to find them and would rather just post it on Hacker News and look intelligent. So, respectively: Yes, Yes, Yes. I hope this is a helpful answer.
- heurist 9y ago
  When a coin becomes unusable, fork it or switch to a better one. The market is extremely liquid.
Glyptodon 9y ago
What are the new, non-deflationary, non-energy-black-hole, high-transaction-volume cryptocurrencies you reference? I don't disagree that there are a variety of wins for crypto systems, I'm just a moderate skeptic of most of the specific systems I know anything about (obviously, being software systems, many of the things I view as problems can be coded away).

wildbunny 9y ago

The easy way to express this is: cryptocurrencies are true, digital cash

JumpCrisscross 9y ago
> cryptocurrencies are true, digital cash I just wired money from my brokerage account to my checking account at a different institution. It happened in thirty minutes and I was charged no fees. Digital cash has been the bulk of cash for many, many years.
- taway1929293 9y ago
  That meets the /digital/ criteria but not the /cash/ criteria. consider that there are banks and accounts that you can't wire to, or that an account can be frozen. cash & bitcoin don't suffer this. there are a number of desirable properties that bitcoins have, and some downsides as well - digital is only half the equation.
- tenaciousDaniel 9y ago
  Yeah I remember reading that around 80% of the world's currency is now digital. Although I think the key word in the original comment was "true". As in, it is the first currency that is entirely digital, which before bitcoin wasn't possible. Regardless of how valuable you think that notion is, it's still a very interesting technological development.
  - JumpCrisscross 9y ago
    > [Bitcoin] is the first currency that is entirely digital, which before bitcoin wasn't possible It is absolutely possible. Sweden is close to achieving it [1]. The hurdle isn't technological. People like physical cash. Consider the shitstorm that would erupt in America if the Treasury announced it would stop printing and minting physical currency. > it's still a very interesting technological development I agree. [1] https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-apps-leading-europe https://www.theguardian.com/business/2016/jun/04/sweden-cash...
    - tenaciousDaniel 9y ago
      Fair enough, although "entirely digital" has broader implications than whether the currency itself is physical. It's more that the backing of the currency is digital. In Sweden's case, the backing is still the government. And there are physical representations of crypto in the form of QR codes and such.
- 659087 9y ago
  Had you wired that money from Coinbase, you'd still be waiting for it months later. Maybe they're just trying to avoid being faster than Bitcoin.
  - Mtinie 9y ago
    > Had you wired that money from Coinbase, you'd still be waiting for it months later. While this may be the case in some wire transfers into Coinbase/GDAX, this is certainly not the case in all cases. I've made three wire transfers of differing amount within the past three months and in each case the funds were deposited into my Coinbase account within 36 hours. Two close associates of mine have had similar experiences depositing via wire transfer in the mid- and late-December, 2017 time frame. Granted, I have not deeply investigated all of the "my wire transfer has been pending for multiple [days/weeks/months] and still hasn't been deposited" complaints I've read on Reddit or the Coinbase forums, so it could be that I'm an unusual case vs. the norm.
- zeroxfe 9y ago
  Out of curiosity, where do you live? I do wire transfers regularly and have never not paid fees (often, both on the sending and receiving ends.) Also, I've never had a wire settle in under 24 hours. It's typically 2 - 7 days depending on destination and currency.
  - iooi 9y ago
    I can give an example, at Chase bank in the United States, if your account balance is over $65k in your combined checking + savings accounts, or you have an investment portfolio through them via Chase Private Client of at least $250k, all wires are free.
  - sfifs 9y ago
    not GP but in both India and Signapore, instant settlement with little or no fees is the norm for nomimal amounts like rent etc.
    - digi_owl 9y ago
      Similar from Norway, and why it increasingly hurts to think that USA is considered the leader in technological development. It may be the leader in consumer hype of technological development, but dear deity so much of the actual daily operations seems almost third world.
  - saosebastiao 9y ago
    Typically if the sending institution or receiving institution maintains a nostro account at the other end of the transaction, they'll process the transfer immediately.
  - workthrowaway27 9y ago
    Not OP, but I live in the US and don't pay fees on transfers between my brokerage account and checking account. They take a few days to clear though.
    - JumpCrisscross 9y ago
- deweller 9y ago
  What you did there was use digital credit. It is very useful but it is different than digital cash.
cornyNetHandle 9y ago
No, they are a digital ledger. A true digital cash transaction would only need communication between the two parties involved, rather than a working connection to a third entity.

arcanus 9y ago

> But there are new altcoins that have solved both of these, that exist right now! What cryptos do you believe have solved these problems?

zeroxfe 9y ago
Stellar, NEO, Ark, Ripple, Lisk, IOTA, RaiBlocks -- all using novel variations dPoS/PoW/PoS and making different tradeoffs w.r.t. centralization.
- rspeer 9y ago
  You're just listing names of coins that have been pumped recently. IOTA isn't even real cryptography.
  - zeroxfe 9y ago
    I have no opinion w.r.t. they have been pumped or not. I'm just saying that they all use novel consensus mechanisms that don't rely on huge amounts of work or long finalization windows. NEO, for example uses dBFT consensus (which is a type of dPoS), and trades off availability for consistency (the opposite of Bitcoin). It has a block time of about 20 seconds and can do thousands of transactions per second. IOTA, uses a block DAG (which it calls Tangle) instead of a chain, and uses a novel PoW mechanism to validate transactions that allows for parallelism, and it's throughput grows with the size of the network. (I don't know what you mean by "isn't even real cryptography.") There is a huge amount of research in this area, and some of the ideas coming out are really interesting (from a distributed consensus perspective.) (/me worked on paxos-based consensus systems for a decade.)
    - rspeer 9y ago
      My view of all these cryptocurrencies is that the math and CS they're originally based on is pretty cool, and they do provide a proof of concept of a rather difficult distributed consensus task. But all the speculation right now cares about none of that. They only care about optimizing how quickly people can be convinced to throw money at the coin. They don't need to do the math right, they just need it to sound right. IOTA is a prime example. IOTA does cryptography like a literal cargo cult does aviation. They just went through the motions without understanding what they're doing. They rolled their own hash function, in ternary for some dumb reason. It turned out to be vulnerable to attacks known for decades the moment a cryptographer looked at it. The spin they've come up with after that indicates that they don't fundamentally understand why not to roll your own crypto, especially not a hash function. They are amateurs, screwing around. Any research you've read in distributed consensus, I guarantee you that the IOTA team doesn't understand it. The fact that you included IOTA in your list undermines the credibility of your entire list, and makes me at least think that you haven't applied your expertise in consensus systems to looking at what these coins actually do. More information: https://www.media.mit.edu/posts/iota-response/ https://www.media.mit.edu/posts/iota-response/

ufo 9y ago

Chip-based cards do use public key cryptography. The actual problem here is that for internet purchasing it is possible to just use the card number without necessarily having physical access to the card chip. This is an intentional security vs convenience tradeoff :/

jaequery 9y ago

Or maybe Buffett is just trying to protect his long term $1B assets in VISA

Strom 9y ago

While the public key concept is indeed useful, you don't need a blockchain or cryptocurrency to have this. My country's banking system already works with public key crypto. I can pay local merchants with my bank account by signing the transaction with my private key, which is stored on a smartcard protected by a PIN. The private key doesn't leave the smartcard. When I take my smartcard out of the reader, nobody can fraudulently authorize payments from my bank account even if they had a trojan on the PC I used.

corpMaverick 9y ago
We are talking about the credit/debit cards with chips. right? https://en.wikipedia.org/wiki/Smart_card https://en.wikipedia.org/wiki/Smart_card This is becoming standard in the USA. I am glad to know that this is how they work.
- digi_owl 9y ago
  He lives in Estonia, that is a very "strange" place when it comes to the use of public key encryption. Most places using chips for payment is a continuation of the magnetic strip and pin, only that now the chip can attempt to verify that the payment terminal and bank connection is functioning correctly before accepting the pin and approving the transaction details the terminal is sending to the bank. In the end the transactions are basically ledger entries, be them manual or digital.
  - corpMaverick 9y ago
    So the ones used in the USA are susceptible to a man in the middle attack? i.e. Somebody stealing the CC, pin or other secret while using a merchants terminal.
    - digi_owl 9y ago
      Yes and no. A chip can't be copied like a mag strip can, so it is safe from the classic skimmers. Also a pin is worthless on its own. I have however read about a kind of mitm attack that was demoed in the UK. It involved a device sitting between the card and the terminal, and it made the chip think the terminal was doing a signature payment, while the terminal thought the chip had validated the pin.

jdc0589 9y ago

> Well of course it doesn't! It's a currency. Currencies are an abstraction for value. This is true. However, most traditional currencies started out as something that was an abstraction for value, but was backed by something of tangible value (e.g. gold standard). This isn't true anymore, we aren't on the gold standard, but if nothing else that lack of transition from tangible to "imaginary" value never happening with bitcoin is part of what fuels the uncertainty and skepticism. Bitcoin will likely continue to succeed even with its lack of "intrinsic" value and no backing by a traditional organization/govt simply because it was first. I don't think any of the alt-coins that don't also bring something else to the table are going to succeed long term though.

brlewis 9y ago

With normal fiat currencies a government is behind both the supply of that currency (central bank) and the demand for that currency (taxes). With bitcoin, supply is controlled by mathematics and technology, and demand is entirely unpredictable. I would not venture to predict the future value of any cryptocurrency until a government or some other powerful entity adopts it.

saosebastiao 9y ago
I don't think it will be possible to predict the future value of a cryptocurrency either, but gold seems to be the proxy for the direction, if not magnitude. Gold isn't significantly controlled by governments, but due to hoarding, the intrinsic value of gold (by actual consumers of gold) has been outpaced by the trade value of it for decades, if not centuries. As long as inflationary currencies inflate, deflationary currencies will be around. And I would assume that a mathematical guarantee of fixed supply would be more valuable to those people than monetary policy by gold miners. Not that I think bitcoin and others are truly deflationary, as the presence of derivatives and fractional reserve deposits means that overall they could still be inflationary, in the same way that M0 could experience deflation while M2 experiences inflation.
- beberlei 9y ago
  in terms of metal we have gold, silver, platinum. In cryptocurrencies we have 1000. If cryptocurrencies persist over this current hype, then its still open which of the +1000 ones will be the "gold" and which ones will go to 0.
  - saosebastiao 9y ago
    The analogy between an ICO and a stock is pretty apt: they're both tradable contracts. One is enforced via math (as well as luck/naivety), while one is enforced via governments and financial institutions. And a huge portion of those 1000+ cryptocurrencies are really just ICO tokens. I think crypto is in a huge bubble, and I think ICOs are dumb and will eventually die off or be killed off, but saying that there are 1000+ cryptocurrencies is pretty misleading. It would be like saying that due to the various stock exchanges we have millions of fiat currencies. It's only true given a particular definition of cryptocurrency. Outside of ICOs, there are probably only a couple dozen cryptocurrencies that are not piggybacking off of some other cryptocurrency's smart contract infrastructure.

bradleyjg 9y ago

In the old days, government issued currencies had value because you could trade them in for gold or silver. In contemporary times, they have some value because everyone that lives in a particular country is legally required to pay taxes and those taxes can only be paid in the relevant government issued currency. Gold is just about the only thing around that acts somewhat like money but isn't premised on much of anything except social constructed value. Though even there, there are jewelry and electronic uses. I could believe that we could could get something else like gold that would be bootstrapped into having a relatively stable purely social constructed value. But as you point out, there isn't just one altcoin that has solved (some of) the problems of bitcoins, there are lots. There are huge incentives to issue new altcoins and for speculators to buy new altcoins in hopes of being the winner. And those speculators and creators are all hoping for this huge volatility (albeit in one direction) while what's strongly preferred for a medium of exchange is value stability. I don't see how we get there from here. What process or trends out there look convergent and stabilizing to you?

digi_owl 9y ago
Gold, and silver, was nice metals for making durable tokens off back in the day. What made said tokens currency was not the metal, but the stamp. That said, daily, local, transactions were likely done either using simpler copper tokens or basically a verbal or written IOU.
- Chaebixi 9y ago
  > What made said tokens currency was not the metal, but the stamp. No, at least not always. IIRC, in Ancient Greece the money was the precious metal itself and its value of a coin was reckoned based on its weight and purity. The stamp was just an indicator of purity. The very largest amounts of money were measured using weight units (e.g. talents). It would have been impossible for it to be otherwise, since there were so many competing coin standards (e.g. a drachma in one city could be made to a very different standard to another, with standard weights possibly varying by as much as 50% or something).
  - 9y ago

criddell 9y ago

> With debit cards, you have to give someone your private key (16 digit combo+exp date+security code) Just because that's how it works now doesn't mean it has to always work that way. There's no reason why the "private key" couldn't be different for each transaction.

BearGoesChirp 9y ago

>I've heard smart people say bitcoin will plummet because it has no intrinsic value. Well of course it doesn't! It's a currency. Currencies are an abstraction for value. Currencies have certain values as currency. This includes factors like limited supply, having some level of enforcement of its use as a currency, ease of use, and also factors such as if it has other applications. Take a gold coin. Low ease of use, but high limited supply and gold has numerous other uses. Depending upon the actual coin, and the ability to authenticate, it could be worth only its weight as gold, or it could be worth more because of rarity. Take a dollar. High ease of use, mostly limit supply, has the US government backing it, has almost no other use. Crypto has value as well. Harder to use in many situations, but easier in some. It has greater ability to remove the identity of the user and their funds, which is something most other electronic payment systems don't have. It doesn't have much backing it except the crypto algorithms (which most don't understand), but it does appear to have a limited supply. I think crypto currencies do have intrinsic value. But there is a problem. Years ago this intrinsic value wasn't known. As we slowly worked out what value crypto provides, its price has gone up. This has attracted some people who place value in it not as a currency, but as an asset that rises in price. As more people see it as an asset to invest in instead of a currency, it further drives up the price. At the same time, the intrinsic value of crypto is still being discovered. So the question becomes, for any given crypto-currency, is the discovered intrinsic value + increase in value from being used as an investment greater than, less than, or roughly equal to the future intrinsic value. If the intrinsic value that will be discovered ends up being far less than the current price inflation driven by using it as an investment asset, we will eventually see a correct/crash. When, and how far it goes before then, is something I'm not at all comfortable predicting, even if that was the case. But I will say, when people with no tech interests are coming to me asking about bitcoin and investing in it, it makes me think it is over-hyped. There is also the possibility of value in just possessing it, but I personally think this is near 0 for crypto (unlike foreign currency where some people pay a little just to have a framed collection of bills on our wall even if those bills have no value).

spookthesunset 9y ago

> But there are new altcoins that have solved both of these, that exist right now! Any of them solve the fact that you have a eternal database fully replicated across hundreds of thousands of machines which could, by design, grow to infinite size? How about the fact that every one of those machines have to verify the integrity of every transaction ever made? Any of those could scale to handle even hundreds of transactions per second? How about any that solve the absolute piss-awful amount of energy wasted by PoW? Any of those not pre-mined scams designed to enrich the people who "invented" the coin? Any of those useful for anything outside of paying for murder, fentanyl, or unlocking cryptoransomware? What real-world problem, exactly, does any of this solve anyway? All of the problems we have in the financial world are political and social problems. You gotta solve those before you can start throwing tech at it...

dkonofalski 9y ago
This is exactly my problem with Bitcoin. The process for securing Bitcoin was fascinating to me because I thought mining was a clever way of staggering the growth of the currency. Unfortunately, you quickly realize that there's nothing to back the value of the currency and anything that could is disproportionately devalued when China builds farms for nothing but mining and the exploitation of the currency. Blockchain, on the other hand, is awesome and will continue to be a key piece of tech for things like voting and records where trust can be shared amongst all the users.
icelancer 9y ago
>>How about any that solve the absolute piss-awful amount of energy wasted by PoW? Any of those not pre-mined scams designed to enrich the people who "invented" the coin? Any of those useful for anything outside of paying for murder, fentanyl, or unlocking cryptoransomware? These inflammatory questions have legitimate answers, and the fact you ask them in this forum mean you haven't done any honest work to find them and would rather just post it on Hacker News and look intelligent. So, respectively: Yes, Yes, Yes. I hope this is a helpful answer.
heurist 9y ago
When a coin becomes unusable, fork it or switch to a better one. The market is extremely liquid.

Glyptodon 9y ago

What are the new, non-deflationary, non-energy-black-hole, high-transaction-volume cryptocurrencies you reference? I don't disagree that there are a variety of wins for crypto systems, I'm just a moderate skeptic of most of the specific systems I know anything about (obviously, being software systems, many of the things I view as problems can be coded away).