18 ms·

Beyond the Bitcoin bubble

225 points by npalli 9y ago

hesdeadjim 9y ago
I am personally hoping we can survive the speculation craze and reach a point where we can use the block chain technology in revolutionary (or even evolutionary) ways. Since it’s tax time I can’t help but feel that the true long term danger to block chain technology isn’t draconian government regulation, it’s the IRS. For example I have a transaction earlier this year where I purchased some software for $15 BTC equivalent. Transaction fees back then weren’t as brutal so I will ignore that issue as I believe it is 100% solvable. What was truly brutal is that using standard FIFO accounting practices I owe an additional 30% tax on the “money” I spent. My cost basis for that particular coin amount was 10% of what the current price of BTC was when I made the transaction. A new user will have no idea that they even need to worry about this. Worse, Coinbase is fucking awful when it comes to transparent tax information. So as soon as the IRS starts publicly punishing intentional (or worse, unintentional) tax evaders it is a very real possibility that the interest from the broad public will wane. Now if prices stabilize this problem starts to recede. But even if it does and prices only fluctuate 1-2%, I STILL need to worry come tax time. Edit: I understood and knew I would owe capital gains when I purchased the software. I am not complaining about having to pay it personally, I am pointing out that this is a pretty significant problem for widespread usage and that the average user of Bitcoin right now probably has very little idea of the consequences of actually using a crypto currency for any kind of transaction that is considered a taxable event by the IRS.
- sethgecko 9y ago
  > Since it’s tax time I can’t help but feel that the true long term danger to block chain technology isn’t draconian government regulation, it’s the IRS. Sorry but no, one country's tax authority is not a long term danger to block chain.
  - arcticfox 9y ago
    The tax authority behind the world's reserve currency? I don't think they'll do anything or even need to, but if they wanted to, they absolutely could.
  - hesdeadjim 9y ago
    Unfortunately this one country is a leader in tech and has millions of people with the disposable income to actually use the block chain. I am not myopically focused on the US, but to say that it won’t hurt block chain adoption is willful ignorance.
    - bennyg 9y ago
      Might hurt blockchain adoption in the US, but there is much more than BTC out there. There are specific chains that many Asian companies are adopting for use that will proliferate and generally stay out of American news. There's a lot happening in the crypto space beyond BTC/ETH/LTC. Adoption may still not take off, but it won't be because of the IRS.
- gamblor956 9y ago
  Transaction fees back then weren’t as brutal so I will ignore that issue as I believe it is 100% solvable. What was truly brutal is that using standard FIFO accounting practices I owe an additional 30% tax on the “money” I spent. My cost basis for that particular coin amount was 10% of what the current price of BTC was when I made the transaction. For tax purposes, Bitcoin is not considered a currency, it is considered an asset.[1] When you used it to buy some software, you were treated as exchanging that BTC for the software. Because that BTC had increased in value, you were tax on the gain in the value of the BTC actually used in the software-purchase transaction. This analysis generally applies in all of the Western world. [1] Even if Bitcoin would be considered a currency for tax purposes, it would be considered a foreign currency (meaning, not the legal tender of your jurisdiction), so the same analysis applies. When transacting in foreign currency, you need to do gain/loss calculations for each transaction. Note that IRS advice for calculating digital currency gains/losses is essentially the advice they give for calculating foreign currency gains and losses, but simplified to layman's terms.
  - hesdeadjim 9y ago
    Oh I knew that before I spent it, it was more for the novelty of making a Bitcoin purchase.
- deleted 9y ago
  [deleted]
- joosters 9y ago
  Why should crypto currencies get special tax treatment?
  - vkou 9y ago
    Because it's different this time, and I stand to make a lot of money.
- lalaland1125 9y ago
  You legitimately made gains on those coins though and in this country we currently have a capital gains tax. What would you prefer? A loophole the size of a mountain for bartering appreciating assets? A special carve out for bitcoin? A removal of the capital gains tax (which would result in raising taxes for the poor or large deficits)? The system works the way it does for rather decent reasons.
  - hyprCoin 9y ago
    I would prefer that the government control the supply of money and take a part of a preset emission to fund itself. A second part of the emission could be used for UBI protecting the poor and getting buy in from the populous. It would rid ourselves of the debtor's prison and the government would no longer be providing a yearly negative reward signal to it's financially successful citizenry. Oh well enough fantasizing, time to guess how to report income tax on low liquidity asset income that hasn't, and sometimes can't, be liquidated. If I'm wrong it's time for bank account freezing and fines. Maybe jail time if I upset the wrong employee. Feeling pretty scared in the home of the brave right now..
- deleted 9y ago
  [deleted]
- will_brown 9y ago
  For a while I have been thinking about a startup idea, a Stripe Atlas for tax free cryptocoin trading if you will. There are tax free vehicles, but so few people actually understand the initial tax implication of buying and selling coins like yourself, I don’t think the market would be there. Curious, what might you be will to pay for such a service?
vthallam 9y ago
This was a necessary phase. Mass adoption couldn't have been achieved without the exponential price rise of various cryptocurrency tokens. There would not have been media coverage of this proportion, had it not been for the gains. People now talk cryptocurrency, read more about the underlying technology and accept that it will positively affect the industry in the upcoming future. I hope the market stabilizes and some of the tokens actually become useful.
- gizmo385 9y ago
  > People now talk cryptocurrency, read more about the underlying technology and accept that it will positively affect the industry in the upcoming future. Do they really though? I don't hear anyone outside of people who have actively bought into the cryptocurrency hype saying that it is going to have a positive affect on the industry. I hear a lot of people saying things like "it's a bubble" or that "the rules these currencies are designed to circumvent are there for a reason", etc.
  - notahacker 9y ago
    To be fair, there are people at financial services companies and blue chip multinationals running blockchain projects. But then there are also people in financial services companies and blue chip multinationals running projects as vaguely defined as "cloud" or "big data" and as specifically niche as "graph databases" and "deep learning-based object classification" without get-rich-quick schemes and libertarian antieconomics attached to their hype.
  - vec 9y ago
    Right, this. I think cryptocurrencies are here to stay. I'm not convinced that's actually going to "positively affect the industry in the upcoming future". I don't think cryptocurrencies are going to remove the need for some big middleman like Visa to sit between individual consumers and their partners. Things like reversible transactions and on-demand small loans are too attractive to the median consumer, so someone's going to be layering them on top of the underlying currency, whatever it may be. I don't think they're going to have a big impact on the financial sector. They can trade and leverage and loan with cryptos just as easily as they can with fiats, just with a lot of the safety rails like bankruptcy pulled off. I don't think they're going to impact most governments' ability to levy taxes and to borrow. There are dozens of governments that don't mint their own currencies, and by and large they still maintain taxing authority about as easily as they maintain the rest of their infrastructure and bureaucracy. I do think it's going to prevent central banks from doing their thing, but I'm not convinced that's a good thing. Central banks have their issues, to be sure, but I'm pretty sure they're better than the huge boom & bust cycles they replaced. Cryptocurrencies will certainly make the world different in meaningful ways. Different doesn't necessarily mean better.
nabla9 9y ago
I hope the technology matures beyond 'blockchain' and marketing drops the 'coin' moniker and the gold rush dies down. Cryptographically verified distributed log files should have negligible hype value and be hidden part of the infrastructure. I predict that 10 years from now normal relational databases have infrastructure for shared, authenticated and verified rows and columns and we laugh at the ICO era.
- decentralised 9y ago
  You are not seeing the whole picture and don't understand the goal of the "coin" in a "blockchain". I would strongly urge you to do some research so that you can make up your mind from a place of knowledge instead. http://github.com/jpantunes/awesome-cryptoeconomics http://github.com/jpantunes/awesome-cryptoeconomics
  - chrisco255 9y ago
    This. I don't think a lot of people grasp that cryptocurrency is more than just a distributed ledger. It's as much of an economic innovation as a technical one.
    - aaron-lebo 9y ago
      Nobody fails to grasp the possibilities of these currencies, what they disagree with is utility to hype value. When people throw out "you don't get this" as an argument against skepticism, it sounds naive and a little insulting. This quote was in that NYT "Everyone's Getting Rich.." article: The tone turns somber. “Sometimes I think about what would happen to the future if a bomb went off at one of our meetings,” Mr. Buttram said. Mr. Hummer said, “A bomb would set back civilization for years.” There's too much of that exaggerated thinking.
      - decentralised 9y ago
        I don't mean to sound insulting or naive but maybe I am doing so by accident. Let me try in another way, what is the motivation for hobbyists and companies like Fidelity to buy mining hardware to secure a public blockchain?
rm_-rf_slash 9y ago
I think there is a glaring omission in the structure of the internet as dicusssed in this piece: the underlying hardware and supply chains that physically construct the internet, which I will term InternetZero. InternetZero relies on humongous-scale manufacturing with minuscule margins, which in turn relies on massive natural resource extraction, transportation, and refinement. Even the integrated circuit - ubiquitous in contemporary computing - could have taken many more years than it did to hit the scene if not for NASA’s shoveling piles of money into ICs for the Apollo 11 lunar lander. The “new code” that the article calls for at the end is a start, but is still just one small facet of a very centralized, controlled, and arguably corrupted system.
brndnmtthws 9y ago
Is anyone else tired of hearing the word 'bubble' applied to everything? Whether we're talking about tech stocks, chicken futures, tulips, or Bitcoin, it's become a really tired and meaningless term. You can't know if an asset is in a 'bubble' until long after the bubble has burst. Bitcoin is far from having burst, so this article and all those that came before it offer nothing new or insightful. Please, let's move past the name calling. Calling something a bubble does not make it so.
- nacho2sweet 9y ago
  No I am not tired of keeping my uniformed friends scared and their money safe.
  - jtbayly 9y ago
    Why only your uniformed friends? Are only cops and members of the military worthy of having their money protected? Also, I thought they were the ones who were supposed to do the scaring...
    - rm_-rf_slash 9y ago
      I think parent meant to say “uniNformed”
  - cryptofyodor 9y ago
    Well, I think it's more proper to inform and educate friends and people instead of scarring them. For me what SEC and regulators in majority of other countries are doing is scarring people (with all the warnings) - I'd find education more effective.
    - aaron-lebo 9y ago
      The SEC is warning people so they don't get scammed. Good for them. Their actions aren't unwarranted because there's been a lot of scams. You're asking for an open market so that people can be defrauded.
MechEStudent 9y ago
Paywalled.
- deleted 9y ago
  [deleted]
- AlwaysBCoding 9y ago
  try pasting in the link to outline.com
kylehotchkiss 9y ago
I love Stephen Johnson, the author. His show on Prime/PBS "How we got to now" was an incredible series about how small innovations with glass, sound, and light made the modern world possible, and he does it with a lot of charm. Highly recommended for the HN audience!
- unnawut 9y ago
  I read his book with the very same title. The history of glass, hygiene, etc. especially in the context of civilization is definitely eye opening!
- AareyBaba 9y ago
  If you have Amazon Prime - the show is available for free with your subscription.
catbird 9y ago
I don't understand the transit example presented in this article. I feel like I am missing something fundamental about the utility of any of these distributed services backed by their own type of coin. For the transit example you have some people who want to request rides, and some people who want to provide rides. OK. Someone develops an application to process these requests, in some kind of bidding system... How are the rider and driver matched up? I assume there needs to be some publicly accessible list of all open queries. Is that list what would be stored on the TransitCoin blockchain, and would that imply that all records of requested and completed rides are public, such that someone who knows your TransitCoin address can read all your previous trips, which are stored in this immutable chain until the end of time? Would the TransitCoins be 'mined' by people running a 'node' that does the ride matching? Then in order to pay for a ride you send a TransitCoin to the driver? The driver would then have to sell his earned TransitCoins on an exchange for USD (or GroceryCoins) at the end of the day? In the end I don't see why a new currency needs to be included in every proposed use of a blockchain, if the people who want to participate as a consumer and as a service provider are the ones running the nodes of the blockchain.
- tomaskafka 9y ago
  This - all things that can by done by SomethingSpecificCoin can be equally well done on smart contract platform ala Ethereum. There is no reason (except for rewarding founders and early investors) someone who want to provide taxi rides own specialized mining equipment for maintaining blockchain of a proprietary coin. I rode a taxi few months ago, and I don't remember having to change my currency for a TaxiCoin which would be the only token the taxi driver accepts. In fact, it is illegal for him not to accept the national currency.
  - VMG 9y ago
    It can be equally well done with a Postgres database.
    - geezerjay 9y ago
      You can't sell postgres table inserts.
khabaal 9y ago
Isnt the author, well, supposed to keep his private key private? It was quite easy to create a text file with that 1b0be2162cedb2744d016943bb14e71de6af95a63af3790d6b41b1e719dc5c66 key and "geth account import key.txt" into a ethereum wallet to get a seemingly valid account. Please tell me that i am missing something very important here.
- bowmessage 9y ago
  Well that wallet address is empty now anyway! Looks like someone got ~.01 ETH. https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd5...
- lopatin 9y ago
  Uh, do you expect there to be any money in there?
  - khabaal 9y ago
    Well, it would have been to hillarious if there was, but it was transferred about an hour ago. :D
  - bubbabojangles 9y ago
    There was https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd5...
  - therein 9y ago
    There is also 1 LUN = 30$ in that account. https://etherscan.io/token/Lunyr?a=0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/token/Lunyr?a=0x6c2ecd6388c550e8d99ada3...
martin1975 9y ago
The answer to the fundamental ills of both Ethereum and Bitcoin is addressed in Cardano, which has been hard at work for 2+ years to create Ada and the first formally verified PoS type algorithm, Ouroboros. I wish more people would wrap their heads around the rigid approach to developing Ada that Cardano's taken so the light will come on... sort of like seasoned imperative language programmers who get bitten by the FP bug, the same kind of cathartic effect is achieved once you begin to understand the fundamentals of what Cardano is doing. Visit CardanoHub.org for more info and get ready to be processing new info for at least a week to begin to understand it.
- jhwang5 9y ago
  Sure, we can implement the good ideas behind Cardano to see if we can improve some areas of existing financial system. But I don't think the society needs to help pump cardano tokens.
- companyhen 9y ago
  Coin shilling has officially entered HN.
  - martin1975 9y ago
    It's more like their tech I'm shilling. But hey, you're welcome to downvote me.
v64 9y ago
It's strange to me how there are many among the Hacker News crowd who can read an article like this and have doubts about its thesis. You lived through the 80s and 90s right? I can't count how many times in my life I was told no one would ever need a computer in their house, we've gotten along for decades just fine without them. No one will ever buy books online, that's ridiculous, you can go to the store and have one right now. The internet is just a niche chat program that will never have any use in business, etc. Our uses of cryptocurrency and blockchain technology now are similar to how we once used the power of the web to create Geocities pages with nothing more than MIDIs, scrolling text, and under construction gifs, because we didn't know what we were doing yet. But the early computer and internet pioneers were able to see past the proofs of concept and build on those ideas, to create the modern internet we have today. Bitcoin may cease to exist as a software product, but I think the innovations that it has spurred on will be with us for some time. This technology has the possibility of making business much more efficient by reducing costs that are associated with distrustful parties having to rely on (and pay money to) third party escrow/auditing services. If I want to send a large sum of money to someone else now, I have to rely on third party services such as banks or Western Union to facilitate that transfer. If you still continue to think "well that can be done with a SQL database now", you're completely missing the point. There's nothing wrong with relying on third parties, but now we have technology that allows us to choose not to if there's a need for it. In that regard, cryptography shares many of the same characteristics. We could communicate securely before public key cryptography was invented, but it broadened the scope and security of such operations, to the point where we espouse using https for all websites, not just ones requiring security. When the time comes, why would you trust a third party if you didn't have to?
- bigdubs 9y ago
  Not sure the parallels are as strong as you're making them out to be; there are deep, deep flaws with proof of work as a concept because of the energy consumed. There will probably be a better end state for distributed trust, but we're legitimately not there yet.
  - aoro 9y ago
    They already exist. Check out the stellar consensus mechanism. https://www.stellar.org/papers/stellar-consensus-protocol.pdf https://www.stellar.org/papers/stellar-consensus-protocol.pd...
singularity2001 9y ago
can I buy Kraken shares? could perform better than JPMorgan.
lu11 9y ago
What happens if we end up using bitcoin (or any coin) for currency and then for some reason (like earthquake) we lose electricity for 24h or more... how we would be paying for things?

225 points by npalli 9y ago

I am personally hoping we can survive the speculation craze and reach a point where we can use the block chain technology in revolutionary (or even evolutionary) ways. Since it’s tax time I can’t help but feel that the true long term danger to block chain technology isn’t draconian government regulation, it’s the IRS. For example I have a transaction earlier this year where I purchased some software for $15 BTC equivalent. Transaction fees back then weren’t as brutal so I will ignore that issue as I believe it is 100% solvable. What was truly brutal is that using standard FIFO accounting practices I owe an additional 30% tax on the “money” I spent. My cost basis for that particular coin amount was 10% of what the current price of BTC was when I made the transaction. A new user will have no idea that they even need to worry about this. Worse, Coinbase is fucking awful when it comes to transparent tax information. So as soon as the IRS starts publicly punishing intentional (or worse, unintentional) tax evaders it is a very real possibility that the interest from the broad public will wane. Now if prices stabilize this problem starts to recede. But even if it does and prices only fluctuate 1-2%, I STILL need to worry come tax time. Edit: I understood and knew I would owe capital gains when I purchased the software. I am not complaining about having to pay it personally, I am pointing out that this is a pretty significant problem for widespread usage and that the average user of Bitcoin right now probably has very little idea of the consequences of actually using a crypto currency for any kind of transaction that is considered a taxable event by the IRS.

sethgecko 9y ago
> Since it’s tax time I can’t help but feel that the true long term danger to block chain technology isn’t draconian government regulation, it’s the IRS. Sorry but no, one country's tax authority is not a long term danger to block chain.
- arcticfox 9y ago
  The tax authority behind the world's reserve currency? I don't think they'll do anything or even need to, but if they wanted to, they absolutely could.
- hesdeadjim 9y ago
  Unfortunately this one country is a leader in tech and has millions of people with the disposable income to actually use the block chain. I am not myopically focused on the US, but to say that it won’t hurt block chain adoption is willful ignorance.
  - bennyg 9y ago
    Might hurt blockchain adoption in the US, but there is much more than BTC out there. There are specific chains that many Asian companies are adopting for use that will proliferate and generally stay out of American news. There's a lot happening in the crypto space beyond BTC/ETH/LTC. Adoption may still not take off, but it won't be because of the IRS.
gamblor956 9y ago
Transaction fees back then weren’t as brutal so I will ignore that issue as I believe it is 100% solvable. What was truly brutal is that using standard FIFO accounting practices I owe an additional 30% tax on the “money” I spent. My cost basis for that particular coin amount was 10% of what the current price of BTC was when I made the transaction. For tax purposes, Bitcoin is not considered a currency, it is considered an asset.[1] When you used it to buy some software, you were treated as exchanging that BTC for the software. Because that BTC had increased in value, you were tax on the gain in the value of the BTC actually used in the software-purchase transaction. This analysis generally applies in all of the Western world. [1] Even if Bitcoin would be considered a currency for tax purposes, it would be considered a foreign currency (meaning, not the legal tender of your jurisdiction), so the same analysis applies. When transacting in foreign currency, you need to do gain/loss calculations for each transaction. Note that IRS advice for calculating digital currency gains/losses is essentially the advice they give for calculating foreign currency gains and losses, but simplified to layman's terms.
- hesdeadjim 9y ago
  Oh I knew that before I spent it, it was more for the novelty of making a Bitcoin purchase.
deleted 9y ago
[deleted]
joosters 9y ago
Why should crypto currencies get special tax treatment?
- vkou 9y ago
  Because it's different this time, and I stand to make a lot of money.
lalaland1125 9y ago
You legitimately made gains on those coins though and in this country we currently have a capital gains tax. What would you prefer? A loophole the size of a mountain for bartering appreciating assets? A special carve out for bitcoin? A removal of the capital gains tax (which would result in raising taxes for the poor or large deficits)? The system works the way it does for rather decent reasons.
- hyprCoin 9y ago
  I would prefer that the government control the supply of money and take a part of a preset emission to fund itself. A second part of the emission could be used for UBI protecting the poor and getting buy in from the populous. It would rid ourselves of the debtor's prison and the government would no longer be providing a yearly negative reward signal to it's financially successful citizenry. Oh well enough fantasizing, time to guess how to report income tax on low liquidity asset income that hasn't, and sometimes can't, be liquidated. If I'm wrong it's time for bank account freezing and fines. Maybe jail time if I upset the wrong employee. Feeling pretty scared in the home of the brave right now..
deleted 9y ago
[deleted]
will_brown 9y ago
For a while I have been thinking about a startup idea, a Stripe Atlas for tax free cryptocoin trading if you will. There are tax free vehicles, but so few people actually understand the initial tax implication of buying and selling coins like yourself, I don’t think the market would be there. Curious, what might you be will to pay for such a service?

vthallam 9y ago

This was a necessary phase. Mass adoption couldn't have been achieved without the exponential price rise of various cryptocurrency tokens. There would not have been media coverage of this proportion, had it not been for the gains. People now talk cryptocurrency, read more about the underlying technology and accept that it will positively affect the industry in the upcoming future. I hope the market stabilizes and some of the tokens actually become useful.

gizmo385 9y ago
> People now talk cryptocurrency, read more about the underlying technology and accept that it will positively affect the industry in the upcoming future. Do they really though? I don't hear anyone outside of people who have actively bought into the cryptocurrency hype saying that it is going to have a positive affect on the industry. I hear a lot of people saying things like "it's a bubble" or that "the rules these currencies are designed to circumvent are there for a reason", etc.
- notahacker 9y ago
  To be fair, there are people at financial services companies and blue chip multinationals running blockchain projects. But then there are also people in financial services companies and blue chip multinationals running projects as vaguely defined as "cloud" or "big data" and as specifically niche as "graph databases" and "deep learning-based object classification" without get-rich-quick schemes and libertarian antieconomics attached to their hype.
- vec 9y ago
  Right, this. I think cryptocurrencies are here to stay. I'm not convinced that's actually going to "positively affect the industry in the upcoming future". I don't think cryptocurrencies are going to remove the need for some big middleman like Visa to sit between individual consumers and their partners. Things like reversible transactions and on-demand small loans are too attractive to the median consumer, so someone's going to be layering them on top of the underlying currency, whatever it may be. I don't think they're going to have a big impact on the financial sector. They can trade and leverage and loan with cryptos just as easily as they can with fiats, just with a lot of the safety rails like bankruptcy pulled off. I don't think they're going to impact most governments' ability to levy taxes and to borrow. There are dozens of governments that don't mint their own currencies, and by and large they still maintain taxing authority about as easily as they maintain the rest of their infrastructure and bureaucracy. I do think it's going to prevent central banks from doing their thing, but I'm not convinced that's a good thing. Central banks have their issues, to be sure, but I'm pretty sure they're better than the huge boom & bust cycles they replaced. Cryptocurrencies will certainly make the world different in meaningful ways. Different doesn't necessarily mean better.

nabla9 9y ago

I hope the technology matures beyond 'blockchain' and marketing drops the 'coin' moniker and the gold rush dies down. Cryptographically verified distributed log files should have negligible hype value and be hidden part of the infrastructure. I predict that 10 years from now normal relational databases have infrastructure for shared, authenticated and verified rows and columns and we laugh at the ICO era.

decentralised 9y ago
You are not seeing the whole picture and don't understand the goal of the "coin" in a "blockchain". I would strongly urge you to do some research so that you can make up your mind from a place of knowledge instead. http://github.com/jpantunes/awesome-cryptoeconomics http://github.com/jpantunes/awesome-cryptoeconomics
- chrisco255 9y ago
  This. I don't think a lot of people grasp that cryptocurrency is more than just a distributed ledger. It's as much of an economic innovation as a technical one.
  - aaron-lebo 9y ago
    Nobody fails to grasp the possibilities of these currencies, what they disagree with is utility to hype value. When people throw out "you don't get this" as an argument against skepticism, it sounds naive and a little insulting. This quote was in that NYT "Everyone's Getting Rich.." article: The tone turns somber. “Sometimes I think about what would happen to the future if a bomb went off at one of our meetings,” Mr. Buttram said. Mr. Hummer said, “A bomb would set back civilization for years.” There's too much of that exaggerated thinking.
    - decentralised 9y ago
      I don't mean to sound insulting or naive but maybe I am doing so by accident. Let me try in another way, what is the motivation for hobbyists and companies like Fidelity to buy mining hardware to secure a public blockchain?

rm_-rf_slash 9y ago

I think there is a glaring omission in the structure of the internet as dicusssed in this piece: the underlying hardware and supply chains that physically construct the internet, which I will term InternetZero. InternetZero relies on humongous-scale manufacturing with minuscule margins, which in turn relies on massive natural resource extraction, transportation, and refinement. Even the integrated circuit - ubiquitous in contemporary computing - could have taken many more years than it did to hit the scene if not for NASA’s shoveling piles of money into ICs for the Apollo 11 lunar lander. The “new code” that the article calls for at the end is a start, but is still just one small facet of a very centralized, controlled, and arguably corrupted system.

brndnmtthws 9y ago

Is anyone else tired of hearing the word 'bubble' applied to everything? Whether we're talking about tech stocks, chicken futures, tulips, or Bitcoin, it's become a really tired and meaningless term. You can't know if an asset is in a 'bubble' until long after the bubble has burst. Bitcoin is far from having burst, so this article and all those that came before it offer nothing new or insightful. Please, let's move past the name calling. Calling something a bubble does not make it so.

nacho2sweet 9y ago
No I am not tired of keeping my uniformed friends scared and their money safe.
- jtbayly 9y ago
  Why only your uniformed friends? Are only cops and members of the military worthy of having their money protected? Also, I thought they were the ones who were supposed to do the scaring...
  - rm_-rf_slash 9y ago
    I think parent meant to say “uniNformed”
- cryptofyodor 9y ago
  Well, I think it's more proper to inform and educate friends and people instead of scarring them. For me what SEC and regulators in majority of other countries are doing is scarring people (with all the warnings) - I'd find education more effective.
  - aaron-lebo 9y ago
    The SEC is warning people so they don't get scammed. Good for them. Their actions aren't unwarranted because there's been a lot of scams. You're asking for an open market so that people can be defrauded.

MechEStudent 9y ago

Paywalled.

deleted 9y ago
[deleted]
AlwaysBCoding 9y ago
try pasting in the link to outline.com

kylehotchkiss 9y ago

I love Stephen Johnson, the author. His show on Prime/PBS "How we got to now" was an incredible series about how small innovations with glass, sound, and light made the modern world possible, and he does it with a lot of charm. Highly recommended for the HN audience!

unnawut 9y ago
I read his book with the very same title. The history of glass, hygiene, etc. especially in the context of civilization is definitely eye opening!
AareyBaba 9y ago
If you have Amazon Prime - the show is available for free with your subscription.

catbird 9y ago

I don't understand the transit example presented in this article. I feel like I am missing something fundamental about the utility of any of these distributed services backed by their own type of coin. For the transit example you have some people who want to request rides, and some people who want to provide rides. OK. Someone develops an application to process these requests, in some kind of bidding system... How are the rider and driver matched up? I assume there needs to be some publicly accessible list of all open queries. Is that list what would be stored on the TransitCoin blockchain, and would that imply that all records of requested and completed rides are public, such that someone who knows your TransitCoin address can read all your previous trips, which are stored in this immutable chain until the end of time? Would the TransitCoins be 'mined' by people running a 'node' that does the ride matching? Then in order to pay for a ride you send a TransitCoin to the driver? The driver would then have to sell his earned TransitCoins on an exchange for USD (or GroceryCoins) at the end of the day? In the end I don't see why a new currency needs to be included in every proposed use of a blockchain, if the people who want to participate as a consumer and as a service provider are the ones running the nodes of the blockchain.

tomaskafka 9y ago
This - all things that can by done by SomethingSpecificCoin can be equally well done on smart contract platform ala Ethereum. There is no reason (except for rewarding founders and early investors) someone who want to provide taxi rides own specialized mining equipment for maintaining blockchain of a proprietary coin. I rode a taxi few months ago, and I don't remember having to change my currency for a TaxiCoin which would be the only token the taxi driver accepts. In fact, it is illegal for him not to accept the national currency.
- VMG 9y ago
  It can be equally well done with a Postgres database.
  - geezerjay 9y ago
    You can't sell postgres table inserts.

khabaal 9y ago

Isnt the author, well, supposed to keep his private key private? It was quite easy to create a text file with that 1b0be2162cedb2744d016943bb14e71de6af95a63af3790d6b41b1e719dc5c66 key and "geth account import key.txt" into a ethereum wallet to get a seemingly valid account. Please tell me that i am missing something very important here.

bowmessage 9y ago
Well that wallet address is empty now anyway! Looks like someone got ~.01 ETH. https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd5...
lopatin 9y ago
Uh, do you expect there to be any money in there?
- khabaal 9y ago
  Well, it would have been to hillarious if there was, but it was transferred about an hour ago. :D
- bubbabojangles 9y ago
  There was https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/address/0x6c2ecd6388c550e8d99ada34a1cd5...
- therein 9y ago
  There is also 1 LUN = 30$ in that account. https://etherscan.io/token/Lunyr?a=0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9 https://etherscan.io/token/Lunyr?a=0x6c2ecd6388c550e8d99ada3...

martin1975 9y ago

The answer to the fundamental ills of both Ethereum and Bitcoin is addressed in Cardano, which has been hard at work for 2+ years to create Ada and the first formally verified PoS type algorithm, Ouroboros. I wish more people would wrap their heads around the rigid approach to developing Ada that Cardano's taken so the light will come on... sort of like seasoned imperative language programmers who get bitten by the FP bug, the same kind of cathartic effect is achieved once you begin to understand the fundamentals of what Cardano is doing. Visit CardanoHub.org for more info and get ready to be processing new info for at least a week to begin to understand it.

jhwang5 9y ago
Sure, we can implement the good ideas behind Cardano to see if we can improve some areas of existing financial system. But I don't think the society needs to help pump cardano tokens.
companyhen 9y ago
Coin shilling has officially entered HN.
- martin1975 9y ago
  It's more like their tech I'm shilling. But hey, you're welcome to downvote me.

v64 9y ago

It's strange to me how there are many among the Hacker News crowd who can read an article like this and have doubts about its thesis. You lived through the 80s and 90s right? I can't count how many times in my life I was told no one would ever need a computer in their house, we've gotten along for decades just fine without them. No one will ever buy books online, that's ridiculous, you can go to the store and have one right now. The internet is just a niche chat program that will never have any use in business, etc. Our uses of cryptocurrency and blockchain technology now are similar to how we once used the power of the web to create Geocities pages with nothing more than MIDIs, scrolling text, and under construction gifs, because we didn't know what we were doing yet. But the early computer and internet pioneers were able to see past the proofs of concept and build on those ideas, to create the modern internet we have today. Bitcoin may cease to exist as a software product, but I think the innovations that it has spurred on will be with us for some time. This technology has the possibility of making business much more efficient by reducing costs that are associated with distrustful parties having to rely on (and pay money to) third party escrow/auditing services. If I want to send a large sum of money to someone else now, I have to rely on third party services such as banks or Western Union to facilitate that transfer. If you still continue to think "well that can be done with a SQL database now", you're completely missing the point. There's nothing wrong with relying on third parties, but now we have technology that allows us to choose not to if there's a need for it. In that regard, cryptography shares many of the same characteristics. We could communicate securely before public key cryptography was invented, but it broadened the scope and security of such operations, to the point where we espouse using https for all websites, not just ones requiring security. When the time comes, why would you trust a third party if you didn't have to?

bigdubs 9y ago
Not sure the parallels are as strong as you're making them out to be; there are deep, deep flaws with proof of work as a concept because of the energy consumed. There will probably be a better end state for distributed trust, but we're legitimately not there yet.
- aoro 9y ago
  They already exist. Check out the stellar consensus mechanism. https://www.stellar.org/papers/stellar-consensus-protocol.pdf https://www.stellar.org/papers/stellar-consensus-protocol.pd...

singularity2001 9y ago

can I buy Kraken shares? could perform better than JPMorgan.

lu11 9y ago

What happens if we end up using bitcoin (or any coin) for currency and then for some reason (like earthquake) we lose electricity for 24h or more... how we would be paying for things?