6 ms·

Spoiler: the post boils down to an anti-Bitcoin warning using the old motto “it’s not real money” because you can’t pay your taxes with it. I can’t pay my taxes

by reidjs 6y ago

Spoiler: the post boils down to an anti-Bitcoin warning using the old motto “it’s not real money” because you can’t pay your taxes with it. I can’t pay my taxes in Yen but that doesn’t mean Yen isn’t real money. This is an example of a tech person extrapolating their expertise outside tech. Bitcoin is an experiment in economics as much as it’s an experiment in technology. Just because the network is slow to process transactions doesn’t mean the entire system is worthless. The first 90% of the article isn’t bad, but IMO author didn’t really backup his claims.

burade 6y ago
No, that's not the argument. That argument is that the global bitcoin network is slow as shit, and it would take 5 entire months just to process 140 million US citizens' taxes. Meaning that it's not really viable, unless some technological breakthrough happens.
- reidjs 6y ago
  Why would the US Gov want people to pay their taxes in BTC instead of USD?
- googlryas 6y ago
  It needs a social/political breakthrough, not technological. You could just make block sizes 1000x larger and be done with it. Literally just a configuration variable if everyone would get on board.
  - throw0101a 6y ago
    > Literally just a configuration variable if everyone would get on board. If.
    - googlryas 6y ago
      Right. Almost an impossible task based on precedent. But my point was that it isn't like the system as designed can't handle way more transactions than it currently does. If you have a sports car that is limited to do 15mph, but can actually do 215mph if you remove the artificial limiter, then you don't need a technological breakthrough to get the car to go to 215mph.
  - mr_woozy 6y ago
    https://www.youtube.com/watch?v=CqNEQS80-h4 https://www.youtube.com/watch?v=CqNEQS80-h4 - Luke Dashjr "Briefly, Why Block Sizes Shouldn't Be Too Big" https://www.youtube.com/watch?v=92AYj_9W7x0 https://www.youtube.com/watch?v=92AYj_9W7x0 - Why is Block Size 1MB Andreas Antonopoulos There's simple trade-off between decentralized and bandwidth requirements. If you raise the limit you reduce the pool of those that run full nodes thereby centralizing the network at which point you're undermining the point of a decentralized ledger.
  - jeffreyrogers 6y ago
    So many problems are like this though and they don't get solved. I doubt bitcoin will be any different.
- bhupy 6y ago
  But that's sort of a straw-man representation of what (most) Bitcoin adherents see as the future of Bitcoin / crypto. I don't think anyone serious expects the raw blockchain to power every single transaction in real time, rather it's seen as a mechanism to supplant clearing houses. Consider that every night, banks submit batch files to a network of clearing houses in order to electronically transact US dollars (credit cards, Venmo, etc are all just abstractions on top of this ultimate step). The slow, asynchronous blockchain transaction is meant to be a replacement for that step. The steel-man version of the Bitcoin/crypto future is that most people would use trust-based institutions to perform instant transactions (like credit cards and Venmo), just that the ultimate step involves an hour long blockchain transaction rather than a days-long ACH batch file. The fact that the Blockchain also enables individual point-to-point payments (albeit slowly) in a trust-less way is more of a replacement to having to mail somebody an envelope/briefcase full of cash, which is currently the only way one can transact if one is blacklisted by the centralized institutions. And depending on your political leanings, you might still prefer to use centralized payments on top of Bitcoin/crypto instead of on top of USD because with the former, there's little room for funny business by central bank reserve messing with the supply of money.
  - elliekelly 6y ago
    > rather than a days-long ACH batch file Same-day ACH exists today. Even for international transactions. Most ACH batch files can be processed in as little as an hour. To the extent there's anything preventing "instant transactions" its (1) AML regulations and (2) internal/contractual (Visa, etc.) fraud prevention, not the ACH process.
    - bhupy 6y ago
      That's not the point though, the point is that Bitcoin is not comparable to the entire financial system, rather it's comparable to raw cash. Just like it's pretty infeasible for everyone to always use cash all the time, it would be pretty infeasible for everyone to always use Bitcoin-on-the-blockchain to buy a cup of coffee. What Bitcoin allows you to do is build a financial system comprised of products that look like Venmo, credit cards, banks, etc on top of a currency system that's 1) censorship resistant (unlike ACH), and 2) independent of central bank monetary policy (unlike most fiat currencies). The degree to which you care about (2) is obviously based on your political leanings, but (1) basically turns paper-money in-person transactions into something that can happen between strangers over the Internet unencumbered. Most crypto bulls hope that the vast majority of people use instant bank-driven payments, just based on the blockchain at the lowest layer, rather than USD-over-ACH. And to be clear, I'm not really a crypto bull and I don't really have a horse in the race. But this is the steel-man argument for crypto.
throw0101a 6y ago
IMHO, the primary argument is: > It is completely unambiguously obvious to me that Bitcoin, a brilliant achievement technically, is functioning as a Ponzi scheme, siphoning money from the pockets of rubes and into those of exchange insiders and China-based miners. Can anyone confirm/debunk this claim: > A few large holders commonly referred to as whales continue to own most Bitcoin. About 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95% of the digital asset, according to researcher Flipside Crypto. * https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-whales-ownership-concentration-is-rising-during-rally https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-w...
- dan-robertson 6y ago
  95% controlled by 2% is surely not that shocking a statistic. It’s not too dissimilar if you look at personal wealth but one person could correspond to many Bitcoin accounts outside that 2%.
roland35 6y ago
There is no technical limitations on everyone paying their taxes in Yen (or Euros), but there is a rate limit on bitcoin.
andrewguenther 6y ago
> This is an example of a tech person extrapolating their expertise outside tech. Isn't this exactly what Bitcoin is?
breck 6y ago
The best argument I've heard for the long term success of bitcoin: if you think Bitcoin is complex and expensive to maintain, what do you think it costs to run the U.S. Dollar system? For that reason and that reason alone I would never ever bet against BitCoin. I also wouldn't bet my house on it, but digital currencies really could turn out to a be much more efficient currency system than our current state issued currencies.
- mediaman 6y ago
  Bitcoin in particular would have really benefited from some basic understanding of monetary economics. If you want it to be a currency, it needs to be able to expand its supply to meet demand as a medium of exchange. Otherwise you get huge deflation. Instead, Bitcoin was designed to have a very finite amount of supply. And - shockingly - anyone trying to use it as a medium of currency would find that viewing the world through the lens of Bitcoin has been massively, hugely deflationary (meaning: the cost of a Bag Mac has fallen dramatically in terms of Bitcoin, as has your paycheck). That same 'feature' is what made it the darling of speculators. It's like the feature that makes it a dysfunctional currency is also what made it successful as a tool of speculation. That's not an indictment of crypto generally - hopefully other coins that were designed to more intelligently expand supply as the demand for them increased as a medium of exchange, and these other coins would exhibit more price stability, a core requirement of a functional currency. Crypto brings some great decentralized features, and its creators deserve credit for it. But combining that innovation with some understanding of monetary economics would truly unleash its potential as an alternative to state-sponsored currency.
  - throw0101a 6y ago
    An observation from a paper I ran across: > An ECB publication states that bitcoin’s theoretical roots are in Austrian economics[11]. Bitcoin corresponds with Austrian economic ideas in that bitcoin was intended to provide a monetary alternative that is beyond the reach of governments to regulate. Bitcoin has correspondence with libertarian ideas, which have some relationship with Austrian ideas. In the USA, my experience is that bitcoin proponents appear to have obtained their theory from science-fiction, radical libertarian popular literature, anti- government/anti-tax activism, and often from nothing that is apparent except their own thoughts. * https://arxiv.org/pdf/1312.2048.pdf https://arxiv.org/pdf/1312.2048.pdf * https://arxiv.org/abs/1312.2048 https://arxiv.org/abs/1312.2048
seabass 6y ago
The author also assumes there will be no changes or innovation to speed up the network. I think that's a bad assumption to make. Beyond that, I know in my own experience I don't use btc for any transactions that I need settled instantly--that doesn't make it valueless, it just gives it a different purpose than, for example, usd credit card payments.
alfonsodev 6y ago
yeah, while I enjoyed those stories it feel wrong at the end, because it is an appeal of authority fallacy. "I was was right about unrelated fact A, B, C I am an authority so trust me on this."
- mr_woozy 6y ago
  >it is an appeal of authority fallacy Couldn't say it better myself. Smart enough to understand tech trends, but not smart enough to introspect using logical fallacy. SMORT

by reidjs 6y ago

burade 6y ago

No, that's not the argument. That argument is that the global bitcoin network is slow as shit, and it would take 5 entire months just to process 140 million US citizens' taxes. Meaning that it's not really viable, unless some technological breakthrough happens.

reidjs 6y ago
Why would the US Gov want people to pay their taxes in BTC instead of USD?
googlryas 6y ago
It needs a social/political breakthrough, not technological. You could just make block sizes 1000x larger and be done with it. Literally just a configuration variable if everyone would get on board.
- throw0101a 6y ago
  > Literally just a configuration variable if everyone would get on board. If.
  - googlryas 6y ago
    Right. Almost an impossible task based on precedent. But my point was that it isn't like the system as designed can't handle way more transactions than it currently does. If you have a sports car that is limited to do 15mph, but can actually do 215mph if you remove the artificial limiter, then you don't need a technological breakthrough to get the car to go to 215mph.
- mr_woozy 6y ago
  https://www.youtube.com/watch?v=CqNEQS80-h4 https://www.youtube.com/watch?v=CqNEQS80-h4 - Luke Dashjr "Briefly, Why Block Sizes Shouldn't Be Too Big" https://www.youtube.com/watch?v=92AYj_9W7x0 https://www.youtube.com/watch?v=92AYj_9W7x0 - Why is Block Size 1MB Andreas Antonopoulos There's simple trade-off between decentralized and bandwidth requirements. If you raise the limit you reduce the pool of those that run full nodes thereby centralizing the network at which point you're undermining the point of a decentralized ledger.
- jeffreyrogers 6y ago
  So many problems are like this though and they don't get solved. I doubt bitcoin will be any different.
bhupy 6y ago
But that's sort of a straw-man representation of what (most) Bitcoin adherents see as the future of Bitcoin / crypto. I don't think anyone serious expects the raw blockchain to power every single transaction in real time, rather it's seen as a mechanism to supplant clearing houses. Consider that every night, banks submit batch files to a network of clearing houses in order to electronically transact US dollars (credit cards, Venmo, etc are all just abstractions on top of this ultimate step). The slow, asynchronous blockchain transaction is meant to be a replacement for that step. The steel-man version of the Bitcoin/crypto future is that most people would use trust-based institutions to perform instant transactions (like credit cards and Venmo), just that the ultimate step involves an hour long blockchain transaction rather than a days-long ACH batch file. The fact that the Blockchain also enables individual point-to-point payments (albeit slowly) in a trust-less way is more of a replacement to having to mail somebody an envelope/briefcase full of cash, which is currently the only way one can transact if one is blacklisted by the centralized institutions. And depending on your political leanings, you might still prefer to use centralized payments on top of Bitcoin/crypto instead of on top of USD because with the former, there's little room for funny business by central bank reserve messing with the supply of money.
- elliekelly 6y ago
  > rather than a days-long ACH batch file Same-day ACH exists today. Even for international transactions. Most ACH batch files can be processed in as little as an hour. To the extent there's anything preventing "instant transactions" its (1) AML regulations and (2) internal/contractual (Visa, etc.) fraud prevention, not the ACH process.
  - bhupy 6y ago
    That's not the point though, the point is that Bitcoin is not comparable to the entire financial system, rather it's comparable to raw cash. Just like it's pretty infeasible for everyone to always use cash all the time, it would be pretty infeasible for everyone to always use Bitcoin-on-the-blockchain to buy a cup of coffee. What Bitcoin allows you to do is build a financial system comprised of products that look like Venmo, credit cards, banks, etc on top of a currency system that's 1) censorship resistant (unlike ACH), and 2) independent of central bank monetary policy (unlike most fiat currencies). The degree to which you care about (2) is obviously based on your political leanings, but (1) basically turns paper-money in-person transactions into something that can happen between strangers over the Internet unencumbered. Most crypto bulls hope that the vast majority of people use instant bank-driven payments, just based on the blockchain at the lowest layer, rather than USD-over-ACH. And to be clear, I'm not really a crypto bull and I don't really have a horse in the race. But this is the steel-man argument for crypto.

throw0101a 6y ago

IMHO, the primary argument is: > It is completely unambiguously obvious to me that Bitcoin, a brilliant achievement technically, is functioning as a Ponzi scheme, siphoning money from the pockets of rubes and into those of exchange insiders and China-based miners. Can anyone confirm/debunk this claim: > A few large holders commonly referred to as whales continue to own most Bitcoin. About 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95% of the digital asset, according to researcher Flipside Crypto. * https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-whales-ownership-concentration-is-rising-during-rally https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-w...

dan-robertson 6y ago
95% controlled by 2% is surely not that shocking a statistic. It’s not too dissimilar if you look at personal wealth but one person could correspond to many Bitcoin accounts outside that 2%.

roland35 6y ago

There is no technical limitations on everyone paying their taxes in Yen (or Euros), but there is a rate limit on bitcoin.

andrewguenther 6y ago

> This is an example of a tech person extrapolating their expertise outside tech. Isn't this exactly what Bitcoin is?

breck 6y ago

The best argument I've heard for the long term success of bitcoin: if you think Bitcoin is complex and expensive to maintain, what do you think it costs to run the U.S. Dollar system? For that reason and that reason alone I would never ever bet against BitCoin. I also wouldn't bet my house on it, but digital currencies really could turn out to a be much more efficient currency system than our current state issued currencies.

mediaman 6y ago
Bitcoin in particular would have really benefited from some basic understanding of monetary economics. If you want it to be a currency, it needs to be able to expand its supply to meet demand as a medium of exchange. Otherwise you get huge deflation. Instead, Bitcoin was designed to have a very finite amount of supply. And - shockingly - anyone trying to use it as a medium of currency would find that viewing the world through the lens of Bitcoin has been massively, hugely deflationary (meaning: the cost of a Bag Mac has fallen dramatically in terms of Bitcoin, as has your paycheck). That same 'feature' is what made it the darling of speculators. It's like the feature that makes it a dysfunctional currency is also what made it successful as a tool of speculation. That's not an indictment of crypto generally - hopefully other coins that were designed to more intelligently expand supply as the demand for them increased as a medium of exchange, and these other coins would exhibit more price stability, a core requirement of a functional currency. Crypto brings some great decentralized features, and its creators deserve credit for it. But combining that innovation with some understanding of monetary economics would truly unleash its potential as an alternative to state-sponsored currency.
- throw0101a 6y ago
  An observation from a paper I ran across: > An ECB publication states that bitcoin’s theoretical roots are in Austrian economics[11]. Bitcoin corresponds with Austrian economic ideas in that bitcoin was intended to provide a monetary alternative that is beyond the reach of governments to regulate. Bitcoin has correspondence with libertarian ideas, which have some relationship with Austrian ideas. In the USA, my experience is that bitcoin proponents appear to have obtained their theory from science-fiction, radical libertarian popular literature, anti- government/anti-tax activism, and often from nothing that is apparent except their own thoughts. * https://arxiv.org/pdf/1312.2048.pdf https://arxiv.org/pdf/1312.2048.pdf * https://arxiv.org/abs/1312.2048 https://arxiv.org/abs/1312.2048

seabass 6y ago

The author also assumes there will be no changes or innovation to speed up the network. I think that's a bad assumption to make. Beyond that, I know in my own experience I don't use btc for any transactions that I need settled instantly--that doesn't make it valueless, it just gives it a different purpose than, for example, usd credit card payments.

alfonsodev 6y ago

yeah, while I enjoyed those stories it feel wrong at the end, because it is an appeal of authority fallacy. "I was was right about unrelated fact A, B, C I am an authority so trust me on this."

mr_woozy 6y ago
>it is an appeal of authority fallacy Couldn't say it better myself. Smart enough to understand tech trends, but not smart enough to introspect using logical fallacy. SMORT