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Nope. That's what a medium of exchange is for. Bitcoin isn't at that phase yet. For any new money, it goes like this: 1. Store of value. 2. Medium of exchang

Nope. That's what a medium of exchange is for. Bitcoin isn't at that phase yet. For any new money, it goes like this: 1. Store of value. 2. Medium of exchange. 3. Unit of account. In that order. Cumulatively.

JumpCrisscross 6y ago
> For any new money, it goes like this: 1. Store of value. 2. Medium of exchange. 3. Unit of account. I’m struggling to think of a currency that started as a store of value and then became a medium of exchange. Most currencies [1] started out worthless for good theoretical reasons. If they started valuable, they’d be subject to Gresham’s law and not transacted. [1] The U.S. dollar, pounds Sterling, the Euro, the Swiss franc, money in the free banking era, Song Dynasty jiaozi, et cetera
- Rallerbabs 6y ago
  Read "The Bitcoin Standard" if you want that problem solved.
  - Grustaf 6y ago
    It's a fun book and it accurately describes some of the flaws with fiat money, at least as it is used now. But the part where it tries to explain why Bitcoin is the answer is laughable. Almost as laughable as the part where he blames every societal ill from the degeneration of art and onwards on fiat currencies.
    - Rallerbabs 6y ago
      No attempt at rational argument is made by you. Argument irrelevant.
      - dang 6y ago
        You've been breaking the site guidelines egregiously in this thread, and in other threads. We ban accounts that do that. Would you please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here? I'm not going to ban you right now because you've posted some good comments too, but if you keep posting comments like these ones we're going to have to. Please correct.
        Rallerbabs 6y ago
        Tnx, man. I'll have a looksy!
        dang 6y ago
        Appreciated!
wcoenen 6y ago
Bitcoin's usage as a medium of exchange appears to be decreasing, not increasing. If you look for graphs showing the growth of merchants accepting bitcoin over time, you'll notice they're all out of date. That's because at some point after 2016 it stopped growing and people lost interest in this metric. This happened when the block size limit was reached: the result was higher transaction fees and unpredictable confirmation times. In 2018 it got so bad there was basically a civil war in the community about it and bitcoin cash forked. Today the average transaction fee is $19. So I don't think we're on the path you envision. If bitcoin continues to be successful, I expect it will be used as an international settlement system by large corporations and financial institutions only.
- Rallerbabs 6y ago
  I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh? Ignore Lightning Network's development at your own peril. Increased and decreased interest are part of the normal market cycle, the chart of which I'm betting you don't know by heart. You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies. But whatever, man. You don't wanna belong to the future's 1%, that's fine with me.
  - wcoenen 6y ago
    > I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh? You're reading things into my comment that I didn't say. Note that I didn't claim that my opinion is more important than yours, nor did I claim that bitcoin will not be successful. It very well might be. I just pointed out some inconsistencies in the path to success that you envision. (Or rather, the path that Dan Held envisions, because your comment was an almost verbatim copy of what he recently said in a "What Bitcoin Did" podcast episode.) > Ignore Lightning Network's development at your own peril. Lightning will help with scaling, but it's not a silver bullet. To give one example: a lightning channel's state management involves composing precommitted transactions, which are not broadcast but can be used to unilaterally close a channel (see section 3.3.2 of the lightning paper[1]). That means the transaction fee also needs to be chosen in advance. That can be problematic when the transaction fees spike, because there is only a limited window for such a transaction to go through. If it takes too long to confirm, it will not be able to override an attempt by the other party to maliciously close the channel with outdated state. > You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies. Paypal does not currently support using bitcoin as a medium of exchange. See Paypal's FAQ "Can I use Cryptocurrencies to pay or send money with PayPal?"[2]. Even if they do enable "sending bitcoin" within paypal in the future, I'm not sure we can say that that's bitcoin being used as a medium of exchange. The medium would be paypal, while bitcoin would act as a unit of account (numbers in paypal's database). [1] https://lightning.network/lightning-network-paper.pdf https://lightning.network/lightning-network-paper.pdf [2] https://www.paypal.com/us/smarthelp/article/cryptocurrency-on-paypal-faq-faq4398 https://www.paypal.com/us/smarthelp/article/cryptocurrency-o...

JumpCrisscross 6y ago

> For any new money, it goes like this: 1. Store of value. 2. Medium of exchange. 3. Unit of account. I’m struggling to think of a currency that started as a store of value and then became a medium of exchange. Most currencies [1] started out worthless for good theoretical reasons. If they started valuable, they’d be subject to Gresham’s law and not transacted. [1] The U.S. dollar, pounds Sterling, the Euro, the Swiss franc, money in the free banking era, Song Dynasty jiaozi, et cetera

Rallerbabs 6y ago
Read "The Bitcoin Standard" if you want that problem solved.
- Grustaf 6y ago
  It's a fun book and it accurately describes some of the flaws with fiat money, at least as it is used now. But the part where it tries to explain why Bitcoin is the answer is laughable. Almost as laughable as the part where he blames every societal ill from the degeneration of art and onwards on fiat currencies.
  - Rallerbabs 6y ago
    No attempt at rational argument is made by you. Argument irrelevant.
    - dang 6y ago
      You've been breaking the site guidelines egregiously in this thread, and in other threads. We ban accounts that do that. Would you please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here? I'm not going to ban you right now because you've posted some good comments too, but if you keep posting comments like these ones we're going to have to. Please correct.
      - Rallerbabs 6y ago
        Tnx, man. I'll have a looksy!
        dang 6y ago
        Appreciated!

wcoenen 6y ago

Bitcoin's usage as a medium of exchange appears to be decreasing, not increasing. If you look for graphs showing the growth of merchants accepting bitcoin over time, you'll notice they're all out of date. That's because at some point after 2016 it stopped growing and people lost interest in this metric. This happened when the block size limit was reached: the result was higher transaction fees and unpredictable confirmation times. In 2018 it got so bad there was basically a civil war in the community about it and bitcoin cash forked. Today the average transaction fee is $19. So I don't think we're on the path you envision. If bitcoin continues to be successful, I expect it will be used as an international settlement system by large corporations and financial institutions only.

Rallerbabs 6y ago
I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh? Ignore Lightning Network's development at your own peril. Increased and decreased interest are part of the normal market cycle, the chart of which I'm betting you don't know by heart. You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies. But whatever, man. You don't wanna belong to the future's 1%, that's fine with me.
- wcoenen 6y ago
  > I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh? You're reading things into my comment that I didn't say. Note that I didn't claim that my opinion is more important than yours, nor did I claim that bitcoin will not be successful. It very well might be. I just pointed out some inconsistencies in the path to success that you envision. (Or rather, the path that Dan Held envisions, because your comment was an almost verbatim copy of what he recently said in a "What Bitcoin Did" podcast episode.) > Ignore Lightning Network's development at your own peril. Lightning will help with scaling, but it's not a silver bullet. To give one example: a lightning channel's state management involves composing precommitted transactions, which are not broadcast but can be used to unilaterally close a channel (see section 3.3.2 of the lightning paper[1]). That means the transaction fee also needs to be chosen in advance. That can be problematic when the transaction fees spike, because there is only a limited window for such a transaction to go through. If it takes too long to confirm, it will not be able to override an attempt by the other party to maliciously close the channel with outdated state. > You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies. Paypal does not currently support using bitcoin as a medium of exchange. See Paypal's FAQ "Can I use Cryptocurrencies to pay or send money with PayPal?"[2]. Even if they do enable "sending bitcoin" within paypal in the future, I'm not sure we can say that that's bitcoin being used as a medium of exchange. The medium would be paypal, while bitcoin would act as a unit of account (numbers in paypal's database). [1] https://lightning.network/lightning-network-paper.pdf https://lightning.network/lightning-network-paper.pdf [2] https://www.paypal.com/us/smarthelp/article/cryptocurrency-on-paypal-faq-faq4398 https://www.paypal.com/us/smarthelp/article/cryptocurrency-o...