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Its not a payment system (unless the transaction is sufficiently large). It's more like digital gold. But gold has a track record of holding value over millenn

by eloff 6y ago

Its not a payment system (unless the transaction is sufficiently large). It's more like digital gold. But gold has a track record of holding value over millennia. Bitcoin is only a decade old. Will it hold up over time? Nobody actually knows.

agravier 6y ago
> Its not a payment system (unless the transaction is sufficiently large). > It's more like digital gold. As explained by the famous paper: "Bitcoin: Definitely Not A Peer-to-Peer Electronic Cash System"
- auntienomen 6y ago
  And rebutted in the equally well known "Bitcoin: A Comically Badly Designed and Completely Dysfunctional Peer-to-Peer Electronic Cash System".
  - agravier 6y ago
    I perfectly agree that Bitcoin has stopped innovating long ago to become many people's wasteful cash cow, and needs to die soon. But I don't like "it's actually meant to be digital gold" revisionism.
  - sp332 6y ago
    It was an impressive proof of concept. There are technically better cryptocurrencies (along pretty much any dimension), but they just didn't get as much attention. Maybe these articles about how bad bitcoin is should call out some alternatives.
    - Bluestein 6y ago
      This. Point to the many, innovative, options.
      - sp332 6y ago
        Got some suggestions for your sibling comment by sumedh?
        Bluestein 6y ago
        (I did not want to sound like I was advocating for anything in particular, but since it would be on topic, and you kindly ask :) As you said, as a start, anything with a higher TPS (transactions per second) is more efficient, which helps. Some notables, in my mind (not exclusive, of course) ... The Solana Chain ... - https://solana.com/ https://solana.com/ I really love what Cartesi is doing: They are bringing Smart Contracts to the "linux stack", securely (same guarantees than on-chain) but -outside- of chain. This will, obviously, raise efficiencies ... - https://cartesi.io/ https://cartesi.io/ The Fantom chain is high performance -and- their contracts are Ethereum-compatible (smart!), aside from it being a very nice, well thought out "ecosystem" - https://fantom.foundation/ https://fantom.foundation/ The NANO token makes it a point of pride, exactly how -much- more efficient ("Eco-friendly") it is than BTC, and their approach is interesting. (It has got some HN love lately and everything :) - https://nano.org/ https://nano.org/ (On a tangent, I am also a fan of what FRAX is doing in the stablecoin space, bringing decentralization and transparency to that space ("Frax is the world’s first fractional-algorithmic stablecoin") ... - https://frax.finance/ https://frax.finance/ (Disclosure: Am currently holding CTSI and FXS and FRAX - All of the projects above have their corresponding tokens. The points above stand, though :)
    - sumedh 6y ago
      What are the better alternatives?
      - sp332 6y ago
        The Lightning network is an overloy network on Bitcoin that allows faster transactions and higher transactions-per-second. Due to the economics of mining, it won't decrease the overall electricity usage of the network, but will make it more "efficient" per-transaction. Ethereum is more programmable, to the point of being quite easy to shoot oneself in the foot. (Bitcoin is intentionally not Turing-complete to avoid abuse.) Anything with proof-of-stake instead of proof-of-work is going to be less wasteful in terms of electricity. Ethereum is trying to get there but it has been delayed a lot. The slow pace of block creation has been a problem with Bitcoin for a long time and lots of blockchains have higher transaction-per-second capacities and quicker verification times. Ripple was promising but had some serious scandals and I don't know if it has a future. Anyway, Bitcoin is one of the slowest ones out there now. Several have improved on the privacy/anonymity aspects. The most famous of those I think is Monero.
rootusrootus 6y ago
> Nobody actually knows. We could make an educated guess, however. Gold has intrinsic value, which gives it a significant advantage over a tiny arrangement of bits in an ocean of them.
- renewiltord 6y ago
  The intrinsic value of gold is a fraction of what it trades for.
- eloff 6y ago
  It does, but that only establishes a low floor on the price of gold. If it had no value as a store of wealth, it would plummet in value to a tiny fraction of what it is actually worth. Bitcoin has a floor of 0 in theory. I would also guess that makes gold better as a store of wealth. But given that the price rarely ever approaches that floor means it might not matter. And bitcoin is harder to steal (at least you don't have to pay someone to guard it in a vault), easier to divide and transact and verify ownership. I don't claim to know how it will turn out.
  - zepto 6y ago
    > easier to divide and transact and verify ownership Yes, in the presence of high tech infrastructure, but otherwise impossible. Gold coins carry on working no matter what the nazis do to the internet and the chip foundries.
    - eloff 6y ago
      The Nazis famously confiscated gold. At least if they shutdown the internet you still own your bitcoin.
      - zepto 6y ago
        The Nazis can confiscate the hard drives where your keys are stored. And - it’s not going to help you against the Nazis if you can’t transact it. As to gold - that misses the point. Of course it can be taken from you. However unless that happens, you can still transact it. People escaped the Nazis using gold to pay their way.
civilized 6y ago
Who needs digital gold? Why not just trade ownership rights to actual gold? We used to have gold-backed paper money and you can easily trade gold electronically today.
- eloff 6y ago
  By putting it in a central database? We already do that. If wager you can probably buy gold online which just changes digital records while the gold doesn't move in the vault. If you don't trust the bank our government you can put it on a blockchain. It sounds a little silly to us, but remember half the world lives in non free countries. So trust in government and institutions is a big concern. But then why bother with the gold? Proof of work ensures scarcity. So just drop the gold from the equation and now you have bitcoin.
tanelpoder 6y ago
Also, what happens when the power is out? Texas power grid was apparently a few minutes from completely collapsing recently, with some estimates that it'd take up to months to get it fully back online (and what does electricity cost around that time?). Or if a weather event seems too local, what about a major solar flare that takes out transformer capacity for years? (and it would be expensive for a long time). One could revert back to cash and gold without power, but bitcoin transactions? Edit: I guess the summary would be that cash & gold are decoupled from electricity (even if it takes some to create/mine them), but Bitcoin's entire existence depends on continuous availability of (cheap enough) electricity.

by eloff 6y ago

agravier 6y ago

> Its not a payment system (unless the transaction is sufficiently large). > It's more like digital gold. As explained by the famous paper: "Bitcoin: Definitely Not A Peer-to-Peer Electronic Cash System"

auntienomen 6y ago
And rebutted in the equally well known "Bitcoin: A Comically Badly Designed and Completely Dysfunctional Peer-to-Peer Electronic Cash System".
- agravier 6y ago
  I perfectly agree that Bitcoin has stopped innovating long ago to become many people's wasteful cash cow, and needs to die soon. But I don't like "it's actually meant to be digital gold" revisionism.
- sp332 6y ago
  It was an impressive proof of concept. There are technically better cryptocurrencies (along pretty much any dimension), but they just didn't get as much attention. Maybe these articles about how bad bitcoin is should call out some alternatives.
  - Bluestein 6y ago
    This. Point to the many, innovative, options.
    - sp332 6y ago
      Got some suggestions for your sibling comment by sumedh?
      - Bluestein 6y ago
        (I did not want to sound like I was advocating for anything in particular, but since it would be on topic, and you kindly ask :) As you said, as a start, anything with a higher TPS (transactions per second) is more efficient, which helps. Some notables, in my mind (not exclusive, of course) ... The Solana Chain ... - https://solana.com/ https://solana.com/ I really love what Cartesi is doing: They are bringing Smart Contracts to the "linux stack", securely (same guarantees than on-chain) but -outside- of chain. This will, obviously, raise efficiencies ... - https://cartesi.io/ https://cartesi.io/ The Fantom chain is high performance -and- their contracts are Ethereum-compatible (smart!), aside from it being a very nice, well thought out "ecosystem" - https://fantom.foundation/ https://fantom.foundation/ The NANO token makes it a point of pride, exactly how -much- more efficient ("Eco-friendly") it is than BTC, and their approach is interesting. (It has got some HN love lately and everything :) - https://nano.org/ https://nano.org/ (On a tangent, I am also a fan of what FRAX is doing in the stablecoin space, bringing decentralization and transparency to that space ("Frax is the world’s first fractional-algorithmic stablecoin") ... - https://frax.finance/ https://frax.finance/ (Disclosure: Am currently holding CTSI and FXS and FRAX - All of the projects above have their corresponding tokens. The points above stand, though :)
  - sumedh 6y ago
    What are the better alternatives?
    - sp332 6y ago
      The Lightning network is an overloy network on Bitcoin that allows faster transactions and higher transactions-per-second. Due to the economics of mining, it won't decrease the overall electricity usage of the network, but will make it more "efficient" per-transaction. Ethereum is more programmable, to the point of being quite easy to shoot oneself in the foot. (Bitcoin is intentionally not Turing-complete to avoid abuse.) Anything with proof-of-stake instead of proof-of-work is going to be less wasteful in terms of electricity. Ethereum is trying to get there but it has been delayed a lot. The slow pace of block creation has been a problem with Bitcoin for a long time and lots of blockchains have higher transaction-per-second capacities and quicker verification times. Ripple was promising but had some serious scandals and I don't know if it has a future. Anyway, Bitcoin is one of the slowest ones out there now. Several have improved on the privacy/anonymity aspects. The most famous of those I think is Monero.

rootusrootus 6y ago

> Nobody actually knows. We could make an educated guess, however. Gold has intrinsic value, which gives it a significant advantage over a tiny arrangement of bits in an ocean of them.

renewiltord 6y ago
The intrinsic value of gold is a fraction of what it trades for.
eloff 6y ago
It does, but that only establishes a low floor on the price of gold. If it had no value as a store of wealth, it would plummet in value to a tiny fraction of what it is actually worth. Bitcoin has a floor of 0 in theory. I would also guess that makes gold better as a store of wealth. But given that the price rarely ever approaches that floor means it might not matter. And bitcoin is harder to steal (at least you don't have to pay someone to guard it in a vault), easier to divide and transact and verify ownership. I don't claim to know how it will turn out.
- zepto 6y ago
  > easier to divide and transact and verify ownership Yes, in the presence of high tech infrastructure, but otherwise impossible. Gold coins carry on working no matter what the nazis do to the internet and the chip foundries.
  - eloff 6y ago
    The Nazis famously confiscated gold. At least if they shutdown the internet you still own your bitcoin.
    - zepto 6y ago
      The Nazis can confiscate the hard drives where your keys are stored. And - it’s not going to help you against the Nazis if you can’t transact it. As to gold - that misses the point. Of course it can be taken from you. However unless that happens, you can still transact it. People escaped the Nazis using gold to pay their way.

civilized 6y ago

Who needs digital gold? Why not just trade ownership rights to actual gold? We used to have gold-backed paper money and you can easily trade gold electronically today.

eloff 6y ago
By putting it in a central database? We already do that. If wager you can probably buy gold online which just changes digital records while the gold doesn't move in the vault. If you don't trust the bank our government you can put it on a blockchain. It sounds a little silly to us, but remember half the world lives in non free countries. So trust in government and institutions is a big concern. But then why bother with the gold? Proof of work ensures scarcity. So just drop the gold from the equation and now you have bitcoin.

tanelpoder 6y ago

Also, what happens when the power is out? Texas power grid was apparently a few minutes from completely collapsing recently, with some estimates that it'd take up to months to get it fully back online (and what does electricity cost around that time?). Or if a weather event seems too local, what about a major solar flare that takes out transformer capacity for years? (and it would be expensive for a long time). One could revert back to cash and gold without power, but bitcoin transactions? Edit: I guess the summary would be that cash & gold are decoupled from electricity (even if it takes some to create/mine them), but Bitcoin's entire existence depends on continuous availability of (cheap enough) electricity.