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It is kind of funny that exchanges have become so successful for Bitcoin- since they lose 100% of the stuff that made BTC attractive in the first place. They’re
by Traster 6y ago
It is kind of funny that exchanges have become so successful for Bitcoin- since they lose 100% of the stuff that made BTC attractive in the first place. They’re centralised, regulated and transactions don’t even go on the blockchain.
The result is that the number 1 way people get into Bitcoin is through a mechanism that has none of the attributes of Bitcoin.
- read_if_gay_ 6y ago> They’re centralised, regulated and transactions don’t even go on the blockchain. Of course. All of that is kind of unavoidable if you want to interface with fiat.
- vbezhenar 6y agoNot really. I can buy bitcoins on localbitcoins and it's pretty decentralized.
- viraptor 6y agoThe fact you got to the localbitcoins service and tell it who you do the exchange with makes it at least a centralised place of information.
- 177tcca 6y agoSo basically the consumer tech hasn't yet caught up with the technology, is what you're saying? Once there are enough people buying and selling for cash, you'll just need to find an old payphone, or some other known meeting place, if popular technical means are legislated away.
- deleted 6y ago[deleted]
- robcohen 6y agoUnder US law it is illegal to use localbitcoins. It’s a violation of money transmitter laws. https://kelman.law/blog/money-transmitter-licensing-for-u-s-crypto-companies/ https://kelman.law/blog/money-transmitter-licensing-for-u-s-...
- gruez 6y agoOnly if you're a business, right? Does offering to buy 500 euros off your friend because he have some left over from his european vacation make you a MSB?
- yawnr 6y agoYour friend would be the money transmitter in this case and at that scale no one would care, but if he did it with 1000 “friends” then, well yeah. People have gotten arrested and charged for operating on localbitcoins without proper licensing.
- PaulAJ 6y agoThat isn't quite true. Money business laws only apply to people doing it as business, so your friend is in the clear de-jure as well as de-facto. One of the things a prosecutor would have to prove as part of the case is that this was in fact a business. Typically this would be done by showing that he had been listing both buy and sell on localbitcoins.com and/or by setting up a test purchase that showed he was dealing with anyone who showed up.
- seibelj 6y agoThere is a difference from selling a few cars to strangers, and setting up a car-selling business which would then be subject to a bajillion rules and regulations. The same for selling bitcoins. You can do it a few times but if you make it a business you become a MSB.
- saurik 6y agoAnd yet, you did get there, and once there you interoperate -- permissionlessly -- with any other exchange.
- WJW 6y ago> since they lose 100% of the stuff that made BTC attractive in the first place Not so. They still allow speculation on BTC price volatility and "get rich quick" gambles is what drove most of Bitcoin growth in the past few years. If anything, the big exchanges make Bitcoin even more suitable for speculation than if it was on the blockchain, since you can trade way more if you don't have to wait several blocks for your trade to be confirmed.
- shawnz 6y agoMaking it easier to speculate should in theory decrease volatility and make market manipulation harder, since having more speculators should mean that the price is driven to its fair value more quickly.
- WJW 6y agoThis gets back to the "gambling vs investing" debate we had on the front page yesterday. What is the fair value of bitcoin? It will never provide dividends or other types of future cashflows, so that aspect of its fair value is zero. The remaining part is purely speculative in that it is based on what other people will pay for it. It is not at all clear to me that having more (relatively uninformed) speculators will lead to less volatility for such an instrument.
- shawnz 6y agoBitcoin isn't a stock. Most kinds of assets don't provide dividends or other cashflows -- that is certainly not the only determiner of the value of an asset. It would indeed be a bad idea to construct an investment portfolio out of only Bitcoins and no stocks, but that doesn't mean it is without value (for example, as a monetary technology or an inflation hedge) > It is not at all clear to me that having more (relatively uninformed) speculators will lead to less volatility for such an instrument. I am not sure how we can judge the informedness of the speculators or what we are comparing them against. But, each additional speculator improves the informedness of the market overall.
- riffraff 6y agoas it's been pointed out by many people in many circumstances, the whole cryptocurrency story so far has been a progressive reinvention of the modern financial system, including many of the intermediary steps.
- rualca 6y agoI wouldn't go as far as calling it a reinvention of the modern financial system, but I would call it a reinvention of the Dutch tulip mania[1], with the notable exception that tulips do have some tangible value. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
- SamReidHughes 6y agoThe other obvious exception is that bitcoins don’t self-replicate.
- gurtyui 6y agoIf you want to go to the Amazon jungle, you will still need to pass through a (centralized) airport.
- rchaud 6y ago> It is kind of funny that exchanges have become so successful for Bitcoin When everyone's prospecting for gold, sell shovels.
- andrewtbham 6y agoI think the fixed supply is what attracts people.
- mcguire 6y agoWhich results in long-term depreciation, such that spending bitcoin is economically irrational.
- EVa5I7bHFq9mnYK 6y agoIt is not so, because humans have finite life span. So they MUST spend their coins within a fixed time frame of about 70 years.
- joubert 6y ago> So they MUST spend their coins within a fixed time frame of about 70 years. Inheritance. Donations.
- EVa5I7bHFq9mnYK 6y agoNo one passes everything to heirs
- joubert 6y agoNo, but anything you didn’t spend while you were alive goes to your heirs (or the state if you don’t have any, or other rules). So, you do not have to spend everything while alive.
- imtringued 6y agoLots of Bitcoin simply get lost and people are betting on this loss too. You are also forgetting the ultimate irony behind long term deflation. At some point your Bitcoin will be worth millions in dollars but will the dollar actually buy you that much product or service if there aren't enough young people to take care of everything?
- dehrmann 6y ago> The result is that the number 1 way people get into Bitcoin is through a mechanism that has none of the attributes of Bitcoin. Sure, but 95% of people don't care about that. They just want an asset they will go up. Everything else is just a story people tell themselves so they're not putting 20% of their net worth in trading cards.
- UShouldBWorking 6y agoAre you saying 95% of people are idiots? I'd always have put the figure at just 80 or so.
- anonisko 6y agoEvery store of value that has ever existed and will ever exist is just a game of speculation that it will continue to be valued when you're ready to withdraw your money to do things you've saved for. Gold was the best portable and fungible speculative bet for a very long time. Bonds are speculation that a country will continue to be productive and well managed enough to pay their debts without resorting to massive inflation. Stocks are a speculation that a company will continue to be competitive and profitable for long enough to recoup your investment. Real estate is a speculation that an area will continue to be a desirable place to live or useful for some industry. Rare art is a speculation that people will still be willing to pay millions for your original Picasso and that we won't be able to produce undetectable copies with better technology. Bitcoin is a speculation that people want a digital, neutral store of value like gold was that they can park excess money in that they don't have a better use for right now.
- mettamage 6y agoFrom centralized exchanges the decentralized exchanges evolved since they share your criticism. The way I look at it: people create things, these things have certain effects. That's all there's to it. I don't mind that it's almost 100% against the idealism of Bitcoin, the fact that centralized exchanges were created and used is interesting in itself. Moreover, it's not necessarily incompatible with decentralization since trading Bitcoin on an exchange (centralized) is something else than exchanging Bitcoin via the blockchain (decentralized).
- ravenstine 6y ago> transactions don’t even go on the blockchain What are you talking about? When you purchase coins on Coinbase, they go into a wallet that you can easily deposit to through another means or withdraw to another wallet. This is the same with Binance, Kraken, CashApp, and so on. Exceptions would be Paypal or Rob-in-'hood where they have total custody, which has advantages if the user doesn't care about actually owning the coins themselves. Don't like the centralization of Coinbase? Then just don't use it. There's plenty of other options for purchasing bitcoins. Buying them P2P is easy as hell. Local Coin Swap and Local Bitcoins allow you to buy crypto directly from individuals with an escrow system. By the way, not everyone is interested in the same advantages of Bitcoin. One of the reasons Bitcoin has been on he rise the last year is that it has far greater potential than a savings account to grow in value and, unlike gold or silver, doesn't take up physical space. Not everyone cares about decentralization or is averse to risk.
- paulryanrogers 6y ago> One of the reasons Bitcoin has been on he rise the last year is that it has far greater potential than a savings account to grow in value and, unlike gold or silver, doesn't take up physical space. Its potential may be offset by its environmental impact and lack of any fundamental value.
- ravenstine 6y agoI'm not here to debate that, but my point is that not everyone is obsessed with decentraliztion... they just want their money to grow fast, just as most people don't buy stocks with the primary intention to own a piece of a business; they buy stocks because they want to make money.
- esperent 6y agoExchanges reduce risk and make things easy for casual users. By casual, I mean people who just want to invest and don't care much about the mechanics of bitcoin which was always going to be ~99% of users. What are the other options? Using an exchange is risky (or at least seems risky to me, a person with almost zero crypto experience). Bitcoin ATMs? I know they exist, I've never personally seen one. Handing cash to a stranger? Definitely risky.
- EVa5I7bHFq9mnYK 6y agoThere must be an entry point. After you bought you BTC, you can withdraw it, and use it to pay for things, store privately etc.
- anonisko 6y agoA true cypherpunk would say that everyone should just start earning bitcoin directly to enter.
- EVa5I7bHFq9mnYK 6y agoTrue) I hired developers for Bitcoin directly and through Fiverr - they used to have a Bitcoin payment option.
- codehalo 6y agoThat is not possible without some kind of bootstrapping mechanism.
- anonisko 6y agoI suppose you mean it's not possible without some sense of the value in relation to existing value networks? And this is the bootstrapping that fiat exchanges provide?
- pedalpete 6y agoThat's the way people "get into it", as you need to be able to purchase bitcoin somehow, and atm, the easiest way is through a centralized exchange. There needs to be a level of trust when you are moving from a centralized system to a decentralized system. But once you have your cyrpto, you can move it to your own wallet, or anywhere else you'd like. I can't do that with fiat currency.
- DennisP 6y agoThe decentralized exchanges are on Ethereum. Uniswap alone has over $100 billion in cumulative volume so far. But if you want to interact with legacy banking systems then of course you need an exchange that's hooked into all that. I don't see why that should surprise anyone.