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The level of cognitive dissonance around Bitcoin (and crypto in general) is kind of amazing. That much I will agree on. But to dismiss anything pointing out th

by cletus 6y ago

The level of cognitive dissonance around Bitcoin (and crypto in general) is kind of amazing. That much I will agree on. But to dismiss anything pointing out the flaws in Bitcoin as sour grapes from people who missed out? Wow. That's cognitive dissonance right there. The simple truth here is that: 1. Bitcoin consumes an awful lot of energy; 2. It solves a problem for almost nobody; and 3. It's not as secure as people think it is. I've become increasingly convinced that (1) is what will ultimately doom Bitcoin. I mean it will likely be replaced by something more energy-efficient (ie PoS vs PoW). But that transition will be a massive event in wealth redistribution. As for (2), Bitcoin seems to have two forms of utility: - To escape capital controls in many countries. Wealthy individuals in China trying to bypass Chinese capital controls was (IMHO) a big initial driver in Bitcoin. This also covers countries without a stable currency (eg Venezuela) or artificial limits on currency conversion (eg also Venezuela); and - Illegal stuff. You could argue that Bitcoin is also an asset you can hold for diversification purposes but ask yourself this: would people hold Bitcoin if it was expected to hold a constant value against the US dollar? Or another relatively stable currency? Or even a basket of such currencies? That's impossible to know but I suspect not. I strongly suspect that expectations of BTC rising in value is a big part of why people buy and hold it. "Ponzi scheme" is one characterization of this. I'm not sure it's fully accurate but it's not that far off either. I think "tulip fever" may be more accurate. Either way, the chickens come home to roost eventually. As for (3), I can't speak to the technical merit of the suggested attack in this post. It's known however that the network as a whole is vulnerable to a 51% attack (and I honestly believe there are several who could orchestrate such an attack if they were so inclined). Personally I find this fascinating. And sure I wish I could go back to 2010 and buy $1000 worth of Bitcoin. But that applies to anything. Buying Apple in 1999. Buying Amazon at, well, pretty much any point. Buying land in the 1990s.

fragsworth 6y ago
> It solves a problem for almost nobody You're missing the big problems it solves, the main reasons many smart people have bought into it: Cryptocurrencies are the ONLY liquid assets in the world that you can prove, from first principles, 1) how much of it exists, and 2) that you actually own it. As long as you know what you're doing, you don't have to concern yourself with 1) fraud, 2) hidden stockpiles, 3) someone stealing it, and 4) political instability. These are good things for society. Some of us realized these things when we started buying into it, and when we see people poo-pooing it and completely ignoring these benefits, I can see why people tend to get dismissive.
- cletus 6y ago
  This is some serious white-washing of the downsides and risks of crypto. Reversible transactions for traditional currencies, for example, are often touted as a negative but they are for the most part a positive. It's what protects individuals from fraud. I hazard to think how the average person would manage a wallet without losing it to poor security or malware. And if you use something like Coinbase, you have pretty much the exact same risk profile as using a bank. Also, proving you own it gets real murky if the network itself is compromised. Attacks aside there have been various forks of different cryptos. My point is the immutability of the blockchain is essentially an optimistic exercise of faith. As for hidden stockpiles and knowing how much is out there, that isn't quite true either. For something like Bitcoin, you know the upper bound of how much is out there but you don't actually know how much is out there. There are numerous cases of lost wallet keys, for example, where you can consider the coins irrecoverable (short of a fork). But how many of these just haven't been transacted? Some of these stockpiles are huge too. Take the rumoured ~1.1M BTC associated with Satoshi. Are these lost or have they just not been used? It's impossible to say.
  - fragsworth 6y ago
    "Serious white-washing" is quite misleading. I only responded to a comment to point out that you and others are completely ignoring some obvious and important benefits. Sure, there are disadvantages. I'm not going to disagree with them, they exist, but let's put them in perspective with how the rest of the world works. But include the real benefits as part of the context. If you ignore those benefits, and pretend they don't exist, you will end up getting dismissed by those of us who figured everything out, and invested in it. You should keep in mind that those of us who invest in it are not in any way "stuck with a bag", we can sell at any time if we thought your arguments were convincing enough. The fact is, despite reading plenty of these arguments, we still actually believe it will ultimately succeed, and have yet to see convincing enough arguments against it. On the other hand, those who missed out have a very strong tendency to want the world to adjust in ways that make their decisions correct. There is a lot of pain in admitting that you were wrong and paying the cost (which would be investing in it), and a lot of aversion to feeling like you have to make that choice. Believe me, I know this is a thing, because I went through that process myself.
sneak 6y ago
> You could argue that Bitcoin is also an asset you can hold for diversification purposes but ask yourself this: would people hold Bitcoin if it was expected to hold a constant value against the US dollar? Or another relatively stable currency? Or even a basket of such currencies? There are several of these types of cryptocurrencies (representing gold, USD, EUR, or other "stable" units of account), and the largest of them, USDT, has 2.7M holders despite credible accusations of mismanagement of their billions of USD that supposedly back their issuance. We don't need to guess: cryptocurrencies, even ones with a fixed value relative to USD, are useful and valuable to lots of people.
- mumblemumble 6y ago
  It's hard, though, to measure stablecoins' value independently of the core cryptos. A big thing that drives their adoption is that crypto exchanges such as Binance don't let you have fiat holdings, which means that stablecoins might be the closest thing a crypto trader can have to a cash reserve. In other words, if not for the fact that there are structures in place that make it difficult to exchange Bitcoin for fiat currency, I would guess that, for most people's purposes, USDT would just be a chintzy knock-off of USD.
Black101 6y ago
I don't think that you understand Bitcoin... Your first point is possibly the only valid point but it can be fixed if 51% of miners agree.

by cletus 6y ago

fragsworth 6y ago

> It solves a problem for almost nobody You're missing the big problems it solves, the main reasons many smart people have bought into it: Cryptocurrencies are the ONLY liquid assets in the world that you can prove, from first principles, 1) how much of it exists, and 2) that you actually own it. As long as you know what you're doing, you don't have to concern yourself with 1) fraud, 2) hidden stockpiles, 3) someone stealing it, and 4) political instability. These are good things for society. Some of us realized these things when we started buying into it, and when we see people poo-pooing it and completely ignoring these benefits, I can see why people tend to get dismissive.

cletus 6y ago
This is some serious white-washing of the downsides and risks of crypto. Reversible transactions for traditional currencies, for example, are often touted as a negative but they are for the most part a positive. It's what protects individuals from fraud. I hazard to think how the average person would manage a wallet without losing it to poor security or malware. And if you use something like Coinbase, you have pretty much the exact same risk profile as using a bank. Also, proving you own it gets real murky if the network itself is compromised. Attacks aside there have been various forks of different cryptos. My point is the immutability of the blockchain is essentially an optimistic exercise of faith. As for hidden stockpiles and knowing how much is out there, that isn't quite true either. For something like Bitcoin, you know the upper bound of how much is out there but you don't actually know how much is out there. There are numerous cases of lost wallet keys, for example, where you can consider the coins irrecoverable (short of a fork). But how many of these just haven't been transacted? Some of these stockpiles are huge too. Take the rumoured ~1.1M BTC associated with Satoshi. Are these lost or have they just not been used? It's impossible to say.
- fragsworth 6y ago
  "Serious white-washing" is quite misleading. I only responded to a comment to point out that you and others are completely ignoring some obvious and important benefits. Sure, there are disadvantages. I'm not going to disagree with them, they exist, but let's put them in perspective with how the rest of the world works. But include the real benefits as part of the context. If you ignore those benefits, and pretend they don't exist, you will end up getting dismissed by those of us who figured everything out, and invested in it. You should keep in mind that those of us who invest in it are not in any way "stuck with a bag", we can sell at any time if we thought your arguments were convincing enough. The fact is, despite reading plenty of these arguments, we still actually believe it will ultimately succeed, and have yet to see convincing enough arguments against it. On the other hand, those who missed out have a very strong tendency to want the world to adjust in ways that make their decisions correct. There is a lot of pain in admitting that you were wrong and paying the cost (which would be investing in it), and a lot of aversion to feeling like you have to make that choice. Believe me, I know this is a thing, because I went through that process myself.

sneak 6y ago

> You could argue that Bitcoin is also an asset you can hold for diversification purposes but ask yourself this: would people hold Bitcoin if it was expected to hold a constant value against the US dollar? Or another relatively stable currency? Or even a basket of such currencies? There are several of these types of cryptocurrencies (representing gold, USD, EUR, or other "stable" units of account), and the largest of them, USDT, has 2.7M holders despite credible accusations of mismanagement of their billions of USD that supposedly back their issuance. We don't need to guess: cryptocurrencies, even ones with a fixed value relative to USD, are useful and valuable to lots of people.

mumblemumble 6y ago
It's hard, though, to measure stablecoins' value independently of the core cryptos. A big thing that drives their adoption is that crypto exchanges such as Binance don't let you have fiat holdings, which means that stablecoins might be the closest thing a crypto trader can have to a cash reserve. In other words, if not for the fact that there are structures in place that make it difficult to exchange Bitcoin for fiat currency, I would guess that, for most people's purposes, USDT would just be a chintzy knock-off of USD.

Black101 6y ago

I don't think that you understand Bitcoin... Your first point is possibly the only valid point but it can be fixed if 51% of miners agree.