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Amazing to see. But what I find interesting is that his vision was way off- crypto is nowhere near replacing credit cards, now or in the future. But he did bu

Amazing to see. But what I find interesting is that his vision was way off- crypto is nowhere near replacing credit cards, now or in the future. But he did build a huge company because crypto became a speculative asset bubble instead.

eru 6y ago
Scott Sumner has an interesting argument that it's not a bubble. Similar for the so called 'tech bubble' around the start of the millennium: if you bought all the tech stocks back then and held them until today, you would have made an OK return. (Of course, many companies have gone out of business, but there were a few outsized winners to make up for it. Any individual tech stock was extremely risky, but the overall sentiment that 'tech is the future' was right on the money. If anything, it's not the high valuations of the 'dot-com bubble' that seem off, but the low valuations of the bust.
- gogopuppygogo 6y ago
  Except 75% or so of this bubble is mined in China and more American firms keep buying into it... This story doesn’t likely have a happy ending.
  - rocho 6y ago
    Plus all the Tether shady stuff.
  - bdamm 6y ago
    "China" isn't one people either.
  - swensel 6y ago
    Why doesn't it have a happy ending?
  - berkes 6y ago
    Proof of Work crypto is mined where energy is cheap. And energy is cheap where it is subsidised or in abundance. The first is often 'China'. The second, currently often hydro. A lot of mining is now moving to Iceland, Canada etc. Where energy is becoming cheaper than CPC funded energy.
  - eru 6y ago
    > This story doesn’t likely have a happy ending. And that's exactly what you would expect when extrapolating from the economic argument above! To come back to the analogy with dot-com companies: In a field where a winners might give you outsized 100x returns, you expect perhaps 99 out of 100 companies to be total garbage losers that go bust. So that the average return from investing in all companies in that field is something normal. Otherwise, rational investors will keep pumping money into that field and funding more and more companies until that's true. Same here: even if you believe that in 20 years cryptocurrencies will dominate the world economies (just like 20 years after the dot-com boom and bust, internet companies like Amazon and Google dominate economies), still most almost all cryptocurrencies will fail. The political risks, that you are alluding to, fit this argument just like any other risk would. Thanks to eg bitcoin futures, it's not relatively easy to go shortsell (something like) bitcoins, so I expect the market price to be roughly in line with the best forecasts possible. (Only 'roughly', because the market for bitcoin is still pretty tiny, and not very developed, compared to eg US inflation forecasting markets like https://fred.stlouisfed.org/series/T5YIE https://fred.stlouisfed.org/series/T5YIE )
xvilka 6y ago
> crypto is nowhere near replacing credit cards, now or in the future. Bitcoin - not. On the other hand, modern altcoins who are faster, PoS-based, low fees, etc are on the path to exactly this.
- humaniania 6y ago
  Which coin has a functional, non-exploitable PoS algorithm implemented?
  - deleted 6y ago
    [deleted]
  - xvilka 6y ago
    Cardano, Polkadot?
  - cryptica 6y ago
    Lisk. Though it's Delegated PoS.
- Geee 6y ago
  PoS is not as secure as PoW. If it was, bitcoin's consensus algorithm could be changed as well. So, bitcoin wins anyway.
- swensel 6y ago
  Proof of Stake has yet to demonstrate as much resistence to adversarial attacks as Proof of Work. An expert in the space, Andreas Antonopoulos, speaks to this topic here: https://www.youtube.com/watch?v=U0T49duRt74&t=2720s https://www.youtube.com/watch?v=U0T49duRt74&t=2720s
  - cryptica 6y ago
    There is a very strong incentive for Bitcoin proponents to push this narrative but it doesn't stand up to scrutiny. Proof of Stake is more secure than Proof of Work because it's not possible to use external resources to take control of the system. The cost of hijacking PoS is exponential, not linear. With PoW, someone who has no stake in the network could buy or rent mining hardware using fiat and take control of the network for a linear cost - This is because, unlike cryptocurrency tokens, hardware is not a scarce resource; it's always possible to produce more of it. With PoS, the only way to take control of the network is to buy more than 50% of all tokens. The cost of acquiring 50% of all tokens is non-linear since tokens become more expensive as the attacker purchases more. This is because the attacker will generate continuous demand against fixed supply of tokens; in accordance with the law of supply and demand, the price will keep increasing as they buy more tokens. Also, the incentive to follow through on the attack decreases as the attacker accumulates more tokens.
deleted 6y ago
[deleted]

eru 6y ago

Scott Sumner has an interesting argument that it's not a bubble. Similar for the so called 'tech bubble' around the start of the millennium: if you bought all the tech stocks back then and held them until today, you would have made an OK return. (Of course, many companies have gone out of business, but there were a few outsized winners to make up for it. Any individual tech stock was extremely risky, but the overall sentiment that 'tech is the future' was right on the money. If anything, it's not the high valuations of the 'dot-com bubble' that seem off, but the low valuations of the bust.

gogopuppygogo 6y ago
Except 75% or so of this bubble is mined in China and more American firms keep buying into it... This story doesn’t likely have a happy ending.
- rocho 6y ago
  Plus all the Tether shady stuff.
- bdamm 6y ago
  "China" isn't one people either.
- swensel 6y ago
  Why doesn't it have a happy ending?
- berkes 6y ago
  Proof of Work crypto is mined where energy is cheap. And energy is cheap where it is subsidised or in abundance. The first is often 'China'. The second, currently often hydro. A lot of mining is now moving to Iceland, Canada etc. Where energy is becoming cheaper than CPC funded energy.
- eru 6y ago
  > This story doesn’t likely have a happy ending. And that's exactly what you would expect when extrapolating from the economic argument above! To come back to the analogy with dot-com companies: In a field where a winners might give you outsized 100x returns, you expect perhaps 99 out of 100 companies to be total garbage losers that go bust. So that the average return from investing in all companies in that field is something normal. Otherwise, rational investors will keep pumping money into that field and funding more and more companies until that's true. Same here: even if you believe that in 20 years cryptocurrencies will dominate the world economies (just like 20 years after the dot-com boom and bust, internet companies like Amazon and Google dominate economies), still most almost all cryptocurrencies will fail. The political risks, that you are alluding to, fit this argument just like any other risk would. Thanks to eg bitcoin futures, it's not relatively easy to go shortsell (something like) bitcoins, so I expect the market price to be roughly in line with the best forecasts possible. (Only 'roughly', because the market for bitcoin is still pretty tiny, and not very developed, compared to eg US inflation forecasting markets like https://fred.stlouisfed.org/series/T5YIE https://fred.stlouisfed.org/series/T5YIE )

xvilka 6y ago

> crypto is nowhere near replacing credit cards, now or in the future. Bitcoin - not. On the other hand, modern altcoins who are faster, PoS-based, low fees, etc are on the path to exactly this.

humaniania 6y ago
Which coin has a functional, non-exploitable PoS algorithm implemented?
- deleted 6y ago
  [deleted]
- xvilka 6y ago
  Cardano, Polkadot?
- cryptica 6y ago
  Lisk. Though it's Delegated PoS.
Geee 6y ago
PoS is not as secure as PoW. If it was, bitcoin's consensus algorithm could be changed as well. So, bitcoin wins anyway.
swensel 6y ago
Proof of Stake has yet to demonstrate as much resistence to adversarial attacks as Proof of Work. An expert in the space, Andreas Antonopoulos, speaks to this topic here: https://www.youtube.com/watch?v=U0T49duRt74&t=2720s https://www.youtube.com/watch?v=U0T49duRt74&t=2720s
- cryptica 6y ago
  There is a very strong incentive for Bitcoin proponents to push this narrative but it doesn't stand up to scrutiny. Proof of Stake is more secure than Proof of Work because it's not possible to use external resources to take control of the system. The cost of hijacking PoS is exponential, not linear. With PoW, someone who has no stake in the network could buy or rent mining hardware using fiat and take control of the network for a linear cost - This is because, unlike cryptocurrency tokens, hardware is not a scarce resource; it's always possible to produce more of it. With PoS, the only way to take control of the network is to buy more than 50% of all tokens. The cost of acquiring 50% of all tokens is non-linear since tokens become more expensive as the attacker purchases more. This is because the attacker will generate continuous demand against fixed supply of tokens; in accordance with the law of supply and demand, the price will keep increasing as they buy more tokens. Also, the incentive to follow through on the attack decreases as the attacker accumulates more tokens.

deleted 6y ago

[deleted]