4 ms·

There are some intelligent criticisms here along with some fundamental misunderstandings. The biggest misunderstanding that crypto critics and even many advoca

There are some intelligent criticisms here along with some fundamental misunderstandings. The biggest misunderstanding that crypto critics and even many advocates have is that Bitcoin is a currency that people will buy stuff with. If Bitcoin has any use, it is as a final settlement layer. The Lightning network that is layered on top of Bitcoin is what is actually useful for buying stuff. Much of this article is based on this misunderstanding. A correct criticism is that Bitcoin can be controlled by pooling mining. But a more nuanced take would be to say that it is a system that works due to aligning the economic interest of the miners providing the decentralized security with the users. The real problem with government fiat currency is less the centralization but more that the centralized actor is incentivized to monkey around with it, and particularly to devalue everyone else's money by printing as much new currency as they can without creating rampant inflation. With Bitcoin, miners could attempt to control the currency, but then it would lose all its value, so they choose not to. It's certainly still a risk to the system, particularly when one nation state like China previously did most of the mining.

aNoob7000 5y ago
Is Bitcoin an asset or a currency? Because right now it is being traded and used like an asset not a currency.
- gregwebs 5y ago
  There’s similar issues with gold currency. Gold is a self custody asset like Bitcoin: https://www.lynalden.com/gold-and-bitcoin/ https://www.lynalden.com/gold-and-bitcoin/ Just as dollars used to use a gold standard, Lightning is using a Bitcoin standard. So it’s an asset that can be used as a base layer for currency.
- TheColorYellow 5y ago
  Currencies ARE assets. Even fiat currency requires it be viewed as an asset by society to then lend its usage as a currency.
  - giaour 5y ago
    No, currencies target low positive rates of inflation specifically to discourage their being viewed as assets. The point of a currency is to serve as a medium of exchange, not as an asset to be held. That's why accounts where people are encouraged to "hold" currency actually exchange the currency for liquid assets like stock, money market fund shares, or an insured interest in a bank's general loan pool.
zozbot234 5y ago
Lightning is way too bleeding edge to describe it as "useful for buying stuff". It also depends on some pretty complex P2P routing layer to supposedly enable arbitrary transactions out of bidirectional channels - AFAICT, that's basically vaporware that has yet to be developed. Let's get back to this when it's actually working as intended. (One flaw in the article is that it talks about "permissioned blockchains" as if that was a meaningful concept. A permissioned blockchain is just a database. In fact, put a database's physical storage in git version control - which uses Merkle trees under the hood to provide immutable history tracking - and you've got something even physically indistinguishable from "permissioned" blockchain tech!)
- gregwebs 5y ago
  Lightning is actually in use in El Salvador now for remittances and buying stuff. I don’t disagree that it should mature more but it’s already infinitely more practical than the majority of crypto related things.
hiq 5y ago
> The Lightning network that is layered on top of Bitcoin is what is actually useful for buying stuff. Much of this article is based on this misunderstanding. It's not obvious to me what this changes with respect to the article, can you be more specific, especially since it's a long article? E.g. I think the point about the energy consumption, the lack of decentralization still stand. > With Bitcoin, miners could attempt to control the currency, but then it would lose all its value, so they choose not to. Why do you think that's the case? The author quotes research pointing out that the majority of BTC activity actually comes from speculation which might have little to do with security guarantees the Bitcoin network is supposed to provide, so having them break will not necessarily impact its USD/BTC rate. I think there's a whole spectrum of control major miners could exert without much backlash in terms of value BTC would lose. E.g. if major miners agreed to prevent any transaction from a certain address from being mined ever, they can just ignore their transactions in their pool, and revert any block from other miners that would have these transactions. I don't see BTC losing value if this is done sparsely.
sireat 5y ago
Remember that Bitcoin started out as digital currency and then moved the goalposts to "store of value". Source: archive of bitcoin.org Second: every year I check the state of Lightning Network and it is not pretty: I assume this is best that it can currently offer? https://lightningnetworkstores.com/?tags=shipped%20goods https://lightningnetworkstores.com/?tags=shipped%20goods On random I checked the Domino middleman store and of course the store locator showed the stores but was grayed out... This is the story with crypto e-commerce over and over again. Seemingly grand claims which fall apart on closer inspection - barely functional stores at best. Show me the money! That is show me a bustling e-commerce operation that is using crypto for non-crypto items/services. Preferably legitimate goods/services too. I am leaving out the technical problems of actually using LN. PS I bought my old laptop for BTC in 2013 and it seemed so much easier back then.

aNoob7000 5y ago

Is Bitcoin an asset or a currency? Because right now it is being traded and used like an asset not a currency.

gregwebs 5y ago
There’s similar issues with gold currency. Gold is a self custody asset like Bitcoin: https://www.lynalden.com/gold-and-bitcoin/ https://www.lynalden.com/gold-and-bitcoin/ Just as dollars used to use a gold standard, Lightning is using a Bitcoin standard. So it’s an asset that can be used as a base layer for currency.
TheColorYellow 5y ago
Currencies ARE assets. Even fiat currency requires it be viewed as an asset by society to then lend its usage as a currency.
- giaour 5y ago
  No, currencies target low positive rates of inflation specifically to discourage their being viewed as assets. The point of a currency is to serve as a medium of exchange, not as an asset to be held. That's why accounts where people are encouraged to "hold" currency actually exchange the currency for liquid assets like stock, money market fund shares, or an insured interest in a bank's general loan pool.

zozbot234 5y ago

Lightning is way too bleeding edge to describe it as "useful for buying stuff". It also depends on some pretty complex P2P routing layer to supposedly enable arbitrary transactions out of bidirectional channels - AFAICT, that's basically vaporware that has yet to be developed. Let's get back to this when it's actually working as intended. (One flaw in the article is that it talks about "permissioned blockchains" as if that was a meaningful concept. A permissioned blockchain is just a database. In fact, put a database's physical storage in git version control - which uses Merkle trees under the hood to provide immutable history tracking - and you've got something even physically indistinguishable from "permissioned" blockchain tech!)

gregwebs 5y ago
Lightning is actually in use in El Salvador now for remittances and buying stuff. I don’t disagree that it should mature more but it’s already infinitely more practical than the majority of crypto related things.

hiq 5y ago

> The Lightning network that is layered on top of Bitcoin is what is actually useful for buying stuff. Much of this article is based on this misunderstanding. It's not obvious to me what this changes with respect to the article, can you be more specific, especially since it's a long article? E.g. I think the point about the energy consumption, the lack of decentralization still stand. > With Bitcoin, miners could attempt to control the currency, but then it would lose all its value, so they choose not to. Why do you think that's the case? The author quotes research pointing out that the majority of BTC activity actually comes from speculation which might have little to do with security guarantees the Bitcoin network is supposed to provide, so having them break will not necessarily impact its USD/BTC rate. I think there's a whole spectrum of control major miners could exert without much backlash in terms of value BTC would lose. E.g. if major miners agreed to prevent any transaction from a certain address from being mined ever, they can just ignore their transactions in their pool, and revert any block from other miners that would have these transactions. I don't see BTC losing value if this is done sparsely.

sireat 5y ago

Remember that Bitcoin started out as digital currency and then moved the goalposts to "store of value". Source: archive of bitcoin.org Second: every year I check the state of Lightning Network and it is not pretty: I assume this is best that it can currently offer? https://lightningnetworkstores.com/?tags=shipped%20goods https://lightningnetworkstores.com/?tags=shipped%20goods On random I checked the Domino middleman store and of course the store locator showed the stores but was grayed out... This is the story with crypto e-commerce over and over again. Seemingly grand claims which fall apart on closer inspection - barely functional stores at best. Show me the money! That is show me a bustling e-commerce operation that is using crypto for non-crypto items/services. Preferably legitimate goods/services too. I am leaving out the technical problems of actually using LN. PS I bought my old laptop for BTC in 2013 and it seemed so much easier back then.