11 ms·

It's not a failure because Bitcoin tanked (relatively), it's a failure because Bitcoin tanking was and will always be a significant risk. People who got rich fr

by croon 4y ago

It's not a failure because Bitcoin tanked (relatively), it's a failure because Bitcoin tanking was and will always be a significant risk. People who got rich from Bitcoin weren't savvy, they won the lottery. It's not a sound investment decision based on outcome. Investments are sound based on probability and risk beforehand. El Salvador gambled which is stupid. Whether they won or lost at the lottery is inconsequential to its stupidity.

edwnj 4y ago
The bet being made by El Salvador is to get the immense benefits of being an early adopter at the cost of short term volatility and risk of bitcoin failing. Regardless of your opinion on this, you have to at least wait till the proposition plays out before passing judgement. You have to see if they can withstand the short term volatility and whether bitcoin succeeds or not. Calling the experiment failure before the results is silly to say the least.
- el-salvador 4y ago
  > The bet being made by El Salvador is to get the immense benefits of being an early adopter at the cost of short term volatility and risk of bitcoin failing. Salvadoran here. It's hard to see the benefits if there is no transparency on the process. If we could even have a dashboard and an official website were we could have access to audited reports about the results of this bet, and see how its value varies over time. Then I might agree. Maybe just a graph like the one found Norway's Sovereign Fund website https://www.nbim.no/ https://www.nbim.no/ In reality we just don't. Public information is limited or contradictory. The few public information available includes a tweet about the president buying bitcoin from his phone while not wearing clothes. https://www.washingtonpost.com/world/2022/01/26/el-salvador-bitcoin-dip-crypto-crash/ https://www.washingtonpost.com/world/2022/01/26/el-salvador-... As far as I know, the trust that holds El Salvador bitcoin doesn't have a public website. And the state wallet's website doesn't publish an address or phone number. The only time I've seen their address is a receipt from a veterinary hospital run by the same state company operating the wallet, in which every procedure costs only US $0.25 because they are subsidized by "bitcoin profits" El Salvador is a strange country sometimes.
  - edwnj 4y ago
    I 100% agree with you. El Salvadors adoption could have definitely been handled in a more transparent and self sovereign manner. I really wasn't big fan of forcing companies to accept it.. But then again, you never get everything you want. I guess the best we could do is praise them for the good and provide feedback when they miss the mark..
- croon 4y ago
  No, I specifically called it a failure regardless of results, because results of surviving a base jump without a parachute doesn't affect the merit of the decision to jump. See: Survivorship bias.
  - edwnj 4y ago
    Here’s a proposition: - Gold got dethroned from its 5k year rule as the global store of value because of globalisation & speed of commerce. FDR ban & dollar being taken off the gold standard sealed its fate. - Gold is replaced by the fiat currency of the global economic & military hegemon. - Central banking & MMT is deeply corrupt & dysfunctional to the core. - Digital alternatives were attempted but failed because of the double spend problem which in turn required private centralisation - Satoshi invented bitcoin which solves double spend problem. Through the invention of Proof of Work and the use of supply limit, Satoshi puts bitcoin up as a contender for global store of value. - A decade later, Bitcoin is in the zeitgeist. 100s billion in market cap. Best investors in the world are hedging for/against bitcoin (Paul Tudor Jones). Countries are banning/integrating bitcoin. - Basically the bet is on. Now we have a game theoretic situation where the early adopters take the most risk but are going to reap the most benefits. To call this a "base jump without parachute" is asinine and completely unwarranted. There is a clear bet going on with the smartest people in the world on both sides. Some believe the “rulers” of the current system will never allow this to happen therefore we will get CBDC’s instead. Others believe, the collapse of the current debt passed system is inevitable therefore bitcoin is a lifeboat. Either way, china isn’t using the same technology invented by satoshi (without the PoS & decentralisation) for no reason. The US isn’t thinking about thinking about creating a FedCoin for no reason. India isn’t building one for no reason. The race is on. Its a bet. There is risks on both side but its definitely not a one sided thing to say the least.
  - edwnj 4y ago
    Also those are not just the 2 bets btw. El Salvador still supports the dollar. There are those who envision a world full of privacy coins, CBDC's, bitcoin, company coins etc.. In this world, bitcoin will be the ruler of rulers. As in, Bitcoin will reward disciplined countries and punish undisciplined countries. Just like gold did in the past.
MomoXenosaga 4y ago
The people who get rich from crypto are the ones running the exchanges. When this fad has run its course they'll move on.
ploppyploppy 4y ago
Price is one thing. Its utility as a decentralised banking system for those who have no access to banking in poorer regions of the world is a clear benefit and has achieved what it wanted for the country.
afterburner 4y ago
It's worse than a lottery for some. It rewarded incorrect thinking on how the financial industry works. Speculative spikes can happen for a lot of reasons, but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons.
- theplumber 4y ago
  >> but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons. Bitcoin was not bought because people believed it will replace all currencies. They bought bitcoin to get rich fast and cash out BEFORE the expected crash.
  - afterburner 4y ago
    Yeah, that was happening too, but I was getting an earful of terrible economic viewpoints in the earlier days. I guess they could have all been lying to puff up their investments, but then I guess I'm left with thinking those particular people were stupid and liars.
    - JauntTrooper 4y ago
      I remember hearing similar economic arguments in 2006 - 2012 about gold and silver. I often wonder if those same people moved into Bitcoin.
      - adastra22 4y ago
        Yes, they did.
      - MrMan 4y ago
        those people (where I was) also loudly predicted (and lost real-money bets) on the trading floor that Obama was definitely coming for our guns and that mass shootings were all false flag operations to justify seizure of personal firearms. The Venn diagram of gun nuts and gold bug - hard money types at many places I frequent was basically a circle.
Kathula 4y ago
It isn't lucky to hold through multiple multi-year 80% drawdowns, it's called doing research and having a conviction. I didn't sell at 60k, I'm not selling now, because I have a strong conviction. You call this lucky, but it isn't. If you have a conviction and a span longer than four years you could get "lucky" too.
- wikfwikf 4y ago
  You would have been much luckier if your worldview had allowed you to sell at $60k and buy back at $20k.
  - Kathula 4y ago
    I had no conviction that 60k would be the top. But I have a conviction that it'll be surpassed eventually.
    - benj111 4y ago
      And what objective metrics are you using to back up your conviction that bitcoin is worth X? Many people have conviction in their belief in God. That doesn't make the existence of God any more sound.
      - plebianRube 4y ago
        I may only buy when Fidelity and Blackrock say it is safe for retail, if at all. Until then, I will let institutions take the risk and I will stick with my index fund.
        xwolfi 4y ago
        I think even if they say it's safe, it wont make it so: there is fundamentaly no special value in bitcoin compared to the Thai Baht and nobody's rushing to buy those.
    - Chris2048 4y ago
hackerlight 4y ago
> It's not a failure because Bitcoin tanked (relatively), it's a failure because Bitcoin tanking was and will always be a significant risk. A lot of the risk can be hedged by custodians, so I don't agree. The reason it should fail for transactions is because Bitcoin sucks for transactions. Few people will prefer slow, irreversible and expensive transactions.
- VMG 4y ago
  Those that need unstoppable transactions are willing to pay the 10'000 satoshi fee on a transaction with arbitrary amount.
  - mrguyorama 4y ago
    Which users actually need and want irreversible transactions. What's the utility of a system that doesn't let you combat fraud?
    - VMG 4y ago
      people targeted by law enforcement or secret police need unstoppable transactions
    - yellowapple 4y ago
      A system with a middleman capable of reversing transactions enables fraud. See also: the folks behind Flipper Zero being permanently robbed of more than a million USD thanks to PayPal's whims (as the latest of a long list of high-profile cases of PayPal taking vendors' money and running).
- plebianRube 4y ago
  Lightning is popular because few prefer slow transactions. El Salvador primarily uses lightning network, same network Strike uses for instant cross border payments.
  - hackerlight 4y ago
donatj 4y ago
Have you seen the dollar’s buying power recently? I went from living very comfortably to living paycheck-to-paycheck in about 6 months. Holding my value in USD has become a significant risk.
- jallen_dot_dev 4y ago
  > Have you seen the dollar’s buying power recently? Yeah, it's been going up relative to almost all other currencies and especially BTC.
- ceejayoz 4y ago
  Now imagine you had half as much USD for your groceries, because you decided to put it in BTC a year ago instead.
  - donatj 4y ago
    Quite literally what happened. My groceries cost over twice as much.
    - benj111 4y ago
      It isn't literally what happened because that would be equivalent to your groceries costing 4 times as much.
    - Zanfa 4y ago
      Ignoring the fact that you’re implying a 100% USD inflation over the past year, you’d only have 25% of the purchasing power if you “invested” in BTC per the GPs example.
      - sp332 4y ago
        "Inflation" is an average of several things. Actual inflation doesn't have to be even across all items. Groceries went up more than other things. Edit: some examples https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/ https://www.ers.usda.gov/data-products/food-price-outlook/su... Retail egg prices went up 38% from July 2021 to July 2022.
jollybean 4y ago
It should not have been any kind of 'investment' in the first place.
koonsolo 4y ago
I agree with you on the El Salvador part, but not on the investment part. > Investments are sound based on probability and risk beforehand. Investing in bitcoin had a limited downside (lose 100%), but a very high upside (reaches it's initial goals). For me, the potential gains outweighed the low probability. I consider myself very lucky that I made some money (wasn't crazy to put all my money in there). But for me, when it would have gone to 0, I still feel it was worth the risk. But of course, with such a high risk high reward investment, only invest a small % of your total money.
- the_gastropod 4y ago
  Boy do I have the investment for you! Give me your life savings, and I'll give you 50% equity in my Evil Empire. I plan on taking over the planet by 2028. What an upside! Only risk is losing 100%—that's practically nothing in comparison! Or I guess you could buy lottery tickets. Probably a slightly less insane way to "invest" your money.
  - koonsolo 4y ago
    Both seems like a bad idea. Bitcoin on the other hand, made me a shitton of money :D Have a nice day.
- gopuck16 4y ago
  What you've stated here is your experience, now if you try to extrapolate the thinking/investment model you've used to large number of people - there is very limited upside and very high downside.
  - koonsolo 4y ago
    No it stays the same if you have an investment portfolio and only invest max 5% in high risk assets. Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it? What is your upside? Maybe x100, so double your entire portfolio. Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk. And it didn't even live up to its original intent. Imagine the price if it did!
mtrycz2 4y ago
It is a failure because BTC has pivoted away from the Bitcoin whitepaper (p2p ecash), limited its blocksize and has taken the path of this strange "digital store of value" (lol). BTC's activity rose gradually up to 2017, and then topped off at 1MB and even dropped. [1] If Bitcoin's momentum hadn't been dissolved, it wouldn't require people to be forced by State to accept it. [1] https://bitinfocharts.com/comparison/size-btc-ema14.html#alltime https://bitinfocharts.com/comparison/size-btc-ema14.html#all...
- frankenst1 4y ago
  Growth continued on second layers: Bitcoin's tx count on the Lightning Network has doubled over the last year. Forks of Bitcoin who attempted to scale by increasing the blocksize all failed and are practically dead (Bitcoin SV, Bitcoin Gold, Bitcoin Cash, eCash, Bitcoin ABC, ...).
  - CyberDildonics 4y ago
    That's not growth, bitcoin's throughput is still less than a 56k modem from 25 years ago. Being able to send and receive from anyone is growth, lightning isn't on the bitcoin chain until it gets synchronized. If I give you a bitcoin address, you can't send anything to me with the lightning network. It's unnecessary nonsense because bitcoin is pointlessly crippled. Every other cryptocurrency has plenty of throughput and can be used decentralized.
    - frankenst1 4y ago
      > lightning isn't on the bitcoin chain until it gets synchronized. That is literally the purpose of building second layers. We don't need to keep on-chain records of every microtransaction and coffee purchase in an immutable, ever-growing blockchain synchronized across thousands of nodes across the globe. > If I give you a bitcoin address, you can't send anything to me with the lightning network. Sure I can. It is called a submarine swap.
      - CyberDildonics 4y ago

by croon 4y ago

edwnj 4y ago

The bet being made by El Salvador is to get the immense benefits of being an early adopter at the cost of short term volatility and risk of bitcoin failing. Regardless of your opinion on this, you have to at least wait till the proposition plays out before passing judgement. You have to see if they can withstand the short term volatility and whether bitcoin succeeds or not. Calling the experiment failure before the results is silly to say the least.

el-salvador 4y ago
> The bet being made by El Salvador is to get the immense benefits of being an early adopter at the cost of short term volatility and risk of bitcoin failing. Salvadoran here. It's hard to see the benefits if there is no transparency on the process. If we could even have a dashboard and an official website were we could have access to audited reports about the results of this bet, and see how its value varies over time. Then I might agree. Maybe just a graph like the one found Norway's Sovereign Fund website https://www.nbim.no/ https://www.nbim.no/ In reality we just don't. Public information is limited or contradictory. The few public information available includes a tweet about the president buying bitcoin from his phone while not wearing clothes. https://www.washingtonpost.com/world/2022/01/26/el-salvador-bitcoin-dip-crypto-crash/ https://www.washingtonpost.com/world/2022/01/26/el-salvador-... As far as I know, the trust that holds El Salvador bitcoin doesn't have a public website. And the state wallet's website doesn't publish an address or phone number. The only time I've seen their address is a receipt from a veterinary hospital run by the same state company operating the wallet, in which every procedure costs only US $0.25 because they are subsidized by "bitcoin profits" El Salvador is a strange country sometimes.
- edwnj 4y ago
  I 100% agree with you. El Salvadors adoption could have definitely been handled in a more transparent and self sovereign manner. I really wasn't big fan of forcing companies to accept it.. But then again, you never get everything you want. I guess the best we could do is praise them for the good and provide feedback when they miss the mark..
croon 4y ago
No, I specifically called it a failure regardless of results, because results of surviving a base jump without a parachute doesn't affect the merit of the decision to jump. See: Survivorship bias.
- edwnj 4y ago
  Here’s a proposition: - Gold got dethroned from its 5k year rule as the global store of value because of globalisation & speed of commerce. FDR ban & dollar being taken off the gold standard sealed its fate. - Gold is replaced by the fiat currency of the global economic & military hegemon. - Central banking & MMT is deeply corrupt & dysfunctional to the core. - Digital alternatives were attempted but failed because of the double spend problem which in turn required private centralisation - Satoshi invented bitcoin which solves double spend problem. Through the invention of Proof of Work and the use of supply limit, Satoshi puts bitcoin up as a contender for global store of value. - A decade later, Bitcoin is in the zeitgeist. 100s billion in market cap. Best investors in the world are hedging for/against bitcoin (Paul Tudor Jones). Countries are banning/integrating bitcoin. - Basically the bet is on. Now we have a game theoretic situation where the early adopters take the most risk but are going to reap the most benefits. To call this a "base jump without parachute" is asinine and completely unwarranted. There is a clear bet going on with the smartest people in the world on both sides. Some believe the “rulers” of the current system will never allow this to happen therefore we will get CBDC’s instead. Others believe, the collapse of the current debt passed system is inevitable therefore bitcoin is a lifeboat. Either way, china isn’t using the same technology invented by satoshi (without the PoS & decentralisation) for no reason. The US isn’t thinking about thinking about creating a FedCoin for no reason. India isn’t building one for no reason. The race is on. Its a bet. There is risks on both side but its definitely not a one sided thing to say the least.
- edwnj 4y ago
  Also those are not just the 2 bets btw. El Salvador still supports the dollar. There are those who envision a world full of privacy coins, CBDC's, bitcoin, company coins etc.. In this world, bitcoin will be the ruler of rulers. As in, Bitcoin will reward disciplined countries and punish undisciplined countries. Just like gold did in the past.

MomoXenosaga 4y ago

The people who get rich from crypto are the ones running the exchanges. When this fad has run its course they'll move on.

ploppyploppy 4y ago

Price is one thing. Its utility as a decentralised banking system for those who have no access to banking in poorer regions of the world is a clear benefit and has achieved what it wanted for the country.

afterburner 4y ago

It's worse than a lottery for some. It rewarded incorrect thinking on how the financial industry works. Speculative spikes can happen for a lot of reasons, but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons.

theplumber 4y ago
>> but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons. Bitcoin was not bought because people believed it will replace all currencies. They bought bitcoin to get rich fast and cash out BEFORE the expected crash.
- afterburner 4y ago
  Yeah, that was happening too, but I was getting an earful of terrible economic viewpoints in the earlier days. I guess they could have all been lying to puff up their investments, but then I guess I'm left with thinking those particular people were stupid and liars.
  - JauntTrooper 4y ago
    I remember hearing similar economic arguments in 2006 - 2012 about gold and silver. I often wonder if those same people moved into Bitcoin.
    - adastra22 4y ago
      Yes, they did.
    - MrMan 4y ago
      those people (where I was) also loudly predicted (and lost real-money bets) on the trading floor that Obama was definitely coming for our guns and that mass shootings were all false flag operations to justify seizure of personal firearms. The Venn diagram of gun nuts and gold bug - hard money types at many places I frequent was basically a circle.

Kathula 4y ago

It isn't lucky to hold through multiple multi-year 80% drawdowns, it's called doing research and having a conviction. I didn't sell at 60k, I'm not selling now, because I have a strong conviction. You call this lucky, but it isn't. If you have a conviction and a span longer than four years you could get "lucky" too.

wikfwikf 4y ago
You would have been much luckier if your worldview had allowed you to sell at $60k and buy back at $20k.
- Kathula 4y ago
  I had no conviction that 60k would be the top. But I have a conviction that it'll be surpassed eventually.
  - benj111 4y ago
    And what objective metrics are you using to back up your conviction that bitcoin is worth X? Many people have conviction in their belief in God. That doesn't make the existence of God any more sound.
    - plebianRube 4y ago
      I may only buy when Fidelity and Blackrock say it is safe for retail, if at all. Until then, I will let institutions take the risk and I will stick with my index fund.
      - xwolfi 4y ago
        I think even if they say it's safe, it wont make it so: there is fundamentaly no special value in bitcoin compared to the Thai Baht and nobody's rushing to buy those.
  - Chris2048 4y ago

hackerlight 4y ago

> It's not a failure because Bitcoin tanked (relatively), it's a failure because Bitcoin tanking was and will always be a significant risk. A lot of the risk can be hedged by custodians, so I don't agree. The reason it should fail for transactions is because Bitcoin sucks for transactions. Few people will prefer slow, irreversible and expensive transactions.

VMG 4y ago
Those that need unstoppable transactions are willing to pay the 10'000 satoshi fee on a transaction with arbitrary amount.
- mrguyorama 4y ago
  Which users actually need and want irreversible transactions. What's the utility of a system that doesn't let you combat fraud?
  - VMG 4y ago
    people targeted by law enforcement or secret police need unstoppable transactions
  - yellowapple 4y ago
    A system with a middleman capable of reversing transactions enables fraud. See also: the folks behind Flipper Zero being permanently robbed of more than a million USD thanks to PayPal's whims (as the latest of a long list of high-profile cases of PayPal taking vendors' money and running).
plebianRube 4y ago
Lightning is popular because few prefer slow transactions. El Salvador primarily uses lightning network, same network Strike uses for instant cross border payments.
- hackerlight 4y ago

donatj 4y ago

Have you seen the dollar’s buying power recently? I went from living very comfortably to living paycheck-to-paycheck in about 6 months. Holding my value in USD has become a significant risk.

jallen_dot_dev 4y ago
> Have you seen the dollar’s buying power recently? Yeah, it's been going up relative to almost all other currencies and especially BTC.
ceejayoz 4y ago
Now imagine you had half as much USD for your groceries, because you decided to put it in BTC a year ago instead.
- donatj 4y ago
  Quite literally what happened. My groceries cost over twice as much.
  - benj111 4y ago
    It isn't literally what happened because that would be equivalent to your groceries costing 4 times as much.
  - Zanfa 4y ago
    Ignoring the fact that you’re implying a 100% USD inflation over the past year, you’d only have 25% of the purchasing power if you “invested” in BTC per the GPs example.
    - sp332 4y ago
      "Inflation" is an average of several things. Actual inflation doesn't have to be even across all items. Groceries went up more than other things. Edit: some examples https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/ https://www.ers.usda.gov/data-products/food-price-outlook/su... Retail egg prices went up 38% from July 2021 to July 2022.

jollybean 4y ago

It should not have been any kind of 'investment' in the first place.

koonsolo 4y ago

I agree with you on the El Salvador part, but not on the investment part. > Investments are sound based on probability and risk beforehand. Investing in bitcoin had a limited downside (lose 100%), but a very high upside (reaches it's initial goals). For me, the potential gains outweighed the low probability. I consider myself very lucky that I made some money (wasn't crazy to put all my money in there). But for me, when it would have gone to 0, I still feel it was worth the risk. But of course, with such a high risk high reward investment, only invest a small % of your total money.

the_gastropod 4y ago
Boy do I have the investment for you! Give me your life savings, and I'll give you 50% equity in my Evil Empire. I plan on taking over the planet by 2028. What an upside! Only risk is losing 100%—that's practically nothing in comparison! Or I guess you could buy lottery tickets. Probably a slightly less insane way to "invest" your money.
- koonsolo 4y ago
  Both seems like a bad idea. Bitcoin on the other hand, made me a shitton of money :D Have a nice day.
gopuck16 4y ago
What you've stated here is your experience, now if you try to extrapolate the thinking/investment model you've used to large number of people - there is very limited upside and very high downside.
- koonsolo 4y ago
  No it stays the same if you have an investment portfolio and only invest max 5% in high risk assets. Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it? What is your upside? Maybe x100, so double your entire portfolio. Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk. And it didn't even live up to its original intent. Imagine the price if it did!

mtrycz2 4y ago

It is a failure because BTC has pivoted away from the Bitcoin whitepaper (p2p ecash), limited its blocksize and has taken the path of this strange "digital store of value" (lol). BTC's activity rose gradually up to 2017, and then topped off at 1MB and even dropped. [1] If Bitcoin's momentum hadn't been dissolved, it wouldn't require people to be forced by State to accept it. [1] https://bitinfocharts.com/comparison/size-btc-ema14.html#alltime https://bitinfocharts.com/comparison/size-btc-ema14.html#all...

frankenst1 4y ago
Growth continued on second layers: Bitcoin's tx count on the Lightning Network has doubled over the last year. Forks of Bitcoin who attempted to scale by increasing the blocksize all failed and are practically dead (Bitcoin SV, Bitcoin Gold, Bitcoin Cash, eCash, Bitcoin ABC, ...).
- CyberDildonics 4y ago
  That's not growth, bitcoin's throughput is still less than a 56k modem from 25 years ago. Being able to send and receive from anyone is growth, lightning isn't on the bitcoin chain until it gets synchronized. If I give you a bitcoin address, you can't send anything to me with the lightning network. It's unnecessary nonsense because bitcoin is pointlessly crippled. Every other cryptocurrency has plenty of throughput and can be used decentralized.
  - frankenst1 4y ago
    > lightning isn't on the bitcoin chain until it gets synchronized. That is literally the purpose of building second layers. We don't need to keep on-chain records of every microtransaction and coffee purchase in an immutable, ever-growing blockchain synchronized across thousands of nodes across the globe. > If I give you a bitcoin address, you can't send anything to me with the lightning network. Sure I can. It is called a submarine swap.
    - CyberDildonics 4y ago