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It wasn't just ICO pump and dumpers that got rid of this utility. The people coordinating Bitcoin made an explicit technical decision to focus on it being a st

It wasn't just ICO pump and dumpers that got rid of this utility. The people coordinating Bitcoin made an explicit technical decision to focus on it being a store-of-value, which made it too expensive to use as a means-of-exchange. Smaller transactions like the ones you described became too slow and expensive to be viable anymore, because of these decisions.

rchaud 4y ago
> which made it too expensive to use as a means-of-exchange. But wouldn't this have happened over time anyway as transaction size and network volume increased? The exponential increases in electricity usage to mine BTC would have to be paid for somehow?
- px43 4y ago
  Not at all. For example Ethereum and Monero etc have floating blocksizes that will adjust due to market demand. The fee market can get pricey for a while, but it quickly adapts to new volume. In the early days Satoshi begrudgingly put in a 1mb block size limit to prevent DOS, and later through some underhanded political BS, that limit was basically made permanent. Also you seem to think that network usage is related to some way to electricity usage. Even today, a single person with a laptop could be the only miner, and the network would still run just fine. The current block reward on Bitcoin is 900 coins per day, so the upper bound on electricity usage is however much power 900 BTC will get you. That number gets cut in half every 4 years, so generally, the max electricity expenditure is actually going down, except that the price of BTC is currently going up faster than the rewards are going down. Energy usage is directly correlated to price, not utility. There is a loose connection between utility and price, but since utility got capped in 2015 or so, the price has continued to go up, so that connection is pretty tenuous.
  - noduerme 4y ago
    > through some underhanded political BS There is this weird assumption that Bitcoin was "managed" or that political forces were at work. It was simply a war between some developers and others. Not to you specifically, but in this thread: I find it troubling, this new reflex of ascribing to dark conspiracies what are banal historical facts. The growth of the blocksize was inevitable once it took off; now we have lots of shitcoins, and a few that are stores of value and some that are means of exchange. Lots of hucksters showed up, but no one planned anything. (And looking at the state of things now, it clearly shows). https://www.theguardian.com/technology/2015/aug/17/bitcoin-xt-alternative-cryptocurrency-chief-scientist https://www.theguardian.com/technology/2015/aug/17/bitcoin-x... never ascribe to conspiracy what can be ascribed to stupidity.
    - njarboe 4y ago
      Unless they were actually at "war" shooting guns and killing people, groups of people using non-violent means to achieve an end is politics. One of Carl von Clausewitz most famous quotes is "Der Krieg ist eine bloße Fortsetzung der Politik mit anderen Mitteln" or "War is merely the continuation of politics by other means". A conspiracy is just a group of people working towards a goal and keeping most of their actions secret, i.e. many groups.
    - idiotsecant 4y ago
      There is always politics any time more than one person coordinates to do something. Bitcoin was definitely not an exception.
      - rchaud 4y ago
        There's politics implicit in any situation where one person can stand to gain over others. The instinct to call it a conspiracy may come from the strong beliefs some have that Bitcoin was 'neutral' and designed to not be dominated by a small number of parties.
  - nwah1 4y ago
    Mining for rewards is not the only way mining can occur. It can also occur from fees. And since the total number of bitcoins is capped, it will soon only happen via fees. The amount of fees is unlimited, and the total possible energy usage is currently unlimited and will remain unlimited, and scales with use.
    - latchkey 4y ago
      > it will soon only happen via fees The year 2140 isn't my definition of soon.
CydeWeys 4y ago
This concern is way overblown. Over the past month the average transaction fee has hovered around a dollar, at level at which it's entirely reasonable to perform international money changing as the people you replied to were doing. If you transact on Lightning network, it's much cheaper still.
- kevinak 4y ago
  The median fee in each block over the last while has been $0.03-0.06 - if you're paying 1 dollar you're doing something very wrong
  - CydeWeys 4y ago
    Whatever the first site that popped up on Google was lied to me :( Anyway that just makes my point even stronger.
- bolanyo 4y ago
  I don't think you're accurately disputing what I said. Bitcoin went through a period when transaction fees were very high, and wait times were unreasonably long. During this period, they essentially lost all their users who were using Bitcoin for retail-type transactions: moving money across borders, sending payments to friends and family, making small illicit purchases, paying sex workers, etc. Some they lost to Monero and other altcoins. Some went back to traditional finance. Some went to new non-crypto fintech. Those people did not come back to Bitcoin (they may have held some, but no longer use it for transactions). The lower prices now reflect not only that some of the issues were resolved, but also the vastly reduced demand. Today, the vast majority of flows are related to speculation, or the use of Bitcoin in other parts of the crypto economy.
noduerme 4y ago
Transaction costs did become a huge drag on the system and a drain on wealth [edit: what I mean is, at some point they overwhelmed the initial value of cutting out the middleman in other types of digital currency transfers], although I don't think this was a conscious or coordinated decision; it was a result of the inherent limit in block size / mining capacity. Basically, "Satoshi" never imagined so many people would be trying to trade so frequently... so perhaps this focus on storage of value was in a sense baked in unwittingly. I was for BCH becoming the "main" branch. Honestly, though, I don't think making it easier or harder or more or less expensive to trade had any impact on whether or not con artists used it to con people.
- mrguyorama 4y ago
  Satoshi explicitly was making bitcoin as a medium of exchange, as described in his paper, but apparently couldn't do the math to realize that his system would never manage more than a few hundred transactions a day. That's a pretty massive oversight IMO, and evidence that satoshi is just a normal dude, not some prophet or messiah. The decision to not expand block size limits was 100% coordinated by a huge amount of chinese mining capacity because the ingress routes to their networks of miners would not have handled the higher throughput, and like six dudes who controlled 80% of the miners sat up on a stage together and talked about it. How is that not coordinated? Bitcoin had every chance to improve it's ability to be a currency, but guess what, the oligarchs who controlled all the mining thought it would give them less money to go that route, so they stopped it. It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
  - notch898a 4y ago
    Satoshi as far as I know never indicated he meant bitcoin to be an ultimate solution and not an incremental stepping stone. It seems weird to expect some anonymous guy to create a perfect end-all and be a failure if he merely ended up with something with some merits that can be improved on.
  - mike_hearn 4y ago
    Satoshi did the math just fine, and later I repeated his calculations with more detail. There were no inherent problems with scaling Bitcoin up beyond the question of how to pay for mining post-inflation subsidy, which could be solved with assurance contracts. > It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people" That's proof of stake. Mining isn't about how much wealth you control but about how much hardware.
danaris 4y ago
I'm not sure this entirely follows...? My (admittedly, limited) understanding is that standard fiat currencies are stores of value, media of exchange, and units of account. Being a store of value doesn't mean it needs to appreciate in value, just that it doesn't depreciate to nothing over reasonable timescales. From what I've seen, the main problem with Bitcoin specifically as a currency is that it makes a terrible unit of account: its volatility compared to regular currencies means that no one's going to denominate any prices in BTC.
- lottin 4y ago
  That's right, a volatile currency is bad for businesses, because the revenue from sales will likely exceed by a lot or fall well below the cost of sales, increasing the likelihood of bankruptcy.

rchaud 4y ago

> which made it too expensive to use as a means-of-exchange. But wouldn't this have happened over time anyway as transaction size and network volume increased? The exponential increases in electricity usage to mine BTC would have to be paid for somehow?

px43 4y ago
Not at all. For example Ethereum and Monero etc have floating blocksizes that will adjust due to market demand. The fee market can get pricey for a while, but it quickly adapts to new volume. In the early days Satoshi begrudgingly put in a 1mb block size limit to prevent DOS, and later through some underhanded political BS, that limit was basically made permanent. Also you seem to think that network usage is related to some way to electricity usage. Even today, a single person with a laptop could be the only miner, and the network would still run just fine. The current block reward on Bitcoin is 900 coins per day, so the upper bound on electricity usage is however much power 900 BTC will get you. That number gets cut in half every 4 years, so generally, the max electricity expenditure is actually going down, except that the price of BTC is currently going up faster than the rewards are going down. Energy usage is directly correlated to price, not utility. There is a loose connection between utility and price, but since utility got capped in 2015 or so, the price has continued to go up, so that connection is pretty tenuous.
- noduerme 4y ago
  > through some underhanded political BS There is this weird assumption that Bitcoin was "managed" or that political forces were at work. It was simply a war between some developers and others. Not to you specifically, but in this thread: I find it troubling, this new reflex of ascribing to dark conspiracies what are banal historical facts. The growth of the blocksize was inevitable once it took off; now we have lots of shitcoins, and a few that are stores of value and some that are means of exchange. Lots of hucksters showed up, but no one planned anything. (And looking at the state of things now, it clearly shows). https://www.theguardian.com/technology/2015/aug/17/bitcoin-xt-alternative-cryptocurrency-chief-scientist https://www.theguardian.com/technology/2015/aug/17/bitcoin-x... never ascribe to conspiracy what can be ascribed to stupidity.
  - njarboe 4y ago
    Unless they were actually at "war" shooting guns and killing people, groups of people using non-violent means to achieve an end is politics. One of Carl von Clausewitz most famous quotes is "Der Krieg ist eine bloße Fortsetzung der Politik mit anderen Mitteln" or "War is merely the continuation of politics by other means". A conspiracy is just a group of people working towards a goal and keeping most of their actions secret, i.e. many groups.
  - idiotsecant 4y ago
    There is always politics any time more than one person coordinates to do something. Bitcoin was definitely not an exception.
    - rchaud 4y ago
      There's politics implicit in any situation where one person can stand to gain over others. The instinct to call it a conspiracy may come from the strong beliefs some have that Bitcoin was 'neutral' and designed to not be dominated by a small number of parties.
- nwah1 4y ago
  Mining for rewards is not the only way mining can occur. It can also occur from fees. And since the total number of bitcoins is capped, it will soon only happen via fees. The amount of fees is unlimited, and the total possible energy usage is currently unlimited and will remain unlimited, and scales with use.
  - latchkey 4y ago
    > it will soon only happen via fees The year 2140 isn't my definition of soon.

CydeWeys 4y ago

This concern is way overblown. Over the past month the average transaction fee has hovered around a dollar, at level at which it's entirely reasonable to perform international money changing as the people you replied to were doing. If you transact on Lightning network, it's much cheaper still.

kevinak 4y ago
The median fee in each block over the last while has been $0.03-0.06 - if you're paying 1 dollar you're doing something very wrong
- CydeWeys 4y ago
  Whatever the first site that popped up on Google was lied to me :( Anyway that just makes my point even stronger.
bolanyo 4y ago
I don't think you're accurately disputing what I said. Bitcoin went through a period when transaction fees were very high, and wait times were unreasonably long. During this period, they essentially lost all their users who were using Bitcoin for retail-type transactions: moving money across borders, sending payments to friends and family, making small illicit purchases, paying sex workers, etc. Some they lost to Monero and other altcoins. Some went back to traditional finance. Some went to new non-crypto fintech. Those people did not come back to Bitcoin (they may have held some, but no longer use it for transactions). The lower prices now reflect not only that some of the issues were resolved, but also the vastly reduced demand. Today, the vast majority of flows are related to speculation, or the use of Bitcoin in other parts of the crypto economy.

noduerme 4y ago

Transaction costs did become a huge drag on the system and a drain on wealth [edit: what I mean is, at some point they overwhelmed the initial value of cutting out the middleman in other types of digital currency transfers], although I don't think this was a conscious or coordinated decision; it was a result of the inherent limit in block size / mining capacity. Basically, "Satoshi" never imagined so many people would be trying to trade so frequently... so perhaps this focus on storage of value was in a sense baked in unwittingly. I was for BCH becoming the "main" branch. Honestly, though, I don't think making it easier or harder or more or less expensive to trade had any impact on whether or not con artists used it to con people.

mrguyorama 4y ago
Satoshi explicitly was making bitcoin as a medium of exchange, as described in his paper, but apparently couldn't do the math to realize that his system would never manage more than a few hundred transactions a day. That's a pretty massive oversight IMO, and evidence that satoshi is just a normal dude, not some prophet or messiah. The decision to not expand block size limits was 100% coordinated by a huge amount of chinese mining capacity because the ingress routes to their networks of miners would not have handled the higher throughput, and like six dudes who controlled 80% of the miners sat up on a stage together and talked about it. How is that not coordinated? Bitcoin had every chance to improve it's ability to be a currency, but guess what, the oligarchs who controlled all the mining thought it would give them less money to go that route, so they stopped it. It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
- notch898a 4y ago
  Satoshi as far as I know never indicated he meant bitcoin to be an ultimate solution and not an incremental stepping stone. It seems weird to expect some anonymous guy to create a perfect end-all and be a failure if he merely ended up with something with some merits that can be improved on.
- mike_hearn 4y ago
  Satoshi did the math just fine, and later I repeated his calculations with more detail. There were no inherent problems with scaling Bitcoin up beyond the question of how to pay for mining post-inflation subsidy, which could be solved with assurance contracts. > It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people" That's proof of stake. Mining isn't about how much wealth you control but about how much hardware.

danaris 4y ago

I'm not sure this entirely follows...? My (admittedly, limited) understanding is that standard fiat currencies are stores of value, media of exchange, and units of account. Being a store of value doesn't mean it needs to appreciate in value, just that it doesn't depreciate to nothing over reasonable timescales. From what I've seen, the main problem with Bitcoin specifically as a currency is that it makes a terrible unit of account: its volatility compared to regular currencies means that no one's going to denominate any prices in BTC.

lottin 4y ago
That's right, a volatile currency is bad for businesses, because the revenue from sales will likely exceed by a lot or fall well below the cost of sales, increasing the likelihood of bankruptcy.