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> But I don’t think it’s bullshit because it does solve a real problem - verifying transactions independently. But of course there are trade offs with this, suc

by pid-1 4y ago

> But I don’t think it’s bullshit because it does solve a real problem - verifying transactions independently. But of course there are trade offs with this, such as bitcoin’s power consumption. The disconnect comes from crypto people misjudging the world. The current financial system simply isn’t so bad to require all the weird trade offs of crypto. If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient.

nonethewiser 4y ago
When you say it would not be possible, do you mean that it couldn’t handle the volume? That hardly means it’s worthless. And I already granted it’s worth less than the current financial system. So I believe we’re in agreement.
incrudible 4y ago
We would not use Bitcoin for ordinary transactions, at least not Layer 1. That would be the equivalent of transporting your money in an armored truck. There is plenty of ways to scale with Layer 2, but Layer 1 fees on Bitcoin Cash or other smaller cryptos are currently so low that this is not necessary.
- throwway120385 4y ago
  So what you're saying is we will have some kind of central system, like a bank, that issues Bitcoin, and then a bunch of spoke systems that issue currency based on the value of the Bitcoin holdings? How is that different from what we do now?
  - ericd 4y ago
    I'm pretty sure that's not at all what he's saying, he's just saying that the existing bitcoin network would serve as a net settlement layer for L2 systems, which handle the much higher volume of everyday transactions. My understanding is that net settlement between banks is much less frequent than the capacity of BTC. Lightning (an L2 system on Bitcoin) is essentially a system of peer to peer exchange of signed BTC transactions, which supersede previous ones, but don't get committed to the main net. In that way, you can keep a running tab between counterparties with effectively no marginal cost until one of you decides to close the tab by committing it.
    - toast0 4y ago
      There were 4,746 FDIC insured banks as of the end of Q3 2022, and 5,099 NCUA insured credit unions as of the end of 2020. If each of those institutions does net settlement with 200 other institutions daily, you've got roughly 1 million settlements a day (each settlement has two parties, so 100 * 10,000). Earlier in the thread, someone said BTC can do 3-7 transactions a second, which doesn't quite make it to 1 million transactions per day. Of course, I just made a wild guess about how many net settlements between banks would happen; maybe banks don't settle up from check clearing daily, but in a world where transactions are difficult to reverse and nobody trusts anyone, you'd want to settle up regularly.
      - ericd 4y ago
        Thanks for running the numbers. The amounts in the channels are committed with those signed transactions, there’s no opportunity to double spend, so it’s fine to settle much less than daily, as long as the net flows are well balanced (big if). Transactions hop through the graph, you don’t have to have a running tab with more than a few other nodes.
      - incrudible 4y ago
        Again, how many armored trucks are used for settlement each day? Probably not a million. The transaction limit on Bitcoin is artificial, the result of a negotiation between the miners, who provide the security and the users, who implicitly demand that security, by choosing Bitcoin over any other cryptocurrency. Ethereum on the other hand already processes a million transactions per day on L1.
capableweb 4y ago
> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient. What exactly do you mean? This is exactly the one use case where cryptocurrencies do work, compared to all the other bullshit use cases cryptocurrency hypists have came up with. Doing non-centralized transactions is what it excels at. Unclear if you're talking about Bitcoin specifically or cryptocurrencies in general, but there are cryptocurrencies that handle transactions quickly and at scale in a secure and decentralized manner. Algorand is one of those, but there are plenty of others out there that fits the requirements.
- btreecat 4y ago
  In what situation does the entire financial system shut down, and we still all have reliable electricity and Internet to use crypto with? Also most market cap isn't in those "more efficient" and "more decentralized" coins.
- nbar1 4y ago
  HN hates crypto for no apparent reason other than hive-mind. Not even worth arguing around here.
  - roland35 4y ago
    Hate crypto for no apparent reason? There are so many reasons to hate it! Fraud and waste are the main problems for me personally. The entire enterprise is rotten.
    - infamouscow 4y ago
      I'd be curious where you're gathering your information about how much fraud and waste exists in the current system.
    - deleted 4y ago
      [deleted]
    - 4y ago
SoftTalker 4y ago
> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient. Not because the way they work is inefficient, but because if the financial system collapsed that badly, we would not have an internet, or power, or food, most likely.
hackingforfun 4y ago
> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. This is... not true [1]. We'd need to use something like the Lightning Network. The traditional financial system also has layers build on top of it, so it makes sense that you wouldn't only use the Bitcoin base layer. [1] https://voltage.cloud/blog/bitcoin-education/how-many-transactions-can-the-lightning-network-handle/ https://voltage.cloud/blog/bitcoin-education/how-many-transa...

by pid-1 4y ago

nonethewiser 4y ago

When you say it would not be possible, do you mean that it couldn’t handle the volume? That hardly means it’s worthless. And I already granted it’s worth less than the current financial system. So I believe we’re in agreement.

incrudible 4y ago

We would not use Bitcoin for ordinary transactions, at least not Layer 1. That would be the equivalent of transporting your money in an armored truck. There is plenty of ways to scale with Layer 2, but Layer 1 fees on Bitcoin Cash or other smaller cryptos are currently so low that this is not necessary.

throwway120385 4y ago
So what you're saying is we will have some kind of central system, like a bank, that issues Bitcoin, and then a bunch of spoke systems that issue currency based on the value of the Bitcoin holdings? How is that different from what we do now?
- ericd 4y ago
  I'm pretty sure that's not at all what he's saying, he's just saying that the existing bitcoin network would serve as a net settlement layer for L2 systems, which handle the much higher volume of everyday transactions. My understanding is that net settlement between banks is much less frequent than the capacity of BTC. Lightning (an L2 system on Bitcoin) is essentially a system of peer to peer exchange of signed BTC transactions, which supersede previous ones, but don't get committed to the main net. In that way, you can keep a running tab between counterparties with effectively no marginal cost until one of you decides to close the tab by committing it.
  - toast0 4y ago
    There were 4,746 FDIC insured banks as of the end of Q3 2022, and 5,099 NCUA insured credit unions as of the end of 2020. If each of those institutions does net settlement with 200 other institutions daily, you've got roughly 1 million settlements a day (each settlement has two parties, so 100 * 10,000). Earlier in the thread, someone said BTC can do 3-7 transactions a second, which doesn't quite make it to 1 million transactions per day. Of course, I just made a wild guess about how many net settlements between banks would happen; maybe banks don't settle up from check clearing daily, but in a world where transactions are difficult to reverse and nobody trusts anyone, you'd want to settle up regularly.
    - ericd 4y ago
      Thanks for running the numbers. The amounts in the channels are committed with those signed transactions, there’s no opportunity to double spend, so it’s fine to settle much less than daily, as long as the net flows are well balanced (big if). Transactions hop through the graph, you don’t have to have a running tab with more than a few other nodes.
    - incrudible 4y ago
      Again, how many armored trucks are used for settlement each day? Probably not a million. The transaction limit on Bitcoin is artificial, the result of a negotiation between the miners, who provide the security and the users, who implicitly demand that security, by choosing Bitcoin over any other cryptocurrency. Ethereum on the other hand already processes a million transactions per day on L1.

capableweb 4y ago

> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient. What exactly do you mean? This is exactly the one use case where cryptocurrencies do work, compared to all the other bullshit use cases cryptocurrency hypists have came up with. Doing non-centralized transactions is what it excels at. Unclear if you're talking about Bitcoin specifically or cryptocurrencies in general, but there are cryptocurrencies that handle transactions quickly and at scale in a secure and decentralized manner. Algorand is one of those, but there are plenty of others out there that fits the requirements.

btreecat 4y ago
In what situation does the entire financial system shut down, and we still all have reliable electricity and Internet to use crypto with? Also most market cap isn't in those "more efficient" and "more decentralized" coins.
nbar1 4y ago
HN hates crypto for no apparent reason other than hive-mind. Not even worth arguing around here.
- roland35 4y ago
  Hate crypto for no apparent reason? There are so many reasons to hate it! Fraud and waste are the main problems for me personally. The entire enterprise is rotten.
  - infamouscow 4y ago
    I'd be curious where you're gathering your information about how much fraud and waste exists in the current system.
  - deleted 4y ago
    [deleted]
  - 4y ago

SoftTalker 4y ago

> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient. Not because the way they work is inefficient, but because if the financial system collapsed that badly, we would not have an internet, or power, or food, most likely.

hackingforfun 4y ago

> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. This is... not true [1]. We'd need to use something like the Lightning Network. The traditional financial system also has layers build on top of it, so it makes sense that you wouldn't only use the Bitcoin base layer. [1] https://voltage.cloud/blog/bitcoin-education/how-many-transactions-can-the-lightning-network-handle/ https://voltage.cloud/blog/bitcoin-education/how-many-transa...