12 ms·

My prediction is that Bitcoin will become fully institutionalized within twenty years, to the point that the “Bitcoin” held by investors are entirely disconnect

by pavlov 3y ago

My prediction is that Bitcoin will become fully institutionalized within twenty years, to the point that the “Bitcoin” held by investors are entirely disconnected from the theoretical blockchain. A similar thing happened with stocks. Not so long ago they used to be physical pieces of paper. You could trade shares peer-to-peer and even anonymously by handing over the share certificate to someone in person. For dividends, there was a coupon that you could cut off with scissors and use to claim the income. Imagine you show up today at a Charles Schwab office with a 1977 Apple Computer stock certificate, and ask to sell it. That piece of paper is theoretically worth more than a Bitcoin (thanks to stock splits). But the Schwab branch surely won’t buy it, they’ll send you away. Getting your piece of paper recognized as stock that you can actually trade in modern systems is a separate process. That’s how it will be with Bitcoin in 2050. You contact Coinbase’s customer service AI and tell them you have an actual Bitcoin on the chain and you’d like to sell it. They’ll politely redirect you to the compliance department that will inform you that it may take up to six months to verify the provenance of your quaint original Bitcoin that’s not registered in the modern custodial systems - assuming your coin has no history with mixers and other addresses of interest to law enforcement, of course.

Ekaros 3y ago
You know, those coins that satoshi mined are too high risk for our blockchain and bitcoin. So we just blacklisted all of them. And basically also all that haven't moved in 1 year from the date we did. Sorry your coins are forever dirty and no miner will include transactions with them in a block...
- max51 3y ago
  Do you seriously think you can convince all mining pools to start blacklisting addresses like this?! The entire reason why it exists in the first place is to prevent interventions like this, it's what gives btc "value". Your chances are about as good as the USA trading their oil in ruble.
  - Ekaros 3y ago
    Not all, but enough. Specially if there is no on or off ramps for the other forks...
isoprophlex 3y ago
How will they implement tracking of bitcoin provenance in their new systems? Maybe they can use some proof-of-work blockchain tech for that, I heard it is a really good fit for those use cases :^)
- pavlov 3y ago
  Same way as they track the trillions of dollars worth of stocks and bonds that are traded every day. No need to reinvent the wheel with a much slower and less power-efficient system.
zubairq 3y ago
Actually a huge amount of Bitcoin that people bought from large institutions over the last 5 - 10 years was already not on the blockchain. (1) a customer would go to an exchange’s website and purchase 1 Bitcoin (2) the exchange would add 1 to an internal counter representing the Bitcoin balance for that customer on their internal SQL database (3) the exchange would use / trade that money sent by the customer to try to make a profit before the customer sold their Bitcoin and withdrew their money This is how big scandals like FTX and others disasters happened. Also known as “fractional banking”
- pavlov 3y ago
  The popularity of these scammy exchanges despite the massive red flags shows that this is actually what customers want. They don't want the theoretical advantages of permissionless blockchains and private keys, they just want penny stocks that trade 24/7 and are called "crypto" because it sounds cool. So institutions will take advantage of that desire for convenience and work with regulators to turn "crypto" into just another product on their menu, with the vast majority of customers having no other way to access it.
  - petesergeant 3y ago
    > They don't want the theoretical advantages Surely only a fool would want advantages that were theoretical only?
    - pavlov 3y ago
      The greater fool theory is the only mechanism for converting crypto to dollars, so this is a feature.
    - fidelramos 3y ago
      But they are not theoretical, users who have their own crypto wallets have been unaffected by all the failed exchanges (MtGox, FTX, etc.) There are other actual advantages that some people today benefit from, like avoiding confiscation and uncensorable transactions ( which would have been appreciated by the Canadian truckers when they were debanked), or protection against high inflation (like many Venezuelans and Argentinians do). This is not to say that the UX of cryptocurrencies is not good enough for the majority of people, but that is a separate criticism.
roenxi 3y ago
The possibility of change exists, but one of the hardest promises Bitcoin makes is that you can't change the rules mid-game like what happened with stocks. That is one of the most attractive things about this asset class - if the US regulators want to change how a crypto is traded ... tough biscuits. They have to convince the market participants, globally, to trade the new way. The bar might be orders of magnitude higher than for getting rid of stock certificates. People underestimate, I think, how much nudging happens at the institutional level which cryptocurrencies might shut down. It is a really exciting experiment from that perspective.
- petesergeant 3y ago
  > but one of the hardest promises Bitcoin makes is that you can't change the rules mid-game Am I misremembering or did the other blockchain do exactly that in response to the DAO hack?
  - roenxi 3y ago
    Compare that to the ease of rolling back a transaction in USD. I think we'll find the cost was orders of magnitude higher.
    - petesergeant 3y ago
      That doesn’t sound like a “hard promise”
      - ericd 3y ago
        Wasn't that on Ethereum? My impression is that it has very different governance/promises.
        hanniabu 3y ago
        Governance on ethereum is the same as bitcoin, regardless of what bitcoin maxis want you to believe
shudza 3y ago
I've got a newsflash for you... US IS NOT THE WORLD. Stocks (companies) are US based and Bitcoin isn't. So while you are not entirely wrong, you missed the most important difference between stocks and Bitcoin in your comparison.
npoc 3y ago
The difference is that they can never stop you custodying the bitcoin yourself. Bitcoin won't become "quaint" - it will always sit there as the hardest money mankind has ever seen (and likely ever will). If they try and create tokens that don't represent bitcoin i.e. creating them out of thin air, then they will go down in value relative to bitcoin, just as we are seeing with fiat currencies and people will move their wealth back into bitcoin. Decentralised exchanges like Bisq mean that people will always be able to get their hands on the real thing.
- Wytwwww 3y ago
  > hardest money mankind has ever seen Except it's not really money is it? It's a speculative asset. > The difference is that they can never stop you custodying the bitcoin yourself. Except if you can no longer convert it to real money ($/€/etc.) it becomes effectively worthless or at least start trading at massive discount. Also the delusional/quasi-religious rhetoric is getting old. Can't you actually try to think of any rational and/or substantiative arguments?
  - npoc 3y ago
    Let's not argue semantics. With bitcoin you don't need "real money", you can exchange it directly person to person. In any case other countries that embrace bitcoin will always exist. It sounds like you need to learn what money really is. Try and figure out why mankind chose shells and beads as money, then gold and then fiat. It will help you understand why it will choose bitcoin next.
    - Wytwwww 3y ago
      > With bitcoin you don't need "real money", Maybe you don't (almost) everyone else does. > In any case other countries that embrace bitcoin will always exist. Doubtful. None exist and unlikely any will exist in the future (at least not the type of countries many people would want to live int) > It sounds like you need to learn what money really is. Try and figure out why mankind chose shells and beads as money, then gold and then fiat. It will help you understand why it will choose bitcoin next. I'm sorry but you sound pretty much like the "flat earth" people... (maybe that was the point?)
deleted 3y ago
[deleted]
cturner 3y ago
There is an important difference between shares and crypto: US shares exist as a result of US legislation. Hence, it is straightforward to make regulatory or legislative changes for the operation of a share market. This is not true of crypto. Crypto is more like a currency than a share. It is transnational - if one jurisdiction applies regulatory burden, activity will flow somewhere else without that changing the operation of the market. Hence, it would be far harder for the US to coax changes into the crypto market, and it would require heavy cooperation from other governments. The US government has leverage against crypto to these limits: (1) some companies that operate as exchanges operate there; (2) some people with US bank accounts want to exchange cash for crypto; (3) the US has some extradition reach against non-US firms who have US customers. In the last twenty years the US government has extended its legislative reach for banking matters into other developed countries. Their mechanism for doing this: they offer cheap lending (free money) to banks who sign up to their rules. This could change. The London eurodollar trade happened despite the wishes of the US gvt, and such things can happen again. The security environment will be significant in how things change. In a US-overreach scenario, I would look to India as a place that could emerge as a crypto haven. India is distinct from the Russia/China axis, which lack rule of law - the state can disappear you on a whim. India is comfortably distinct from the US security block, where security agreements can be used as leverage for legislative reach. Several south american countries could run plays also.
- rmbyrro 3y ago
  Nothing prohibit the US from legislating bitcoin.
  - cturner 3y ago
    This is true. But it would be a mistake to see the legislative options for the US towards crypto to be as straightforward as its options for its own share market. With crypto, there is far more potential for unintended consequences that would push activity off-shore. That would result in reduced control.
pjc50 3y ago
My prediction: it'll do a Gamestop. Huge initial interest, followed by a gradual fade. Regulating out the gambling and the exchanges cheating customers makes it less volatile, and therefore less interesting.
sjducb 3y ago
It would be like trying to legislate to affect the value of gold. Many countries try to do this. It has had almost no effect on the value of gold. For example in the US in 1933 private ownership of gold bullion was punishable by 10 years imprisonment.
sharperguy 3y ago
I won't argue what is going to happen. I do think if bitcoin were to go this way it would lose most of its fundamental value. As border restrictions, sanctions, KYC, tracking are all applied to the institutional coin, there would be little advantage in comparison to other instruments which generate yield or are more liquid. In such a world the demand for a truly sovereign bitcoin would still exist, although using it may be out of reach for most, depending on how things play out. The battle is on, in terms of finding ways to scale bitcoins sovereign transaction limit, and find ways to transact that can't easily be prevented with the wave of a regulator's pen.
- egorfine 3y ago
  > if bitcoin were to go this way It is already strongly headed this way. I have recently seen an auction by the respected house (Sotheby's? maybe) that was heavily marketed as the first one with crypto currencies accepted. Turns out, as it is customary with marketingspeak, in their terms and conditions they mean something entirely else: payments are only accepted from a couple of US crypto exchanges. So, no blockchain and no crypto at all.
JustinGoldberg9 3y ago
Lol, Bitcoin is p2p. Ignore this at your peril.
127 3y ago
I think that's complete nonsense because how the (theoretical) underlying worth of Bitcoin is based on its network and utility. Sure, you can get pretty wild speculative bubbles, but eventually there has to be come to Jesus moment. The tech will keep improving, there will be better and simpler user front-ends. Adoption will increase. People will be more aware of their various options. Not your keys, not your coins. Stock performance is measured with earnings. Bitcoin performance is measured on metrics that happen on the blockchain and in the real world people holding and transferring actual Bitcoin.
mattmcegg 3y ago
[dead]
jowea 3y ago
Will we get the next steps of gold to gold certificate money to fiat too?
bdcravens 3y ago
> to the point that the “Bitcoin” held by investors are entirely disconnected from the theoretical blockchain Very much already there. Fiat in, fiat out, with no transactions on the blockchain. Their "Bitcoin" is little more than rows in a private database.
mtippett 3y ago
That happened to me. AMD stock certificate from 2006 received at about $10. They accepted it, were willing to transfer it into my account. Unfortunately, I had moved country and the annual meeting messages were returned to Computershare as RTS. They declared me (and my stock certificates lost) and hence eschewed them to the state of Delaware. Where they were dutifully sold and state lost property had the results of the sale. The eschewment happened in 2015 when the stock was about $5. When I realized I had them, and tried to deposit them in etrade, it all went well, except the certificates were returned "no longer valid eschewed to the state of delaware". The bummer is that the stock was running at about $80 then, and is running at around $150 now. sigh. So they will be valid, but there will paths that will "expire them".
helsinkiandrew 3y ago
Actually the current Bitcoin ETF approvals are entirely cash settled - you buy with dollars and when you sell you get back dollars, you can't put BTC in or get 'your' BTC out. https://www.bloomberg.com/news/articles/2024-01-03/bitcoin-spot-market-still-little-weird-proshares-strategist-says https://www.bloomberg.com/news/articles/2024-01-03/bitcoin-s... https://archive.ph/y3H2y https://archive.ph/y3H2y

by pavlov 3y ago

Ekaros 3y ago

You know, those coins that satoshi mined are too high risk for our blockchain and bitcoin. So we just blacklisted all of them. And basically also all that haven't moved in 1 year from the date we did. Sorry your coins are forever dirty and no miner will include transactions with them in a block...

max51 3y ago
Do you seriously think you can convince all mining pools to start blacklisting addresses like this?! The entire reason why it exists in the first place is to prevent interventions like this, it's what gives btc "value". Your chances are about as good as the USA trading their oil in ruble.
- Ekaros 3y ago
  Not all, but enough. Specially if there is no on or off ramps for the other forks...

isoprophlex 3y ago

How will they implement tracking of bitcoin provenance in their new systems? Maybe they can use some proof-of-work blockchain tech for that, I heard it is a really good fit for those use cases :^)

pavlov 3y ago
Same way as they track the trillions of dollars worth of stocks and bonds that are traded every day. No need to reinvent the wheel with a much slower and less power-efficient system.

zubairq 3y ago

Actually a huge amount of Bitcoin that people bought from large institutions over the last 5 - 10 years was already not on the blockchain. (1) a customer would go to an exchange’s website and purchase 1 Bitcoin (2) the exchange would add 1 to an internal counter representing the Bitcoin balance for that customer on their internal SQL database (3) the exchange would use / trade that money sent by the customer to try to make a profit before the customer sold their Bitcoin and withdrew their money This is how big scandals like FTX and others disasters happened. Also known as “fractional banking”

pavlov 3y ago
The popularity of these scammy exchanges despite the massive red flags shows that this is actually what customers want. They don't want the theoretical advantages of permissionless blockchains and private keys, they just want penny stocks that trade 24/7 and are called "crypto" because it sounds cool. So institutions will take advantage of that desire for convenience and work with regulators to turn "crypto" into just another product on their menu, with the vast majority of customers having no other way to access it.
- petesergeant 3y ago
  > They don't want the theoretical advantages Surely only a fool would want advantages that were theoretical only?
  - pavlov 3y ago
    The greater fool theory is the only mechanism for converting crypto to dollars, so this is a feature.
  - fidelramos 3y ago
    But they are not theoretical, users who have their own crypto wallets have been unaffected by all the failed exchanges (MtGox, FTX, etc.) There are other actual advantages that some people today benefit from, like avoiding confiscation and uncensorable transactions ( which would have been appreciated by the Canadian truckers when they were debanked), or protection against high inflation (like many Venezuelans and Argentinians do). This is not to say that the UX of cryptocurrencies is not good enough for the majority of people, but that is a separate criticism.

roenxi 3y ago

The possibility of change exists, but one of the hardest promises Bitcoin makes is that you can't change the rules mid-game like what happened with stocks. That is one of the most attractive things about this asset class - if the US regulators want to change how a crypto is traded ... tough biscuits. They have to convince the market participants, globally, to trade the new way. The bar might be orders of magnitude higher than for getting rid of stock certificates. People underestimate, I think, how much nudging happens at the institutional level which cryptocurrencies might shut down. It is a really exciting experiment from that perspective.

petesergeant 3y ago
> but one of the hardest promises Bitcoin makes is that you can't change the rules mid-game Am I misremembering or did the other blockchain do exactly that in response to the DAO hack?
- roenxi 3y ago
  Compare that to the ease of rolling back a transaction in USD. I think we'll find the cost was orders of magnitude higher.
  - petesergeant 3y ago
    That doesn’t sound like a “hard promise”
    - ericd 3y ago
      Wasn't that on Ethereum? My impression is that it has very different governance/promises.
      - hanniabu 3y ago
        Governance on ethereum is the same as bitcoin, regardless of what bitcoin maxis want you to believe

shudza 3y ago

I've got a newsflash for you... US IS NOT THE WORLD. Stocks (companies) are US based and Bitcoin isn't. So while you are not entirely wrong, you missed the most important difference between stocks and Bitcoin in your comparison.

npoc 3y ago

The difference is that they can never stop you custodying the bitcoin yourself. Bitcoin won't become "quaint" - it will always sit there as the hardest money mankind has ever seen (and likely ever will). If they try and create tokens that don't represent bitcoin i.e. creating them out of thin air, then they will go down in value relative to bitcoin, just as we are seeing with fiat currencies and people will move their wealth back into bitcoin. Decentralised exchanges like Bisq mean that people will always be able to get their hands on the real thing.

Wytwwww 3y ago
> hardest money mankind has ever seen Except it's not really money is it? It's a speculative asset. > The difference is that they can never stop you custodying the bitcoin yourself. Except if you can no longer convert it to real money ($/€/etc.) it becomes effectively worthless or at least start trading at massive discount. Also the delusional/quasi-religious rhetoric is getting old. Can't you actually try to think of any rational and/or substantiative arguments?
- npoc 3y ago
  Let's not argue semantics. With bitcoin you don't need "real money", you can exchange it directly person to person. In any case other countries that embrace bitcoin will always exist. It sounds like you need to learn what money really is. Try and figure out why mankind chose shells and beads as money, then gold and then fiat. It will help you understand why it will choose bitcoin next.
  - Wytwwww 3y ago
    > With bitcoin you don't need "real money", Maybe you don't (almost) everyone else does. > In any case other countries that embrace bitcoin will always exist. Doubtful. None exist and unlikely any will exist in the future (at least not the type of countries many people would want to live int) > It sounds like you need to learn what money really is. Try and figure out why mankind chose shells and beads as money, then gold and then fiat. It will help you understand why it will choose bitcoin next. I'm sorry but you sound pretty much like the "flat earth" people... (maybe that was the point?)

deleted 3y ago

[deleted]

cturner 3y ago

There is an important difference between shares and crypto: US shares exist as a result of US legislation. Hence, it is straightforward to make regulatory or legislative changes for the operation of a share market. This is not true of crypto. Crypto is more like a currency than a share. It is transnational - if one jurisdiction applies regulatory burden, activity will flow somewhere else without that changing the operation of the market. Hence, it would be far harder for the US to coax changes into the crypto market, and it would require heavy cooperation from other governments. The US government has leverage against crypto to these limits: (1) some companies that operate as exchanges operate there; (2) some people with US bank accounts want to exchange cash for crypto; (3) the US has some extradition reach against non-US firms who have US customers. In the last twenty years the US government has extended its legislative reach for banking matters into other developed countries. Their mechanism for doing this: they offer cheap lending (free money) to banks who sign up to their rules. This could change. The London eurodollar trade happened despite the wishes of the US gvt, and such things can happen again. The security environment will be significant in how things change. In a US-overreach scenario, I would look to India as a place that could emerge as a crypto haven. India is distinct from the Russia/China axis, which lack rule of law - the state can disappear you on a whim. India is comfortably distinct from the US security block, where security agreements can be used as leverage for legislative reach. Several south american countries could run plays also.

rmbyrro 3y ago
Nothing prohibit the US from legislating bitcoin.
- cturner 3y ago
  This is true. But it would be a mistake to see the legislative options for the US towards crypto to be as straightforward as its options for its own share market. With crypto, there is far more potential for unintended consequences that would push activity off-shore. That would result in reduced control.

pjc50 3y ago

My prediction: it'll do a Gamestop. Huge initial interest, followed by a gradual fade. Regulating out the gambling and the exchanges cheating customers makes it less volatile, and therefore less interesting.

sjducb 3y ago

It would be like trying to legislate to affect the value of gold. Many countries try to do this. It has had almost no effect on the value of gold. For example in the US in 1933 private ownership of gold bullion was punishable by 10 years imprisonment.

sharperguy 3y ago

I won't argue what is going to happen. I do think if bitcoin were to go this way it would lose most of its fundamental value. As border restrictions, sanctions, KYC, tracking are all applied to the institutional coin, there would be little advantage in comparison to other instruments which generate yield or are more liquid. In such a world the demand for a truly sovereign bitcoin would still exist, although using it may be out of reach for most, depending on how things play out. The battle is on, in terms of finding ways to scale bitcoins sovereign transaction limit, and find ways to transact that can't easily be prevented with the wave of a regulator's pen.

egorfine 3y ago
> if bitcoin were to go this way It is already strongly headed this way. I have recently seen an auction by the respected house (Sotheby's? maybe) that was heavily marketed as the first one with crypto currencies accepted. Turns out, as it is customary with marketingspeak, in their terms and conditions they mean something entirely else: payments are only accepted from a couple of US crypto exchanges. So, no blockchain and no crypto at all.

JustinGoldberg9 3y ago

Lol, Bitcoin is p2p. Ignore this at your peril.

127 3y ago

I think that's complete nonsense because how the (theoretical) underlying worth of Bitcoin is based on its network and utility. Sure, you can get pretty wild speculative bubbles, but eventually there has to be come to Jesus moment. The tech will keep improving, there will be better and simpler user front-ends. Adoption will increase. People will be more aware of their various options. Not your keys, not your coins. Stock performance is measured with earnings. Bitcoin performance is measured on metrics that happen on the blockchain and in the real world people holding and transferring actual Bitcoin.

mattmcegg 3y ago

[dead]

jowea 3y ago

Will we get the next steps of gold to gold certificate money to fiat too?

bdcravens 3y ago

> to the point that the “Bitcoin” held by investors are entirely disconnected from the theoretical blockchain Very much already there. Fiat in, fiat out, with no transactions on the blockchain. Their "Bitcoin" is little more than rows in a private database.

mtippett 3y ago

That happened to me. AMD stock certificate from 2006 received at about $10. They accepted it, were willing to transfer it into my account. Unfortunately, I had moved country and the annual meeting messages were returned to Computershare as RTS. They declared me (and my stock certificates lost) and hence eschewed them to the state of Delaware. Where they were dutifully sold and state lost property had the results of the sale. The eschewment happened in 2015 when the stock was about $5. When I realized I had them, and tried to deposit them in etrade, it all went well, except the certificates were returned "no longer valid eschewed to the state of delaware". The bummer is that the stock was running at about $80 then, and is running at around $150 now. sigh. So they will be valid, but there will paths that will "expire them".

helsinkiandrew 3y ago

Actually the current Bitcoin ETF approvals are entirely cash settled - you buy with dollars and when you sell you get back dollars, you can't put BTC in or get 'your' BTC out. https://www.bloomberg.com/news/articles/2024-01-03/bitcoin-spot-market-still-little-weird-proshares-strategist-says https://www.bloomberg.com/news/articles/2024-01-03/bitcoin-s... https://archive.ph/y3H2y https://archive.ph/y3H2y