...a list of new business models zero of which have shown an iota (pardon the pun) of traction in a decade. I feel the list of crazy startup ideas circulating on r/wallstreetbets is as valuable.
The technical and scaling problems are all self imposed due to leveraging a woefully inadequate storage mechanism. It’s basically coal-powered banking.
I'm on neither side of this debate, but citing how much Bitcoin is worth seems like a really weak argument in favor of traction.
I think a more convincing argument would be citing # of transactions or use cases (store of value, cheaper way of sending large amount of money or money internationally, etc.)
How many of them were fake? 95%. [1] While I understand that applies to exchanges and not mainnet, the reality is that each mainet transaction is impacted because it's the 95% of fake volume that sets the price and therefore the terms of exchange for the "real" transactions.
None of them. There is no such thing as a 'fake' bitcoin transaction. What you are thinking of is fake trading volume on exchanges. Those are very different things.
It's baffling to me seeing the progression of anti-blockchain people. They keep insisting that it's all a joke, and yet every single day the level of adoption keeps on increasing.
I feel like I'm watching the internet be born again.
Sadly it’s the opposite of a joke. 1 bitcoin transaction is 607kWh (or 288kgCO2 and 85g of ewaste). And the more efficient technology gets the less efficient bitcoin gets. Patently absurd.
95% of volume is fraudulent, and decentralized and trustless means that’s an intentional, irrevocable part of the system. Being able to circumvent international sanctions and pay terrorists is a feature. North Korea has been accumulating a large stockpile. More than 50% of hash power is concentrated in 3 mining pools in the PRC.
The higher the price goes the more you have to pay miners for the same job. Just maintaining the price requires $14.4M in new money each day to pay the miners. If BTC goes to $80K each you’d need $144M in new money per day to pay the miners.
And it solves no actual problems people have. Sweet joke fam. I feel like I’m watching the liberty reserve all over again.
> And the more efficient technology gets the less efficient bitcoin gets.
Incorrect. The technology getting more efficient does not make Bitcoin less efficient. You probably didn't actually think through this point, because it's nonsensical.
> 95% of volume is fraudulent, and decentralized and trustless means that’s an intentional, irrevocable part of the system.
95% of volume on exchanges that nobody pays any attention to anyway. Binance, Coinbase, Kraken, Bittrex, etc all have completely legitimate volume numbers.
> The higher the price goes the more you have to pay miners for the same job.
This is only true as long as new bitcoins are still being minted. And it's also only true if the rate of increase in the price outstrips the decrease in the minting rate.
> And it solves no actual problems people have. Sweet joke fam. I feel like I’m watching the liberty reserve all over again.
Ok. Don't buy any then. Meanwhile, people living under repressive and fiscally irresponsible governments will continue to use it to protect their wealth, as they have been doing.
That reply ended up in the wrong place and now I can’t amend it my bad.
> Incorrect. The technology getting more efficient does not make Bitcoin less efficient. You probably didn't actually think through this point, because it's nonsensical.
It very much does. The more efficient your miners the more you have a temporary advantage over your peers, so there’s incentive to replace your equipment. Then everyone upgrades theirs too. Once you do the difficulty adjusts to match the new hash power. Thus bitcoin becomes less efficient. There’s a straight line up and to the right over time in terms of hash rate, and power consumption but the max tx rate remains a pitiable 7tx/sec. Therefore by definition it’s become less efficient.
I mean 10 years ago it took a couple of Wh to run a tx and now it takes 607kWh! That’s the nonsensical part. You can’t tell me that efficiency hasn’t gone down haha.
> 95% of volume on exchanges that nobody pays any attention to anyway. Binance, Coinbase, Kraken, Bittrex, etc all have completely legitimate volume numbers.
People very much pay attention to bitfinex, since they own the funbux people use to avoid AML/KYC. Even if we take the crazy claim that somehow people only pay attention to the “good 5%” of tx the fake volume sets the exchange rate dude. I can’t believe you’d sit there and say it’s okay if 95% of volume is fake and manipulative because you’ve found the good 5%. If only 5% of all USD transactions were fake, or all stock transactions were fake we’d burn the system to the ground.
> Thus is only true as long as new bitcoins are still being minted. And it's also only true if the rate of increase in the price outstrips the decrease in the minting rate.
So until 2050. And then you think miners will continue to secure the system for their health? Of course not. Transaction fees will skyrocket and if anyone is left using the system the process will repeat itself.
> Ok. Don't buy any then. Meanwhile, people living under repressive and fiscally irresponsible governments will continue to use it to protect their wealth, as they have been doing.
“Protecting their wealth” haha, good one. They lost 33% last week. 70% since all time high. 99.8% if they invested in alt coins. That’s not protection, that’s insanity. There’s so many better ways to protect wealth. It protects wealth like warm milk on a windowsill.
Trust me I’m not buying haha, I made a bunch of money in the initial bubble run, sold at 17K and got out. Today, there’s plenty of better investments in the stock market. I mean outperforming an asset class down 70% in 2 years is pretty pretty easy. Even SoftBank has a better track record. Actually it may be outperformed by the Turkish Lira at this point. (Edit) since 2017 the Turkish lira has done much better than bitcoin.
> It very much does. The more efficient your miners the more you have a temporary advantage over your peers, so there’s incentive to replace your equipment. Then everyone upgrades theirs too. Once you do the difficulty adjusts to match the new hash power. Thus bitcoin becomes less efficient. There’s a straight line up and to the right over time in terms of hash rate, and power consumption but the max tx rate remains a pitiable 7tx/sec. Therefore by definition it’s become less efficient.
So, yes, it becomes less efficient in terms of hash rate, that's true. But we don't really care about hash rate efficiency. What we do care about is power efficiency, but that scales with price not mining technology. And yes, the price has gone up, but power consumption will only continue to rise if the price does. This is basically an economic fact - miners are compensated in Bitcoin, so they should only be willing to consume as much dollar-weighted power as they receive in dollar-weighted bitcoin.
> People very much pay attention to bitfinex, since they own the funbux people use to avoid AML/KYC.
Bitfinex's volume is legitimate, though. Tether is an open question, but tether is also tradable at a market rate. The market believes tether is worth $1. If you disagree, you can short it, and if you actually believed tether was illegitimate, you'd do that. The fact that you haven't indicates to me that you don't really believe it.
> I can’t believe you’d sit there and say it’s okay if 95% of volume is fake and manipulative because you’ve found the good 5%. If only 5% of all USD transactions were fake, or all stock transactions were fake we’d burn the system to the ground.
I think the crux of the issue is that nobody cares about these exchanges. Their volume isn't real and everyone knows it, so they don't matter. If I claim to own a stock exchange that trades 100 trillion usd of volume every day, does that mean that now 95% of traded stocks are "fake"? No. It just means some random guy on the internet claimed something silly. That's what these fake exchanges more or less are.
> So until 2050. And then you think miners will continue to secure the system for their health? Of course not. Transaction fees will skyrocket and if anyone is left using the system the process will repeat itself.
> “Protecting their wealth” haha, good one. They lost 33% last week. 70% since all time high. 99.8% if they invested in alt coins. That’s not protection, that’s insanity. There’s so many better ways to protect wealth. It protects wealth like warm milk on a windowsill.
Better than Venezuelan Bolivars by a long shot.
> Trust me I’m not buying haha, I made a bunch of money in the initial bubble run, sold at 17K and got out. Today, there’s plenty of better investments in the stock market. I mean outperforming an asset class down 70% in 2 years is pretty pretty easy. Even SoftBank has a better track record. Actually it may be outperformed by the Turkish Lira at this point. (Edit) since 2017 the Turkish lira has done much better than bitcoin.
Measuring something's performance from it's all time high is a strange way to consider things. Nobody does that in any other market. There are plenty of assets down that much from their ATH. You're cherrypicking a particularly bad time period for Bitcoin. If you started in 2016, the returns outstrip any national currency on earth - which for the record, is also not a meaningful way to look at things.
Citation needed. Bitfinex is one of the shadiest entities anywhere on earth. Why would you believe them?
> Tether is an open question, but tether is also tradable at a market rate. The market believes tether is worth $1. If you disagree, you can short it, and if you actually believed tether was illegitimate, you'd do that.
I would do that if the market wasn’t manipulated. It’s a suckers game to take any position in a manipulated market. Exchanges actively move the price up to liquidate shorts then spike it down to liquidate long. To play a rigged game at all is a suckers bet; it’s like trying to play a shell game because you’re confident you can see where they put the ball. That’s not why you’ll lose.
> Better than Venezuelan Bolivars by a long shot.
A single transaction fee for BTC is a weeks wages in Venezuela. It does not solve that problem or any other problem. Trust me if a Venezuelan were given the choice between moving a sliver of currency for a weeks wages or 600kWh of productive energy they’d very much pick the latter like any sane human.
For reference, when people say "95% of exchange volume is fake" this is the report they're citing. It lists 10 exchanges with volume it deems legitimate. Bitfinex is one of those 10.
> I would do that if the market wasn’t manipulated. It’s a suckers game to take any position in a manipulated market. Exchanges actively move the price up to liquidate shorts then spike it down to liquidate long. To play a rigged game at all is a suckers bet; it’s like trying to play a shell game because you’re confident you can see where they put the ball. That’s not why you’ll lose.
I'm not sure what you mean by "manipulated". The Tether/USD market on Kraken is not manipulated in any way. And it's unclear what it'd even mean if it were. How would one go about manipulating the Tether market?
> A single transaction fee for BTC is a weeks wages in Venezuela. It does not solve that problem or any other problem. Trust me if a Venezuelan were given the choice between moving a sliver of currency for a weeks wages or 600kWh of productive energy they’d very much pick the latter like any sane human.
Yes, now it's a few weeks wages. But prior to this round of hyperinflation they could have stored their wealth in bitcoin. Now it's probably too late. But i'm not referring to someone doing it now, storing your wealth somewhere will always have some cost associated with it. Wealth preservation is a step you take in anticipation of currency risk, not after its already done.
> Yes, now it's a few weeks wages. But prior to this round of hyperinflation they could have stored their wealth in bitcoin. Now it's probably too late. But i'm not referring to someone doing it now, storing your wealth somewhere will always have some cost associated with it. Wealth preservation is a step you take in anticipation of currency risk, not after its already done.
Perfect haha thus solving the problem once and for all. Except not solving any problem, and somehow even less efficiently.
Before the last few rounds of hyperinflation they could have just as well bought USD and been 70% better off. Yes if you cherry pick entry points in retrospect you can justify any position no matter how crazy. If these poor Venezuelans had only realized how valuable bitcoin was before it mattered you know? Or literally any other asset class that’s done well lately but hey don’t let me spoil the surprise.
> Before the last few rounds of hyperinflation they could have just as well bought USD and been 70% better off. Yes if you cherry pick entry points in retrospect you can justify any position no matter how crazy. If these poor Venezuelans had only realized how valuable bitcoin was before it mattered you know? Or literally any other asset class that’s done well lately but hey don’t let me spoil the surprise.
The only reason I cherrypicked a time period was to demonstrate that you were cherrypicking a time period. If you want to talk seriously about evaluating it as an investment, there are two ways you could go about doing that. One would be to look at it's value since inception, which makes it literally one of the best investments on the planet. The other would be to pick a hold length and evaluate the sharpe ratio for holding the asset over all periods of that length during its lifecycle (e.g. take all 1-year long daily returns streams, and compute the sharpe ratio of each, thereby obtaining a performance distribution for the asset that suggests what your expected risk-adjusted return would be, on average, for buying it at any point during its lifecycle).
I do have the data to do that analysis, but not on the computer i'm currently on. However, I think we both know how good it will look for Bitcoin. If you doubt that, i'm happy to actually run it in a day or two.
This argument has been a bit winding but to recap. I started out saying BTC was getting less efficient over time, you said it wasn't, then agreed it was. You suggested it wasn't manipulated, but we agree there's tons of data that shows its brutally manipulated. Then I argued Bitfinex/Tether is shady, you said it wasn't and that I should short USDT. I said the manipulation makes that a bad call. Next we talked about investing, and you said it was doing great, but over the last 2 years it's down 70%. Then you said it was good for Venezuela, but a single transaction costs a few weeks wages, and takes enough power to run their home for a month. Then you agreed it wasn't good for them, either. So far we agree it's performance is better than the bolivar but worse than the turkish lira. Yes, if you bought for pennies and can sell for thousands you did fine. The question isn't how much money it could have made you, the question is where's it going next. It's also probably not the single best investment in history, if you ask anyone who invested in Facebook's seed round.
It's not good for anyone, anything, or the environment. It's a crap payment system, with limited capacity, consuming an entire country's worth of energy to do what could be achieved with a single AWS instances and a DynamoDB table. And the big feature? That you can circumvent sanctions. Boy if I had a nickel for every time I wanted to pay someone in North Korea, Iran or Syria using a month's household usage of electricity, I'd, well, I'd not have any nickels.
Nobody can point to a single thing Bitcoin does better than anything else already out there except making the early adopters wealthy.
Not to mention "[a study] estimate[s] that Bitcoin generates a large welfare loss that is about 500 times as large as a monetary economy with 2% inflation." [1]
> This argument has been a bit winding but to recap. I started out saying BTC was getting less efficient over time, you said it wasn't, then agreed it was.
You originally said that it gets less efficient as the technology improves. That statement is false. It does however, get less efficient as the price rises. So you should only be concerned if you expect the price to continue to rise.
> You suggested it wasn't manipulated, but we agree there's tons of data that shows its brutally manipulated.
Also false. There are a bunch of exchanges that fake volume. Those exchanges do not manipulate anything, however. All they're trying to do is scam ICOs out of listing fees. They don't even have real users.
> Next we talked about investing, and you said it was doing great, but over the last 2 years it's down 70%.
I articulated the correct criteria for evaluating it as an investment. You may feel free to propose your own, of course. But I presume you haven't already done so because you do not have a better way to run the analysis.
> So far we agree it's performance is better than the bolivar but worse than the turkish lira. Yes, if you bought for pennies and can sell for thousands you did fine.
Over the time period you cherrypicked, yes. If you choose a starting point at random from its history, however, i'd bet it has performed better than any other currency on earth, on average.
> It's also probably not the single best investment in history, if you ask anyone who invested in Facebook's seed round.
Buying Bitcoin on day one was almost certainly a better investment than investing in FB at any stage. I don't know what the terms of FB's seed round was, but let's say you paid $50k for 1% (valuing it at $5mm) of FB. Today that investment is worth an astounding $5 billion, an excellent 100,000x return. However, in March 2010 you could buy Bitcoin at $0.003 each. That's a 2,666,666x return to date.
And that's March 2010, which was the earliest time I could easily find a price for in a Google search. In 2009, when it was actually started, who knows what you could have gotten it for.
You’re not understanding. The miners have to take that much money out of circulation (exchange BTC block rewards to dollars) to pay for their electric bills, which means that much new money has to come in to make up for it for the price to remain stable. It’s negative sum. And as the price rises so does the negative coefficient.
> They keep insisting that it's all a joke, and yet every single day the level of adoption keeps on increasing.
Do you have a citation for that claim? The people hoping to get rich quick in the space are active but there's almost no usage by the general populace.
> I feel like I'm watching the internet be born again.
The early internet had huge barriers to adoption (computers were expensive, network connections were expensive and glacially slow), but each phase of expansion had immediate popular uses. As an example, the web was ~1990, NCSA Mosaic came out in 1993 (Netscape was 1994) and by 1995 it was a household term with rapidly growing personal, business, and government usage for a wide range of tasks. In the earlier era, things were more limited due to connectivity issues but there were still substantial numbers of people using email, usenet, FTP, etc.
In contrast, Bitcoin has been out for 11 years, didn't have any of the barriers to adoption like the early internet, but if it disappeared tomorrow almost nobody outside of the industry would have any interruption in their lives.
No, I’m saying that the fake trading volume sets the price which then determines the number of bitcoin sent in the real transactions. Since nothing is priced in BTC the exchange rate defines the quantities transacted.
That seems like a pretty silly argument. The transactions are not in any sense fake. The fake trading volume is also not in any sense setting the price. Roughly 5-10 billion usd volume per day is completely legitimate, and it is that volume that actually determines the price. The fake volume on low quality exchanges is just noise that follows the price, it isn't a component of price discovery.
I'm constsntly amused by the lack of technical understanding on HN when it comes to cryptocurrencies. That article says 95% of trading volume is fake. This is absolutely different from on chain transactions, 100% of which are real.
No I get it but the sum total of transactions, real and fake determine the exchange rate between real money and crypto. If the fake volume had no impact at all, why on earth do you think they’re doing it? For their health? Fun? Cmon now.
Market cap is not worth for a currency. There’s incredibly limited liquidity in the market relative to the market cap, and even the ETF trying to list recently showed 95% of all volume in the crypto space was fake.
Try and pull a few million dollars worth out and watch what happens. It did just plunge 33% on some small withdrawals, what exactly are you waiting for?
Selling a few million dollars worth of bitcoin would only slip the market a couple of dollars if at all. Go look at bitmex or bitfinex's order books - they have plenty of liquidity.
95% of that volume is fake [1] especially on bitfinex haha, they’re the scammiest. When they launched they were just importing order books from other exchanges to make it look like they had volume, and they launched Tether when they lost banking which also lost banking and had hundreds of millions seized for money laundering. Bitfinex is the biggest scam in the space and that’s saying a lot.
The technical and scaling problems are all self imposed due to leveraging a woefully inadequate storage mechanism. It’s basically coal-powered banking.