Bitcoin is a store of value = “not a proper use case”
Bitcoin is a decentralized financial infrastructure = “not a proper use case”
Bitcoin is helpful to avoid authoritarian government and inflation = “not a proper use case”
Bitcoin is the perfect collateral for a loan = “not a proper use case”
All of these together = “nop”
Well okay, must be a ponzi scheme to fool people!
And yet, adoption is increasing, more developers are working on the technology, and from what I have seen (I could probably find the data again), the number of long-term holders is increasing. So not much for the get rich quick scheme.
Nobody can deny that Bitcoin has been a functional get rich scheme at this point, and a bloody effective one at that. But what happened in the past cannot be extrapolated to what will happen the future.
If I had any serious money in Crypto ATM I would probably take my chips out of the table. This whole frenzy is bound to reach some kind of limit: human, institutional, monetary, or physical…
First off, let me reiterate that I’m not a specialist. I’m here to learn and my main interrogation is why Bitcoin specifically, as it feels antique in regards to some other cryptos.
My real question is: why Bitcoin and not other cryptos? Or other existing goods/systems? The feeling I have, and I’d love to get educated on the topic, is that Bitcoin is an antequated system that performs more poorly than other blockchains and that, by pumping up its price, we are strengthening its hold on the crypto world making it necessary to use it where way more elegant solutions could be designed if we accepted to take the jump and leave it behind.
Take the Bitcoin wrappers, we’re using resources to make it so that you can exchange Bitcoins using other blockchains. Is that really necessary or could we bypass Bitcoin altogether and use the native coin of that specific Blockchain for that?
Taking your use cases:
Bitcoin could play that role, but the current speculation makes it very poor at it. It works for hyperinflated currencies because the money inflates quicker than BTC would drop (example case, Venezuela 2018), so it could be a refuge against a falling dollar but other fiats play this role too (which is a big part of the reason why we have negative rates in Switzerland, because the CHF is a cash refuge). Do we need Bitcoin for that?
Other blockchains are decentralized financial infrastructures and require less energy to maintain so, why Bitcoin? Adding to that, I understand that a takeover of the Bitcoin blockchain would be a very low probability scenario and that Bitcoin is well diversified as of today but would such a scenario have disastrous consequences, making it a low probability, high impact scenario?
It works at that, so that’s great! It’s probable that other coins could fulfill that role, though, is Bitcoin itself necessary for that or could we use a less energy consuming technology?
That’s the first time I hear this one, could you elaborate on it? I’d guess smart contracts make the use of the Ethereum blockchain better for this?
All in all, it feels to me that we are trying to twist an existing legacy technology to make it do things we want to do where we could be way more efficient by designing the correct technology for the use we want to fulfill and use that technology instead. Energy consumption is my main concern, the safety of the blockchain and the need for third parties in order to allow less technology driven people to use the technology are my other ones.
I know little about cryptocurrencies but I’m eager to learn more. One of the videos that I found useful was this one where the co-founder of Ethereum and founder of Cardano, Charles Hoskinson summarises ADA Cardano’s white paper and where he explains the system behind Cardano, and also the several generations of crypto currencies.
I think its first mover advantage might be one of the key part. Despite history showing us that the first come in a market is rarely the winner, this old antiquated crypto has maybe a little chance to prove this statement wrong.
Bitcoin is the very first appearance of a proven concept of a decentralised cryptocurrency. Its reliability has been endured after surviving more than 10 years operating in the open internet on a scale that is far larger than any other of its direct competitors. Which lead to the results of it having the biggest network effects of the market.
The size of the network is of course not enough as people often point at the Myspace failure to Facebook for instance. But what was the monetary cost for the users of these apps to switch completely from one to the other? Mostly none i guess. What about now selling all of your BTC in order to only use/hold Bitcoin Cash, Nano or XRP as your e-sound money? The consequence one would face if the coin you chose as a replacement fail (and which has not yet endured the amount of challenges Bitcoin had) is quite different.
I think the trust people have in Bitcoin security-wise in opposition to other altcoins is what it makes it so sticky and hard to replace despite its flaws.
I am not saying its replacement will never happened, because simply nobody knows. Time and technology advance will tell. But I think the barrier for change is high because one could not just recreate today the environnement a real decentralised and functioning project like Bitcoin had in its infancy.
How to recreate its first mover advantage? How to recreate the way it has been released with Nakamoto basically giving this breakthrough project for free with no barrier to entry and no premined coins? (I know, this only holds true as long as these old wallets stay frozen ) How to recreate the fact that it had the luxury to uses the -for now- safest zero-knowledge proof system to date (a system which becomes safer as the network grows) while spending its most vulnerable years mostly unnoticed?
If in 2009 the world knew what we know today, there’s a high chance the project would have been crushed from the get go by a big actor.
Thanks for the leads up! I’ll be using this thread to take some notes and try to let my understanding sink in, please let me know if that’s not welcome and I’ll start a dedicated thread for it. I’m also welcoming any input on my thoughts.
Taking it slow, one concept at a time in order to let things sink in.
Blockchain
So, at the core of cryptocurrencies, there is this thing called blockchain. What it is is a decentralized store of data. It contains, among other things, data for every transaction with the cryptocurrency(ies) it supports, but it doesn’t stop there. You could put the picture of a cat on it, a certificate that you are the owner of that particular picture of a cat (NFTs?) or the name and adress of your ex boy/girlfriend along with a snarky insult.
The security of the transactions comes from the fact that everybody can access the blockhain and it can be read in full. As long as it’s done, they can spot claims of ownership of the cryptocurrencies and ensure that there’s no fraud involved in acquiring them. That means the complete sequence of the blockchain must be in some way publicly available, or one would input censure and give power to a third party to check and enforce transactions, which is the property of fiat Bitcoin was trying to solve.
[Open thread for future thouhgts: is there a way to alter data on already written/compiled blockchain? That would bring us to square one again since that’d give a third party the power to affect the transactions that are being made.]
There’s a problem with that: if the blockchain must be publicly available in full and there’s no way to remove what has been put in it once it’s there, then people can put in, say, secret government documents, child pornography, an offer of reward for the death of a person or any other thing. That would be a place of no censorship, which some powerful actors may not like (and sometimes rightfully so: as a swiss person, I consider at least some of the laws we make are there for the good of society and should be enforceable). If they want to use force to take those data down, they have to strongly discourage people to post and/or host these kinds of contents. The easier targets would be the people maintaining the blockchain on their own devices, so users may be safe but those who maintain the infrastructure could be at risk.
In order for it to be successful in spite of that, a change in the way we consider things must occur. The mere display of criminal offenses (pictures of child pornography, a contract on your head -gasp! I wouldn’t want this one to be permanently displayed publicly with no way of removal-) or “wrongfully” acquired documents would not be punishable, but we’d have to go more strongly against the production/acquisition of these documents, which may be what may actually hurt child pornography perpetrators more and force change in the way governments/agencies operate.
The world could probably adapt to that, but that’s a huge shift and a huge attack against the status quo, where the most powerful actors in place would stand to loose a lot. A 100% open blockchain would probably not occur without big battles of some kind. A peaceful implementation of a censored blockchain could occur smoothly, making it just yet another technology but not the ideal utopia it was designed as. In such a scenario, cryptocurrencies would be regulated, so no real change to the status quo.
My thoughts on this (maybe a little bit unstructured and uneducated, but hey, I’m not a pro).
Even without blockchain, you can access secret government documents or child pornography. Everybody who puts such thing on internet will know how to do it in a quite secure manner and how to reach their target audience. The first one would be beneficial for the whole society (imho), the latter less. You don’t have more pedophiles, when using blockchains.
Whistleblowers blow secret documents, when a wrongdoing by gov and companies play against their moral values. I don’t see any harm, if those docs are disclosed. I even would support that as I did for wikileaks and Assange (as long as the moral values represent a democratic distribution of those). So if the majority of the people have the same values of what wrongdoing is, it’s somehow democratic and beneficial for the world society. If you are a wrongdoing gov (like U.S. is… and Russia, and China and even Switzerland), then you have to fear such a publicity.
On the other side, if you have a certain amount of pedophiles in a society, you will always have them. I don’t think they animate others to do the same and be more pedophile. You are or you are not. So it’s a kind of natural limitation on that “bad” behavior (btw. it’s a dicease, which cannot be cured, but smoothed).
An example for a thinkable bad behavior on the public would be that someone discloses wrong or false private information of a person or company maybe with an intention to harm those (like on Twitter, Internet, Facebook etc) like you mentioned your ex which in normal Internet world could be sued for removal, and they cannot be removed on a public blockchain. But we have here a discussion the same as with the censoring of Twitter and co for Nazi or alt-right or fake-news content. Here I say, I rather have them public than in private. I am very sure that the majority will sanction those in one way or the other. But censoring something will always lead to someone who decides what has to be censored and what not.
At the end, you criticize/remark that the law cannot be fulfilled, when everything is public and such content has been published. But again, if you take law as a mirror of the democracy and majority of the society and the democracy itself is represented in the blockchain, it doesn’t matter. And again, criminals do their thing even without blockchain. The majority - in our democratic way - will always win (even it is manipulated by the media, and who pays the most usually gets what he wants). I’d say: don’t fear that your moral compass will be broken, when you reach such “bad” content on the blockchain. Most probably, it will not.
Having a public blockchain, the advantages outweight the disadvantages by far, imho, especially for the financial world. Decentralization, trustlessnesss (I know, not all blockchains)… no manipulation by a central authority, that’s huge. (an example of how we went that far is: You buy your Bürli at the bakery and pay online. Right now, it will be processed by at least 4 institutions which take their part of the amount of the transaction for them… that’s stupid. Back to cash-like transaction which leaves the whole amount between you and your baker).
To finish. bitcoin & co with their public blockchains is an attack on the financial institutions, which generated their income in a to the real economy “unnatural” way (derivatives on derivatives of the real economy) (not that I didn’t have profited from it). Further, an attack on the monopolies like the FAANG and others for communication, file storage, compute resources, media publishing etc. And much more… It’s just the beginning. (crazy what blockchains are if you fade out just the cryptocurrency and financial aspects of it).
BUT what they are not; an enhancement of the criminal activity we already have now without the blockchains.
Thanks for your inputs, I think you are right, transparency is a net gain and we should not fear it: we will adapt and maybe come to fairer values out of it.
I do think this is a major paradigm shift for current institutions, including big governments and high profile leaders/politicians and I don’t expect them to go down quietly. My take is that Bitcoin and other cryptos have had it rather smooth up to now (I know it’s not been all sugar and honey and there’s been a lot of convincing to do) because they’ve mostly stayed under the radar. There could be more disruption in the future.
I strongly believe blockchains and cryptocurrencies are here to stay but I’m not certain of the future of cryptos as an investment. I find it very hard to assess their future value, partly because we don’t know which ones will face the more institutional backlash.
I’d say if we want to support a specific blockchain and invest in its technology, we should do so by running a node and/or actively participating in the system. If the purpose is only to make a financial investment, it’s very hard to pick winners and the best way to go about it is to follow the passive investing broad basket of all/most cryptos path. This, to me, would speak against going mostly Bitcoin in the mid-long run. I can envision making it a short term bet, though.
I agree so far as we see that those are playing a big role in pushing today for bitcoin etc or are in finding themselves how they want to act with crypto, the way they can profit most. And a lot what was a hope with the internet revolution for the non-marketing part, I hear now as well. The shift will probably come from an another direction.
But I think, the difference could really lay in this public and international, uncensored space, where everybody can participate (sic. running your own node or like opening facebook or twitter or whatever every day and be in there). The difference would be that it’s now open without any restrictions for everybody (maybe for the next blockchain facebook, who has not the profit in first place in his mind). This time, the shift will maybe rather be pushed by some girls from a village in Africa or South America than the usual suspects from Europe, USA etc. We were focusing so much on the dynamics of our Western World, but the rest of the world is not waiting or sleeping.
Nobody knows. But staying out, would be no solution to it. Right now maybe generously speaking roughly 5% know something about cryptos. Less than 0.5% know more technically about it and much less are actively participating in it. My speculation is that one day, doing crypto will be like buying an ETF or voting for a political party (with your favorite coins, technologies, opinions and stakers/validators/maintainers etc) beyond the financial aspects. (there are projects which want to distribute all coins to all world citizens equally… imagine the potential impacts like direct democracy in the UN etc). Further my speculation is that BTC will replace USD in all I mentioned above. A bitcoin replacement may arise, but it will not happen in one day. So go with the flow. Future value… speculation over speculation.
(I mined my first bitcoins on a laptop 10+yrs ago, unfortunately no coins left or all lost or I sold some. I was not always, but always again technically interested in those coins and tech. Recently, I started to take some tutorials again on smart contracts adding more functionality with oracles or just testing some extensions in the browser with connection to the various test networks.
Where I’m heading: by just doing so, I had a list of about 30 ideas I have noted for further investigation. Some ideas were already somehow implemented in some projects, and some are not, but possibilities are endless… it’s a pity, that the day has only 24h. I think, what can be done, will be done… well not by me. The financial aspects of those projects are for sure a big incentive to further develop new ideas.)
((oh man… I spend quite some time in thinking and writing this stuff. I should have spent it better in creating the next crypto unicorn and bitcoin replacement))
Not only is it contradicted by real-world evidence but it also violates any kind of rational thinking, common sense and basic logic of economics. But I wouldn’t have expected anything else coming from ARK’s so-called “cryptoasset analyst” idiots.
I don’t know if it’s more depressing or aggravating to see (and read) this stuff spewn out by multi-billion dollar companies and investment funds, propagated on the internet - and inevitably being taken serious by some people.
My two cents on what makes Bitcoin so special with 3 key elements, in my opinion and in no particular order:
1. Decentralized vs. Centralized
It is actually a difficult concept because centralization can come in different shapes. Facebook Libra/Diem is obviously centralized as you have a “central power” with Facebook. Ethereum is somewhat centralized as well because you have less nodes, a foundation and some key people working on it (e.g. what happens if Vitalik is arrested and the foundation is closed?). Dogecoin can be considered very centralized because the wallet distribution is really really bad (i.e. one wallet apparently holds 28% of all coins…).
Bitcoin full decentralization from the start allows to have no third party at all and a public access to all relevant information you are looking for. You can explore and audit the entire chain, you can set your node easily, you can read the protocol etc. It is not entire perfect as you have somewhat of a centralization of mining, but I trust it will get better in the future.
There is also a philosophical/political aspect to it, and I know it will go above the head of 90%+ of the people, but a lot of original adoption came from libertarian and privacy-minded people.
2. Technology
While I am not a big fan of Ethereum today, I still think it has a bright future considering the amount of developers working on it (or it might become to complex and unmanageable). Blockchains are technologies after all, you want to make sure that it evolves and gets better with time. Litecoin for instance is not a bad technology per se (it is a fork of Bitcoin), but the limited amount of development on it makes me think it has no real future, and same goes for the thousands of other irrelevant projects.
The amount of work behind Bitcoin is just astounding for a decentralized projects, with truly smart people driving projects such as Lightning network, Taproot, Schnoor, etc. These are very technical upgrades that you don’t need to understand, but it definitely shows the health of the environment.
3. Network effect
That’s what Cursino was mentioning with the first mover advantage, and this is massive. I like Nano, but I don’t know anyone that uses it. I prefer to use DAI but usually Tether or USDC are the preferred stablecoins. Cardano is interesting as the first PoS blockchain, but the volume of daily trade is really low. Network effect is really powerful, I would love to use Signal over Whatsapp, but there is just no way to move away from it entirely today.
Bitcoin is by far ahead of everyone when you combine market cap, transaction volume, number of wallet, developers, projects, information etc. and I don’t see how it could change for a very long time as, anyway, adoption keeps increasing.
That’s super misleading, you don’t have images on bitcoin’s blockchain, it is just not possible to store them. And it is a public ledger, not the best place to hide something.
What you have is string of texts that you could potentially put together to decode them to find a URL where you could see the pictures and whatnot. I honestly have no idea how this could work and how to do it, and I would be surprise if the URL was not dead already.
Example of text you can write on a block with a biblical quote on block 666’666. I don’t think you can write much more than this:
Yes but what would be the size of regular 1080p image in binary code? Probably still around 100kb, no miner would put that in a block of 1mb and remove transactions for it.
I won’t do a search for obvious reasons, but I suspect it was a long time ago when the blocks were not full. And what I dislike is the click bait title that made you think that blockchain is full of porn pictures, which is simply not true.
While people are having fun with Doge, the future of Bitcoin is bright! Some great news from the past few days:
Lightning network is gaining traction with now ~20’000 lightning nodes running
Taproot activation (privacy & scalability upgrade) is progressing nicely with 55% of miners signaling support and a soft fork scheduled for November
Sotheby’s, one of the largest auction house, will now accept payment in bitcoin
Germany will let 4’000 existing institutions invest in crypto assets → probably the biggest news, let see which German institutional fund will invest first.
Ignore the noise, the free market will work itself out
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) How to recreate the fact that it had the luxury to uses the -for now- safest zero-knowledge proof system to date (a system which becomes safer as the network grows) while spending its most vulnerable years mostly unnoticed?
