Bitcoin Reprise



  •  http://brokenlibrarian.org/bitcoin/

    Let's talk once more about how Bitcoin is laughable nonsense. It had its chance. Now it's just a pure symbol of greed.



  • Damnit do I have to rehash the Twitter conversation now!



  • @dhromed said:

    Now it's just a pure symbol of greed.

    Not that pure. I think there's plenty of illicit activity in addition to simple speculation. I think it's mostly worthwhile in what is has taught us: We're not ready for cryptocurrencies that aren't backed by at least one sovereign nation.





  • (It is also not "free", because while adding a transaction fee to
    your Bitcoin transaction is technically optional, without a fee it is
    unlikely that your transaction will be verified any time soon. Fees are a
    de facto requirement to get your transactions processed.)

    Costs are currently at around $0.10 per transaction, partially because the standard client has an unreasonably high default (should be fixed soon, though they've been saying that for a while). Considering the current standards for payment providers seem to be near 3-5%, I don't think it's that bad.

    If Bitcoin actually became popular as a currency and not just as a
    speculative commodity, the blockchain would swell to an absurd and
    unmanageable size. Visa (for example) maintains multi-terabyte (at
    least) databases of financial transactions; now imagine if everybody who
    wanted to safely use a Visa card had to have a copy of all that data
    (including lists of everybody else's transactions).

    This one is just plain wrong. Yes, the blockchain is growing fast (and in a matter of years it will probably be in the hundreds of GB). But you don't have to have a copy to use bitcoin safely. The protocol is even in the original paper: you can have a handful of servers with a copy of the blockchain each, and let the clients rely on them to verify your transactions. The worst that an evil server could do is pretend you have less money than you actually do. This seems to work well in practice today (try using the Electrum or Multibit clients).

     

    Yes, the 10 minute block time, blockchain size and transaction fees are problems. They're bad, but not as bad as the article makes them seem. Maybe another cryptocurrency will have a better design, maybe not (you might find Ripple interesting, it's not really the same as bitcoin, it's more like a distributed payment system than a currency). In any case I still think there's plenty of room to evolve in electronic currency. Maybe one day every government will have their own online semi-centralized payment network?



  • I'm not a Bitcoin cheerleader, so don't tear off my face for the things that I'm about to say.

    You can use a third-party service to store and transfer your Bitcoins, but these services have historically tended to get hacked or just suddenly vanish, taking all your internet funny-money with it.

    Why anyone would trust a largely unknown third party with their personal SSH/SSL/house keys is beyond me. (Especially when they're storable in a small container.) The author indicated that he understood the distinction between the wallet and the blockchain, so I don't understand why he's conflating the two in this paragraph.

    Visa (for example) maintains multi-terabyte (at least) databases of financial transactions; now imagine if everybody who wanted to safely use a Visa card had to have a copy of all that data (including lists of everybody else's transactions).

    Yeah. Doing the initial analysis of the blockchain is an enormous pain. (That shit took two-and-a-half days on my home PC.) There are "light" clients that don't have to download and analyse the entire blockchain to get work done. The (two) official "heavy" clients make an index of the entire blockchain which (at the time of this writing) occupies far less than 1GB. It should be possible to keep blockchain data on the network somewhere and fetch only what you need to get your current task done. Indeed, this might be how "light" clients work.

    There is literally no privacy when it comes to Bitcoin addresses, and once someone can associate your identity with a public address, it is relatively simple for them to track literally all of your activity using that address.

    Anyone saying otherwise is dangerously uninformed. BTC is no more anonymous than USD. It might be just as anonymous as USD, depending on how widely deployed bill serial number scanners have become.

    Unless you have an ideological stake in the concept of Bitcoin (or want to buy drugs and/or child porn), there is literally no reason to get involved in it.

    /s/Bitcoin/USD/ BTC is like all other currencies in that it can be used for both licit and illicit transactions. This should surprise noone.

    [J]ournalism is [rather] uniformly terrible, always remember this.

    FTFH.



  • @boomzilla said:

    Not that pure. I think there's plenty of illicit activity in addition to simple speculation. I think it's mostly worthwhile in what is has taught us: We're not ready for cryptocurrencies that aren't backed by at least one sovereign nation.

    Concept of central bank was invented and spread across the world because it actually improved situation compared to the practice of using precious metals as currency. Going without them just brings back the old problems.



  • I find it hard to take cryptocurrency seriously with the advent of things like dogecoin and the upcoming coinye that bears Kanye West's likeness.



  • @DrakeSmith said:

    I find it hard to take cryptocurrency seriously with the advent of things like dogecoin and the upcoming coinye that bears Kanye West's likeness.

    Strangely enough Dogecoin is one of the more profitable. I make about $30 a day mining Dogecoins. Yes it's silly.



  • @spamcourt said:

    > Unless you have an ideological stake in the concept of Bitcoin (or want to buy drugs and/or child porn), there is literally no reason to get involved in it.

    /s/Bitcoin/USD/ BTC is like all other currencies in that it can be used for both licit and illicit transactions. This should surprise noone.

    To me, the fact that both currencies can used for licit and illicit transactions isn't surprising, but I also don't think it's the point of that comment.

    I think the point is, why would the average consumer choose to get involved with bitcoin at all? - and that's intended as an honest question, if that doesn't come through well.

    I spent maybe about an hour looking into it to see if there was any easy money around mining, before concluding that if there was, it appears to have been mostly soaked up already. I'm not aware of any goods and services I can purchase with bitcoins in a way which is easier or more convenient for me than my current currency. There is a strong (perhaps undeserved) perception that certain items- Such as illegal pornography or controlled substances- are easier to purchase with Bitcoin.

    You're not a bitcoin cheerleader, but you seem to be a bitcoin user. Can you share why you feel bitcoin meets some of your financial needs better than the alternatives?



  • @cdosrun said:

    to see if there was any easy money around mining, before concluding that if there was, it appears to have been mostly soaked up already. I'm not aware of any goods and services I can purchase with bitcoins
     

    Bitcoin is a free-standing spinning wheel, with people continuously adding engines to make its futile spinning go faster.



  • @dhromed said:

    @cdosrun said:

    to see if there was any easy money around mining, before concluding that if there was, it appears to have been mostly soaked up already. I'm not aware of any goods and services I can purchase with bitcoins
     

    Bitcoin is a free-standing spinning wheel, with people continuously adding engines to make its futile spinning go faster.

    Doesn't mean you can't make money with it. In this case, as the article mentions, by selling people engines to make it spin faster.



  • @cdosrun said:

     

    I think the point is, why would the average consumer choose to get involved with bitcoin at all? - and that's intended as an honest question, if that doesn't come through well.

    Well, here's one practical reason: you can turn money into bitcoins, and then turn it back into physical money in the other side of the world, and lose less than 1% of it in the process. That is AFAIK cheaper than most other transfer methods.

     



  • @anonymous234 said:

    Well, here's one practical reason: you can turn money into bitcoins, and then turn it back into physical money in the other side of the world, and lose less than 1% of it in the process. That is AFAIK cheaper than most other transfer methods.
    Presuming, of course, it hasn't depreciated by 50% in the meantime - it's not exactly a stable currency.



  • @anonymous234 said:

    @cdosrun said:

     

    I think the point is, why would the average consumer choose to get involved with bitcoin at all? - and that's intended as an honest question, if that doesn't come through well.

    Well, here's one practical reason: you can turn money into bitcoins, and then turn it back into physical money in the other side of the world, and lose less than 1% of it in the process. That is AFAIK cheaper than most other transfer methods.

     

    Why would the average consumer want to do that?


    If I'm not prying into your private life, why would you? It's intended as an honest question, I've never needed to do something quite like that. Even when traveling to another country, I don't see an advantage over traveler checks or an internationally accepted credit card.


  • Discourse touched me in a no-no place

    @PJH said:

    @anonymous234 said:
    Well, here's one practical reason: you can turn money into bitcoins, and then turn it back into physical money in the other side of the world, and lose less than 1% of it in the process. That is AFAIK cheaper than most other transfer methods.
    Presuming, of course, it hasn't depreciated by 50% in the meantime - it's not exactly a stable currency.
    Or maybe you'll have to find an unlicensed money changer to convert them into things you can spend locally, and hope that they don't add their own extra charges on top via Offers You Can't Refuse.



  • @dhromed said:

    Bitcoin is a free-standing spinning wheel, with people continuously adding engines to make its futile spinning go faster.

    That is an engineer's view.

    The truth is, of course, that Bitcoin is a huge participative performance art piece. It's ultra-dry satire, intended to shine a light on and provide a trenchant criticism of the activities of those who have been doing best from the existing economic order. What makes it so delicious is that this point remains completely lost on both its most ardent supporters and its fiercest opponents. Bitcoin is the best and most consistently maintained piece of trolling I've seen in the last ten years.

    What's new about Bitcoin is not objectionable, and what's objectionable about Bitcoin is not new.



  •  Wondering if any other of the very early people are laughing with me...While I tend to agree that this incarnation of a crypto-currenct will not surivive, it has been a fun experiement, and like many profitable for those who were in the game long enough...



  • In my opinion too, it is not really particularly good as much more than a kind of experimental design (although of course I don't know exactly for sure, what is better). Maybe Ripple is better but I don't know. However, about anonymity, there is something else called Zerocoin, which might help a little bit, at least.



  • @flabdablet said:

    The truth is, of course, that Bitcoin is a huge participative performance art piece.

     

    +1 like

     



  • @dhromed said:

    @flabdablet said:
    The truth is, of course, that Bitcoin is a huge participative performance art piece.
    +1 like
    Donate: 1L7FmS3syrkgeYZsaDdXkBsascGsVGofT



  • @cdosrun said:

    Why would the average consumer want to do that?

     

    I admit I wasn't really thinking about the average consumer, I was thinking more about foreign workers transferring money to their own country (remittance). Still, if the fees were lower and the price more stable, there's no reason why it couldn't be used as a PayPal/credit card alternative.


    Hey, it's only existed for 5 years. Even for computer standards, that's not that long.

     



  • @anonymous234 said:

    @cdosrun said:

    Why would the average consumer want to do that?

     

    I admit I wasn't really thinking about the average consumer, I was thinking more about foreign workers transferring money to their own country (remittance). Still, if the fees were lower and the price more stable, there's no reason why it couldn't be used as a PayPal/credit card alternative.


    Hey, it's only existed for 5 years. Even for computer standards, that's not that long.

     

    It's about on par with other money transfer methods between your own bank accounts in United States, cost- and risk-wise. Might be a bit faster, and you might not have to jump through as many hoops.

     



  • @PJH said:

    @anonymous234 said:
    Well, here's one practical reason: you can turn money into bitcoins, and then turn it back into physical money in the other side of the world, and lose less than 1% of it in the process. That is AFAIK cheaper than most other transfer methods.
    Presuming, of course, it hasn't depreciated by 50% in the meantime - it's not exactly a stable currency.

    You can tell this about any currency. Bitcoin is somewhat bound to rise in value due to the deflationary model.

    The truth is, the idea is actually pretty good (you're able to transfer money worldwide without the hassle of creating a bank account, and the transfers are pretty much instant), but it seems like the community is 10% people who actually want the currency to succeed as a currency, and 90% people who view it as a get-rich-quick scheme. And that whole "mining" thing doesn't help a lot.

    Oh, and all payment processors use the price in Bitcoin according to the current BTC/USD exchange rate, which makes Bitcoin even more coupled to its exchange rate, which makes it even less of a currency itself.


  • Winner of the 2016 Presidential Election

    @Maciejasjmj said:

    Bitcoin is somewhat bound to rise in value due to the deflationary model.

    Well, until it loses its liquidity and everyone abandons it.



  • @joe.edwards said:

    @Maciejasjmj said:
    Bitcoin is somewhat bound to rise in value due to the deflationary model.

    Well, until it loses its liquidity and everyone abandons it.

    I'm hardly an economist, but seeing how it's been on a pretty much constant upwards slope since the beginning, I don't see that happening without some major outside event. Everybody predicts it rising, so everybody's buying (or holding on), so it rises. Kind of a positive feedback loop.

    Of course, as time goes, the probability of such outside event crashing the whole thing rises to 1 too.



  • @Maciejasjmj said:

    I'm hardly an economist, but seeing how it's been on a pretty much constant upwards slope since the beginning, I don't see that happening without some major outside event. Everybody predicts it rising, so everybody's buying (or holding on), so it rises. Kind of a positive feedback loop.


    Aye, but here's the thing: you cannot withdraw more from the system than you put in. So if what you put in increases in value, where does it come from? The words "ponzi scheme" spring to mind; already it takes weeks to make a withdrawal, and as more people seek to "cash out", the more people need to put money in for that to happen. There is going to come a moment, and my gut tells me it will not be too long, when the "make-money-rich" crowd have all more or less invested, growth stops, and as more and more people seek to convert bitcoins into real world currency, the transaction delays and costs will rise exponentially. Of course this does not really bother the 10% or so who want to use it as an alternative currency instead of just a "get-rich-quick" scheme, but for the latter it might already be too late.



  • Aye, but here's the thing: you cannot withdraw more from the system than you put in. So if what you put in increases in value, where does it come from?

    Answer: the more people adopt Bitcoin, the more it increases in value, because you have a growing demand for a limited supply. So, yeah, it's sort of like a Ponzi scheme (or, more accurately, an economic bubble), but if everything goes right, there's a chance it will stabilize at some set price instead of losing its value completely. Actually, there are pretty much four possible scenarios:

    1. The Bitcoin value stabilizes at some set price far lower than the top price. Get-richers will see the reversal of a trend and sell all their stuff, whereas the 10% will continue to hoard Bitcoins and use them as intended. The bubble bursts, but the 10% of actual users sustain the economy.

    2. Bitcoin gains a widespread market adoption, so that get-richers use it to buy stuff instead of selling it for currency. The growth stops, but BTC/USD ratio becomes less relevant, since nobody is selling or buying Bitcoin, they're earning it. We witness a birth of an actual cryptocurrency.

    3. The bubble bursts, and it turns out that there is no 10% that would keep the economy up. Bitcoin get tossed into the attic of "ideas that turned out wrong" and is quickly forgotten. Suicides ensue.

    4. An economic singularity in which USD crumbles down and Bitcoin becomes the de facto payment standard. Ridiculous, but so is US economic policy lately, so...


  • Winner of the 2016 Presidential Election

    The problem is that it doesn't have value because it's in demand, it's in demand because it has value. The value doesn't stem from any tangible source besides greed. Soon it will be worth as much as Confederate dollars.



  • The problem is that it doesn't have value because it's in demand, it's in demand because it has value. The value doesn't stem from any tangible source besides greed.

    Isn't that the definition of money?



  • @Maciejasjmj said:

    The problem is that it doesn't have value because it's in demand, it's in demand because it has value. The value doesn't stem from any tangible source besides greed.

    Isn't that the definition of money goods and services?

    FTFY


  • Discourse touched me in a no-no place

    @Ben L. said:

    @Maciejasjmj said:
    The problem is that it doesn't have value because it's in demand, it's in demand because it has value. The value doesn't stem from any tangible source besides greed.

    Isn't that the definition of money goods and services?

    FTFY
    Goods and services have intrinsic value. If you have some food, you can eat it. If you have the service of a barber, you can get your hair cut. Money's value stems from the fact that you can exchange it for goods and services, even if the rate isn't fixed. It's just a standardised token that makes the exchange simpler by stopping everyone from having to barter for everything all the time.

    The problem with Bitcoin is that it is deflationary (by design) and so there's an incentive for those who have a store of Bitcoins to not spend them, hoarding them for a later date when they become more valuable. This is OK for the Bitcoin owner, but shitty for everyone else. A small level of inflation is better, as that encourages people to spend (on goods and services) and invest (in businesses that produce goods and services).

    Lots of inflation is bad though. There's a minimum on the optimisation curve that happens to be above zero.



  • Money's value stems from the fact that you can exchange it for goods and services, even if the rate isn't fixed. It's just a standardised token that makes the exchange simpler by stopping everyone from having to barter for everything all the time.

    Exactly. And that's what Bitcoin is supposed to be, and maybe will be, even if it isn't yet.

    The problem with Bitcoin is that it is deflationary (by design) and so there's an incentive for those who have a store of Bitcoins to not spend them, hoarding them for a later date when they become more valuable. This is OK for the Bitcoin owner, but shitty for everyone else. A small level of inflation is better, as that encourages people to spend (on goods and services) and invest (in businesses that produce goods and services).

    That wouldn't really work in my opinion. As it is now, Bitcoin is not separated from USD in terms of prices, so unless that'd change, you'd either have to keep hoarding new adopters or have everybody sell now, because their Bitcoin would be losing value. And you can't hoard new adopters indefinitely. Standard currencies are more or less mandatory - you live in the US, you pay for your groceries in USD, whether you like it or not. Bitcoin, on the other hand, is voluntary, so there would have to be some kind of incentive to buy.

    I still think the biggest problem of Bitcoin is that it has no real value in terms of goods, only in terms of USD. As long as they're coupled, the inflationary model simply wouldn't work - the prices will keep rising, so it's better not to bother with buying BTC at all.



  • @Maciejasjmj said:

    I still think the biggest problem of Bitcoin is that it has no real value in terms of goods, only in terms of USD.

    I don't understand the problem here. Maybe this is just another way of saying that no country has declared it to be legal tender? There are other currencies pegged to the USD. Why do you think the USD has "real value in terms of goods" but not bitcoin?



  • @dkf said:

    Goods and services have intrinsic value.

    Small digression here, but the value of goods and services isn't intrinsic. A bottle of water in the desert is more valuable than one in an place where water is abundant. As important as air is to our survival (can't go without it more than a few minutes), it's free on Earth while it must be pretty expensive in the ISS. So, since the value of goods and services depends on the context, it's by definition extrinsic, not intrinsic.



  • @boomzilla said:

    @Maciejasjmj said:
    I still think the biggest problem of Bitcoin is that it has no real value in terms of goods, only in terms of USD.

    I don't understand the problem here. Maybe this is just another way of saying that no country has declared it to be legal tender? There are other currencies pegged to the USD. Why do you think the USD has "real value in terms of goods" but not bitcoin?

    I don't know whether there's a currency literally pegged to the USD - i.e. the prices change the instant the exchange rate changes.



  • @Maciejasjmj said:

    I don't know whether there's a currency literally pegged to the USD - i.e. the prices change the instant the exchange rate changes.

    You're just being silly now. There certainly have been currencies pegged to the dollar (China, Cuba, Argentina come to mind). At least some of them have stopped. There are probably others (on both sides of the peg). Maybe such an adjustment would make sense in a place like Cuba, but prices generally respond to all sorts of signals, including exchange rates. But it's not like prices in the US all respond identically to exchange rates. Price conveys a lot of information, and foreign exchange rates are only a small part of it.



  • but prices generally respond to all sorts of signals, including exchange rates. But it's not like prices in the US all respond identically to exchange rates. Price conveys a lot of information, and foreign exchange rates are only a small part of it.

    That's the point - that's the case with pretty much any currency, excluding Bitcoin. Because with Bitcoin, the only thing that counts is an exchange rate. Literally. When you want to make a payment, the payment processor takes current price from one or more exchanges, takes the price of whatever you're buying in USD, and based on those two things alone, calculates how much you have to pay.



  • New Bitcoin Freakout

    New Bitcoin Freakout

    @Bitcoins R Us said:

    A doomsday scenario that has long been dismissed by bitcoin’s biggest boosters is now a clear and present danger. At 3am ET this morning, a single bitcoin mining collective known as Ghash.io reached 45% of the computing power of all global bitcoin miners, just six points short of the 51% that would be required to break bitcoin by arbitrarily manipulating the record of future transactions upon which it rests. The result could be, at minimum, “double spending” of existing bitcoins, which would render the currency effectively unusable.



  • @El_Heffe said:

    @Bitcoins R Us said:
    The result could be, at minimum, “double spending” of existing bitcoins, which would render the currency effectively unusable.

    Won't happen. If the fear of double-spending were ever to become prevalent enough to render the currency effectively unusable (which it surely would do, if any mining syndicate allowed itself to become big enough to make double-spending possible) then nobody would want to use it, which means nobody would want to buy it, which would lead to a sell-off panic that would crash its value. This is against the self-interest of anybody spending electricity to mine Bitcoin, and every Bitcoin miner knows that. Therefore, people have a direct incentive to walk away from any mining pool that gets too big. This is already happening to Ghash.io.

    There are many ways in which Bitcoin is unsound, but the way it harnesses the self-interest of all players in order to protect its own value is not one of them. Truly, it is the most skilfully executed Ponzi scheme I have ever seen.



  • @flabdablet said:

    There are many ways in which Bitcoin is unsound, but the way it harnesses the self-interest of all players in order to protect its own value is not one of them
    Because nobody has EVER done ANYTHING that was a really bad idea, couldn't possibly succeed and was not in their best interest.

    Somewhere, there's someone who thinks they can pull it off.


  • Winner of the 2016 Presidential Election

    The trick is to not let anyone know you control more than 50% of the computational power by splitting it between subsidiaries with no outwardly visible affiliation.



  • @joe.edwards said:

    The trick is to not let anyone know you control more than 50% of the computational power by splitting it between subsidiaries with no outwardly visible affiliation.
     

    And then have each subsidiary send the other their doubled bitcoins.



  • @flabdablet said:

    This is against the self-interest of anybody spending electricity to mine Bitcoin
     

    Muppet sort of said this already, but he was coming from a standpoint of error.

    What about "people who just want to watch the world burn"? Those people's self interest is to destroy <whatever> so they have no problem spending electricity (or money or whatever) to do it.



  • @too_many_usernames said:

    What about "people who just want to watch the world burn"?
    They've always been a small minority, and are in any case easily outnumbered within the Bitcoin community by "people who want the value of their Bitcoin hoard to keep on rising".



  • @joe.edwards said:

    The trick is to not let anyone know you control more than 50% of the computational power by splitting it between subsidiaries with no outwardly visible affiliation.
    The whole block chain is public, and anybody running a bitcoin daemon gets to see all transactions submitted for verification whether they're part of the consensus chain yet or not, so double-spending discrepancies and odd-looking block chain side branches are easy to detect. And you can bet your arse that there are obsessive freaks watching for double-spending who would make a huge stink if they found any.


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