I wonder how many people are aware of the ongoing and raging battle between big blockers who want a hard fork to upgrade block size, and small blockers, who want a soft fork that adds functionality to make side chains feasible. I am strongly biased for one of these, but won't say which to avoid being attacked.
Awaiting the propaganda wave in response to my comment...
You must not be a heavy user of reddit. Nearly the entire site is compromised, both by mods and admins. And even without that, subreddits are created and defined by users, and thus free to set whatever explicit and implicit rules they wish.
A lot is from rumors but since around the time they moved all the staff to SF, users 'reported' many of the "high-profile" AMAs to be paid. There was also a lot of speculation of vote manipulation by mods/admins. I didn't dig too deep so the above was mostly speculation (not from me).
> One could be a regular visitor to r/bitcoin and have no clue that there is a huge political battle going on amongst the users, miners and developers.
True story, I'm one of those visitors. Off to go read up on some stuff, apparently.
/r/bitcoin was being brigaded by a person (Roger Ver) with a personal vendetta against the moderator of /r/bitcoin, and pays people to do it. The moderation policies are there for anyone to see, and if you feel like you don't have an outlet for your theories there, there are plenty of other outlets for you elsewhere.
What seems to be mostly adolescents continually scream 'censorship' without knowing the meaning of the word. Without that moderation, you get the cesspool funded by Roger Ver.
> What seems to be mostly adolescents continually scream 'censorship' without knowing the meaning of the word.
The meaning of the word, according to Wikipedia:
Censorship is the suppression of free speech, public communication or other information which may be considered objectionable, harmful, sensitive, politically incorrect or inconvenient as determined by governments, media outlets, authorities or other groups or institutions.
If members of a subreddit are engaging in the suppression of ideas they consider objectionable, that is censorship. Smart people understand that there is no actionable defense against such censorship, but lacking an actionable defense doesn't diminish its status as censorship to something lesser. Similarly, it's still censorship whether done by the government, reddit, or Bob's Corner Bakery.
The segwit softfork may fix some things that make side chains more feasible, but that undersells it severely. It mainly solves a bug in bitcoin that prevents a good implementation of Lightning Network (which is not a side chain), and it also upgrades on-chain transaction capacity by doubling it, while solving another bug in Bitcoin (quadratic scaling of sigops) which make such a capacity increase safer.
Not that there's anything terrible about Segwit, it's just that we already have better solutions for everything it claims to do.
For instance we have a solution for the transaction malleability issue - Flexible Transactions - which causes a tiny fraction as much technical debt while offering big benefits in future-proofing. Why bother with Segwit when we have a better solution?
But that's neither here nor there because Segwit doesn't even solve the actual problem that everyone wants fixed right now - block size. The small, one off, slow to deploy solution offered by Segwit isn't a scaling solution at all. It's likely that take-up of Segwit wallets will be fairly gradual which means it'll probably never even prevent the blocks being full. Even if it does we'll be back in the same hole in a few months time anyway because of the small one off change. What's needed is a solution which actually fixes the problem.
The concept of segwit is fine. The problem is that the implementation of it as a soft fork is questionable, and trying to position it as a capacity increase is even more questionable.
The same Mike Hearn that tried and failed to push through a fork of the bitcoin network called Bitcoin XT that allowed for a personally controlled black-list?
Hearn is right. The wider world simply doesn't know how dysfunctional Bitcoin is, mostly because of the censorship taking place on the main communication channels. You will literally be banned from /r/bitcoin if you post a comment notifying other users that comments are being deleted.
The blacklist article is pure FUD, seemingly written with the sole intent of smearing Hearn.
Also Segwit will only give us the block size increase when people transfer their existing bitcoin funds to new Segwit wallets. This is expected to be a slow process so any block size gains probably will be too gradual to be helpful.
Larger block sizes allow more transactions, so although per-tx fees will be lower, there will be more transactions.
The computational costs of larger block sizes are borne on the entire network, however the effects are most severe for miners as larger blocks tend to increase the profitability of large geographically-close pools in comparison to small pools [1]. This is why segwit is only an increase to ~2.1MB.
But the relationship between block size and per-tx fee is based upon the amount of competition between txs, not absolute tx volume. So if the block size is raised high enough to accommodate the current rate of txs with no competition, the fees don't just fall proportionally: they fall to near-0.
The higher the tx backpressure, the higher the fees. The larger the block size, the lower the pressure regardless of overall tx volume.
Miners could also simply decide to not include any transactions with a fee smaller than X. Transactions can't "shop around" for a miner, the first miner to mine a block wins.
Yup, it's not an exact tradeoff, and near-0 it breaks down entirely. At zero it's worse than that, because of the diminishing block subsidy schedule, having zero fee pressure will reduce the incentive for mining, and therefore security.
However, miners can't simply apply the limit to themselves without a consensus rule. There is code in Bitcoin Core to apply a soft limit, but as long as there is any fee pressure, ignoring transactions leads to a disadvantage compared to other miners, so in practice all miners tend to always use the maximum permitted block size. Most proposed schemes for increased or variable block size still enforce the same size across all miners for this reason.
The utility of bitcoin is damaged by the limited maximum transaction rate. It's no help to miners if bitcoin is replaced by another cryptocurrency, which is looking more plausible now than it ever has. In the end they could be collecting fees off a lot more transactions if the block size was larger anyway.
Is it possible a majority of miners sell their block rewards immediately and have little investment in the long term success of Bitcoin? I know they have hardware investments to recoup, so I'm sure there are many sensitive variables in their financial equations.
If their hardware is viable for an altcoin then it seems like increasing the Bitcoin block size would not be in their best interest. Why not maximize shortterm Bitcoin profits and hedge long term profits with altcoins?
Asics can't be redirected to different alt coins that have a different proof of work. They will run to recoup the costs. That is why bitcoin will be more secure even if prices and transactions drop from a move to an alt.
Miners are playing a game of chicken to milk the fees while hoping users don't swerve to another chain.
Some Asics can mine both Bitcoin and Lightcoin though not at the same time. From a cost perspective they are slightly more expencive, but miners could swap over 2 years to a new coin with minimal issues limiting their long term risks.
I don't see an altcoin beating out bitcoin soon, but if one started gaining traction it would probably have a proof of work system compatible with most miners' asics.
All major miners have spent loads of money purchasing mining hardware, and they all need to run that hardware for a long time just to break even. Higher future Bitcoin prices is critical to their ROI.
I don't understand why the segwit softfork and a block size increase would have to be mutually exclusive.
As segwit generally improves the protocol (makes it more efficient, fixes a transaction malleability issue, increases capacity and gives way to proposed future improvements) and doesn't require a hardfork, I think it makes sense to apply that first.
And if with segwit and all the improvements it enables the capacity still doesn't prove to be enough for the future growth, we can hardfork to dynamically increase the block size.
But for now, we need to do something. Why not do the thing that's simpler to put into effect and provides more benefits?
That's exactly what reasonable people would do. But people are afraid of a bait-and-switch where they activate segwit and then larger blocks are never delivered. Semi-reasonable people are asking for a bundle that includes segwit and larger blocks but no one is offering that yet.
Bitcoin nodes have bandwidth limitations, and specifically upload bandwidth. Increasing the blocksize without taking this into consideration kicks nodes off of the network, and decreases decentralization. Right now, a node can be run on a personal internet connection in Australia. Double it, and you hit the limit. Quadruple it, and you effectively stop nodes being hosted here. That's a problem.
Larger blocks are not actually necessary with other layered solutions to bitcoin. The people who are pushing big blocks are mostly uninformed of this reality.
No, you do not understand, or choose to ignore things that are uncomfortable for you to integrate. It's not 'grandmas basement', it's effectively everyone in Australia.
> nbn™ Fixed Network (Base Plan) : Up to 5Mbps (only available in a small proportion of locations)
> nbn™ Fixed Network (Very Fast Speed Boost) : Up to 20Mbps (only available in a small proportion of locations, and only to business customers)
> nbn™ Fixed Network (Super Fast Speed Boost) : Up to 40Mbps (only available in a small proportion of locations, and only to business customers)
> nbn™ Fixed Wireless : Up to 5Mbp (only available in a small proportion of locations)
Welcome to the world outside of your bubble. A node currently takes up about 35% of the upload bandwidth of an internet connection. At a minimum.
> I fail to see node centralization as a priority.
And therein lies your problem. While you continue to hold to that belief, you will find that the direction of bitcoin will go contrary to your desires.
I also enjoy block size drama, but I'm not sure it effects the speculators one way or the other; many of them have probably never created a single on-chain transaction.
A full mempool is by design. Without it, bitcoin can be used as a permanent secure distributed file storage system with massive redundancy. Thanks... I'd prefer to keep it as a non-censorable store of value.
There is no global mempool, it's a per-node thing. I think the default for Bitcoin Core is to hold 300MB of transactions, which means for most nodes the number of transactions in the mempool is constant. A better metric is transaction fees. Here's an example site: https://bitcoinfees.info/
It would be interesting to see a breakdown of WHAT Bitcoin are being trading for (e.g. pure investment, black market goods, standard commercial goods/services).
Without a good understand of what drives Bitcoin's use it is hard to tell if this is an investment bubble or legitimate organic growth. I will say I don't run across all too many sites that support payment via Bitcoin, I know they exist, but it hasn't expanded to be commonplace.
But I've read the drug market on e.g. Tor is alive and well. So maybe that drives a lot of this trading.
Check out Jim Epstein's article on how its used in Venezuela. Pretty great use case. As long as there are a few intermediary companies, i'm not sure it matters that most companies don't take btc.
Like many bitcoin users, Alberto, the miner who makes $1,200 daily, imports food from the U.S. through Amazon's Prime Pantry service. This would be impossible with bolivars because almost no one outside of Venezuela accepts them as payment, and the growing scarcity of U.S. currency has made purchasing foreign goods with dollars increasingly difficult. Though the Seattle-based retail giant doesn't accept bitcoins itself, plenty of intermediary companies do. Alberto purchases Amazon gift cards through the cryptocurrency-friendly website eGifter, using software to mask the location of his computer, and then routes his orders through a Miami-based courier service.
Personally, I've done a lot of dev work for Bitcoin for foreign nationals. It gets real annoying real fast to deal with PayPal or traditional international money transfer systems when you're talking contract work levels of money for a small company (too much for shitty remittance services, too little to make the overhead of more complicated bank-managed mechanisms worth it).
And yes, I do pay taxes on my Bitcoin payments. It's somewhat annoying to keep track of everything, but my accountant mostly takes care of it for me. I probably end up losing ~2% to overhead (very little of which is due to Bitcoin itself), which is unfortunate but comparable to even the cheapest traditional services.
Could you elaborate how you find clients like this? Do you specifically look for clients who are willing to pay in bitcoin or work on bitcoin-related projects?
Clients mostly find me. I'm honestly not sure how to optimize for that, it's usually pretty random. I guess for those clients I do seek out, they'll post about wanting developers in forums or mailing lists or whatever.
You can really only speculate, but I think it's safe to say that the strong majority of trading is for speculation.
The darknet markets certainly bring some demand, but it's high-velocity. You don't need to hold BTC, only transact in it.
The remittance market does seem to be there, but it's still in its infancy. Maybe only a small fraction from this.
Similarly, actual e-commerce is quite limited. Bitcoin offers few advantages over PayPal and credit cards for the large majority of consumers. There's only a subset of international transactions and other fringe situations where it makes sense.
I think the other significant market, after the speculators, are those that are ideologically motivated to hold Bitcoin.
There might even be enough of a legitimate bitcoin economy you could mostly do it, assuming you weren't a really big time criminal. Those guys have ways to launder the profits anyway.
I used to use Xoom but every six months when I'd go to do a transfer they'd need more security verification and it got tiresome. Although that was a few years ago, maybe it is better now.
Services like TransferWise and Xoom are great, provided both parties have access to good banking services. But, a lot of the remittances market is people working in a foreign country sending money back home to people who may well be unbanked. Some of the startups targeting that market, using bitcoin as the transfer layer, are pretty interesting.
Most of the people around me are using it as a speculative investment / store of value. If my sample is not biased and this is the case for the whole universe, that alone should be driving the price up.
The amount of new bitcoins that are being made available is just 12.5 every 10 minutes, this is a mere 1,800 BTC a day, or around USD 2 million. If the main use for bitcoin is store of value or long investments, the available "old" bitcoins are not going to be that many. In my opinion this is the main driver of the price.
Knowing there's continual advancements in all the alternative cryptocoins, one has to wonder why anyone would find it viable to "store value" in a system that may at any moment become objectively obsolete.
More noteworthy is the assumption people have that BTC (or any other early-adopter-deflationary-investment-coin) is able to serve as a currency ecosystem when it's inherently deflationary, thus discouraging the usage of it for anything but speculative hording (which assumes there is a demand by something other than hoarders..) - or rapid short term use, which has proven ineffective and untimely for micropayments [1].
Altcoins are a concern, but as a store of value, Bitcoin is already 'good enough' that network effects are likely to make it a standard for a long time to come.
It's also good to remember that the tech world is built on all sorts of 'objectively obsolete' technologies.
Not with the block size limit serving the market for payments to the first competing cryptocurrency (like Ethereum) that develops a decent wallet and gets critical traction.
If there's a shift, it can quickly turn into a flood, since much of the value of bitcoin is based on speculation, rather than more robust demand from use as a payment vehicle.
BTC and other proof-of-work cryptocoins require active upkeep from the CPU/GPU/ASIC miners maintaining the network.
Hardware, and electricity investment is not static for miner upkeep. A fun feature of most cryptocoins is the ever increasing demand for hashing power, forcing miners to constantly consider the value of their real costs versus the real value of the protocol they apply their equipment to.
So by design, the network effect of cryptocoin miners will flock to whatever the current best design is on any given day.
Gold has been the de facto store of value for thousands of years. It has more to do with consensus rather than technology. As long as the bitcoin blockchain technology meets some minimum requirements, there won't be a need to move your funds anywhere else.
Furthermore, for all intents and purposes, the technology behind bitcoin is already obsolete. So if the obsolescence hasn't affected it yet, there is no reason to believe that further obsolescence would hurt it.
Bitcoin is inherently deflationary as coin creation slows to 0.
>Volatility
Volatility is due to uncertainty and speculation. If Bitcoin survives and is used significantly for transactions volatility will decrease (it already has but not enough).
The assumption is there is no value in a system which is currently insufficient for use as a currency ecosystem, and doomed for obsolescence as other cryptocoins prove to offer objectively more effective feature sets.
Bitcoin is inherently deflationary as coin creation slows to 0.
This is exactly what makes BTC ineffective as a currency ecosystem and thus counter-productive for speculative hording. Speculative hoarders assume the value comes from limited supply, and so the problem is two fold; the system disincentives spending, starving the economy in paradox. Additionally, as speculators place their bet that BTC's value is derived from a limited supply, we see there are already numerous competitors with improvements over the BTC protocol, and many more sure to come.. so this supply is not limited at all.
Ah I didn't notice that that was your longer comment above this and misinterpreted you.
I'm not convinced that the deflationary spiral argument applies to what I view as a settlement layer, but it's definitely concerning to Bitcoin's future. I will agree that as long as bitcoin is seen as more of a commodity than a transaction layer, it will have a questionable future.
Bitcoin has been "objectively obsolete" for a while (Ethereum, Monero/ZCash etc.) yet its value increases. Maybe people are investing for some other reason such as network effects.
I'm pretty sure active trading with BTC is mostly regarding drug dealing through dark net market places. And the conversion mostly dealers selling BTC for USD to consumers, which buy drugs with BTC and those BTC will be sold back to the consumers for USD.
As far as I can tell there is simply nothing else to do with BTC as of now ... sure you can use it in some shops and you can buy plane tickets from Air Baltic with BTC - but those purchases are always actually more expensive to cover for the volatility of the BTC value and of interest only for users who think its fun to actually use BTC in the real world.
Probably it will either establish as an illegal clandestine super-national currency or it will be hijacked by banks for whatever weird theoretical purpose.
This is how Bitcoin must progress. Slow and steady. A platform like this can't be the result of rocket like growth and instantly transform marketplaces. Much of finance is based on stable assured systems.
This is a good sign overall. Even if BTC isn't the right answer as a currency.
It's getting slower and steadier. This tripling from $400 to ~$1200 took a good part of a year, but last time Bitcoin did $400 to $1200 it was done in 20 days (last 3 weeks of Nov 2013). That's a huge reduction of volatility.
I haven't seen a single bitcoin exchange that is stable and trustworthy enough to put your money in (Mt. Gox used to be the biggest and most reputable and we all know how that turned out). Converting from your real currency in to and out of bitcoin is still very difficult. Almost every exchange gets hacked sooner or later or gets shutdown due to government regulations.
Nowadays there are quite a few extremely reputable and solid exchanges, insured, following all regulations, etc. For example Gemini run by the Winkelvoss twins, and Coinbase/GDAX (a YC-funded company.)
MtGox has never been reputable. It was the biggest, and it worked, but it has always been sketchy. I say this as a MtGox user through 2011-2013. And yeah I stopped using it about a year before it got shut down because other exchanges more reputable than MtGox started appearing and it was more and more obvious MtGox had serious internal issues (delays in processing transactions, one of their bank account seized by the feds in 2013, etc.)
That may be true, but we've come a long way. Coinbase insures all currency they store in online storage, and offline storage is significantly more secure and less hackable. USD in Coinbase accounts is FDIC insured too! It's not perfect, but we've certainly come closer to a safer exchange world.
It's just because Coinbase is being extremely/overly cautious about detecting and fighting fraud. They will refuse to let you buy/sell if your account/documentation is a bit suspicious. And they can't explain you why you were tagged (or else fraudsters would simply ask why and would adjust their operations accordingly.)
I personally favor them being overzealous than too lax.
I'm pretty confident Coinbase will still be here in 10 years with no major breach. And I'm also fairly confident that even if there were a major breach, I wouldn't personally lose any Bitcoins or money.
What do you find unstable or untrustworthy about GDAX or Gemini? They're both American companies with a great deal riding on their reputations as mature platforms, Gemini in particular in light of the ETF.
Gemini hasn't even been around for more than 2 years..
I check bitcoinwatch every now and then, and the biggest exchanges always disappear soon or later. I haven't seen anything (for USD) in that top 10 list for over a year (maybe bitstamp, but still...). Not very promising.
It's generally safer to use your own wallet. Online wallet services are a massive target for would-be thieves, so even if they use better security practices than you would, the risk isn't necessarily lower.
I never really understood this perspective. Suppose you had $4,000 worth of bitcoins in 2014 and spent $2,000 on a MacBook, you'd have $2,000 worth of bitcoin left. That $2,000 worth of bitcoin would now be worth more than your original $4,000 and you have a MacBook. If anything, your MacBook was free.
This hypothetical scenario is muddled. OP is lamenting an investment decision (sell BTC, buy computer). It's irrelevant that he/she might have had extra funds (the second $2,000 of bitcoin in your example) that weren't part of that investment decision. OP probably owns other assets as well (car, stocks, patio furniture, etc.). They weren't part of the investment, either. They're irrelevant to this analysis.
Saying the computer was free is misunderstanding what "free" means. If the computer were free, he/she would have paid $0 for it and would still have the bitcoin.
Of course you're right that I am misusing the word "free." But, I understood OP to be criticizing the deflationary nature of Bitcoin rather than lamenting a personal decision to spend his/her own bitcoin holdings. My point was just that it isn't a bad thing for your money to triple in value.
Interesting example. Bitcoin as an example of increased purchasing power facilitated by an increase in productivity and value generation of the entire (global) economy. Thus, a more prosperous ecosystem makes each individual who shares its "currency" wealthier over time - a distribution of the time savings / value generation to all participants.
OP's point seems to be that inflation of bitcoin value is built in, effectively resulting in de minimis velocity and seeking out of alternative stores of value which are more stable. Bitcoin is how I would design a currency if I wanted it to self implode.
I have friends who are long-time Apple employees. The houses they bought in the mid-2000s effectively cost them more than $20m, because they sold their employee stock to pay for them (AAPL has gone up 20x since then).
They don't feel bad, of course, and nobody feels sorry for them. But you can drive yourself insane if you spend too much time thinking about the wide variation in outcomes if you'd made slightly different investment choices.
If the houses they bought are in Palo Alto, they would have appreciated considerably since and, if they used the stock sale to pay the deposit on the house and mortgaged the rest, they might have come out ahead.
That's true. In this case, the cohort of people with Apple stock in the mid-2000s is also the cohort of people who survived the dot-com crash a few years earlier, so they were much more of the mentality to secure their homestead rather than taking the risk that funds would continue to flow in to service the mortgage.
I'm curious how others on HN feel: I think Bitcoin is an evolutionary dead-end and the future is Ethereum. Ethereum is more powerful and allows more development on top of it than Bitcoin. I think Bitcoin still holds sway because it was first, but I think Ethereum has a brighter future. Anyone have a good rebuttal, or am I on the mark?
Rebuttal: Ethereum has far worse properties as a store of value.
-More complex codebase, which makes assessing vulnerabilities more difficult, and security more difficult.
-Ethereum broke trust and "code is law" when self-interested parties were able to rewrite history. Transaction malleability is a terrible property for a "store of value." It leaves the currency open to government interference, manipulation, etc.
-Ethereum has an inflationary schedule. Given a choice between holding an inflating or deflating asset, it seems straightforward which to choose.
-The utility of a given currency is dependent on the number of holders (like Metcalf's law)
-The hashrate and mining power securing bitcoin's network is far greater.
Agree 100%. Mutability itself isn't a problem--our financial system does fine with it. But the ad hoc way rules were created ex post facto by parties with unchecked conflicts of interest is, in my view, a permanent black mark on the project.
A virtual machine isn't all that complicated. Balancing that out, Ethereum's account balances are simpler than UTXOs, and of course Bitcoin has its own more-limited scripting. Ethereum is entirely defined by a 32-page spec, which is detailed enough that independent clients have been built from it.
Ethereum isn't technically any more malleable than Bitcoin. You might say it's more socially malleable, but governments can't force the community to make any particular decision, any more than they can with Bitcoin.
Ethereum's supply is currently inflating at 13% annually. Bitcoin was at 9% just before last summer's halving, and when it had a $1 billion market cap it was inflating at 33%. If Ethereum succeeds with proof of stake its inflation will drop below 2%, less than Bitcoin has now.
Bitcoin's hashrate is much higher, but that's misleading since Ethereum has a completely different hashing algorithm, running on different hardware. If you compare how much each chain pays for security, the difference is roughly equal to the difference in their market caps.
Quoting current inflation is misleading--adopters know the eventual plan for bitcoin is capped, whereas ethereum is uncapped.
A turing complete virtual machine is infinitely complicated--it can run anything. The implementation is "trivial" compared to the infinite surface area. The number of spec-pages is not a useful metric.
Social malleability is just as bad as technical malleability.
Totally agree. Especially about #2, 3. (I assume #1 as well, but have no evidence beyond what I would expect to have happened given how I know they were developed)
These are features that run intentionally counter to modern economics.
It is deflationary because strong currencies displace weak ones: Any individual person will want to hold value in a currency that's deflationary; they get greater value from it the longer they hold it. Is that good for the 'economy'? It's a matter of study. But it's the only thing out there that's deflationary (even gold is currently 2%/yr inflation by newly-mined metal). The fact that Etherium chose not to have this is a nod to the economic theories against deflationary currencies. It will help them with economists and politicians, but it works against them in adoption by individuals.
And it works for everyone the exact same way regardless of circumstances. It makes no social judgements. It has no bias. It runs by the rules. Good people can use it for good things. Bad people can use it for bad things. Rich people. Poor people. Oppressed people. Free people. The fact that Etherium broke their own rules makes them flexible in adversity, but it also makes them untruthworthy. Sure a network could always vote to change the rules, but having a culture of doing so means eventually someone with real power (guns and politicians) will make you change it their way.
While both those might help 'mainstream' adoption, mainstream already has money and electronic transfer systems. It'll be easier for them to fix the 3-day hold period with some new laws about 'you must trust X' than to literally move people off the dollar.
Bitcoin is a direct and overt competitor with the world order of money. Etherium is in a tough middle ground; not quite getting the best of either.
Technically, no history was re-written! No transactions were undone, but the fork agreed to new rules. The users of the new version also had a choice if they wanted to support the fork or not, the majority went with the fork.
Ability for a community to set and agree to new rules is healthy for a blockchain and it makes it more likely that Ethereum can evolve and successfully hardfork to POS mining in the future.
They don't need to be, to be a democratic institution. The head of the EPA or any other federal agency wasn't on your ballot, but the choice you made for president determined that, too.
This way of thinking makes ethereum bring nothing new to the table vs. democratically elected rulers of government changing monetary policy. So nothing aside from the fact that you can make little programs using its language makes it unique from how the fed is run today. This explanation that you post is a hallow excuse that knowledgeable people do not buy into.
In practice, where some percentage of coins inevitably goes lost every year, this still reduces to a deflationary schedule.
Meanwhile, Bitcoin with its hard limit on coin supply, will likely experience some miner incentive perversions when rewards become dominated by fees rather than coinbase.
> Meanwhile, Bitcoin with its hard limit on coin supply, will likely experience some miner incentive perversions when rewards become dominated by fees rather than coinbase.
Piggybacking the complex codebase argument: Ethereum's scripting is Turing complete, unlike Bitcoin's. To some this is a feature, to others this opens the door to unacceptable risk.
It's a variant of JS in that it uses curly brace syntax, but that's pretty much all it has in common with JS. It's statically typed, class-based, and all numbers are integers.
If you want to talk about an actual currency to use or store of value, check out Monero. Although, I certainly would not encourage you to buy it as a speculator.
> -Ethereum broke trust and "code is law" when self-interested parties were able to rewrite history. Transaction malleability is a terrible property for a "store of value." It leaves the currency open to government interference, manipulation, etc.
Rebuttal:
a) This isn't a technological feature/fault of Ethereum. What you really mean to say is that
1) Ethereum foundation broke trust by supporting a fork
2) Most Ethereum users chose to go with the fork.
Technically you can be with ETC (the unforked version of ETH).
b) Bitcoin can be forked too, there is nothing technological safeguard in there in it for it to be not forked, because it's literally impossible to build a technology which can't be forked(unless enforced by the govt).
c) The DAO fork was made possible by a bunch of factors:
1. The money the hacker stole was locked in a contract where he couldn't touch it for 30 days. This bought Ethereum foundation time to do something about it. If Polo gets hacked tomorrow, there is nothing Ethereum foundation can do anything about.
2. ETH is based on accounts model, rather than bitcoin's UTXO model. This means Bitcoin can't go with a fork even if they wanted to even if somehow DAO was implemented in an n-lock transaction for 30 days.
d) Ethereum gets crap for breaking "trust" when as a bitcoin holder I would have totally supported a fork to prevent MtGox or Bitfinix's funds being recovered from the thieves.
The fundamental question which everybody who is pondering over this argument on Ethereum needs to answer is this, "If you're using technology X, and a certain malicious entity/bug has affected a significant majority of the other users of technology X,then would you be willing to make attempts to thwart the actions of the malicious users."
Ethereum people showed that they would prefer such an action. Bitcoiners who don't have any stake in this, love to criticize Ethereumers for this.
It was not a bug it was not a theft, the DAO worked perfectly as designed. Ethereum failed to work as designed and intented, by its creators it was hacked and funds stolen from the genius hacker.
> It was not a bug it was not a theft, the DAO worked perfectly as designed.
By that definition of a 'bug', all bugs work perfectly as designed. I mean what is your definition of a bug then?
The DAO's code allowed a person to ask for money to be taken out before the balance was fully updated, this resulted in the attacker taking money out over and over and over.
This clearly was not the 'intent' of the creators or any of it's investors.
After the DAO debacle the Ethereum story is dead to me:
- it is not feasible to write or verify safe "smart contracts" without having excellent code analysis skills. Similarly to cryptography you really have to get it right. This is on top of the security problems of bitcoin (securing your computer, securing the exchange, understanding and persecute any crime committed against you)
- the DAO hack was not handled well by the community, to me it seems everyone is in it to make some quick money, or maybe for the lulz? There was a fork, and now you get to experience a massive cognitive dissonance when moving between /r/ethereum and /r/ethereumclassic; nothing constructive can come out of this.
- the blockchain technology makes it quite difficult to build practical apps (judging from my experience building a tic tac toe game for two players on a private blockchain, and the quality of the stuff that was out there last time I checked).
This was the thinking in the heyday of the DAO [1], when you could get 30 ETH per BTC.
Now that Ethereum's weaknesses have been exposed, the exchange rate has stabilized at about 90 ETH per BTC [2].
Mr. Market says Ethereum has lost nearly two-thirds of its value compared to Bitcoin.
There will be many cryptocurrencies with different capabilities alongside off-chain vehicles with other interesting and useful capabilities.
Maybe Bitcoin is the slow, steady, reliable, non-inflationary and boring reserve currency that is a long-term store of value and a safe harbor during stormy weather.
Perhaps Bitcoin isn't judged by whether people use it to pay for their dry cleaning, but as the backbone of a new digital economic system.
If it were all about features that would be true. You could build a better facebook that could do cooler stuff than facebook and it would never overtake facebook.
Not to mention it's not clear that features are the most important part of a digital currency. Scaleability, reliability, and simplicity could all end up being more important. Even branding meaning the name itself could be significant for the growth curve.
Ethereum has amazing features and development, and there is definately a LOT more activity in the ethereum development space vs bitcoin. Ethereum makes me anxious as an investment because it has no defined long term monetary policy, and initially ether were labelled the "fuel" of ethereum rather than being a commodity currency.
Bitcoin OTOH has a monetary policy incredibly clearly defined by a jesus-like figure who has now disappeared. Inflation is fixed and total supply is set at 21 million. Even if some group decided they wanted to change this there are enough people who are committed to 21 million that they will just maintain whatever fork still enacts satoshis original monetary policy. This is non-negotiable and results in a truly inflation-proof currency.
Yeah, but Ethereum is still pretty cheap. I figured I could get a good amount of Ethereum for a modest investment and if it ever truly takes off like Bitcoin did, it will have been worth it, and if not, oh well, I'm only out a couple hundred dollars.
As it is, it's currently worth more than I bought it for.
I agree with the first part of your statement, but disagree strongly with the second. I think that cryptocurrency is in general a solution to a problem that doesn't exist, outside of black market use.
Actually, my fortune is increasing due to inflation! See, I have this huge loan (mortgage) and every year, due to inflation, this loan effectively becomes smaller and smaller.
It's hard to get a hold of, it's hard to store securely, it's hard to transport, and it's hard to get people to accept it.
If you're really considering gold or Bitcoin, you very likely care about many of those things, and you'll see that Bitcoin has distinct advantages for several of those problems, with a lot of potential to improve.
Cutting out middlemen out of a transaction is a very useful feature of cryptocurrencies which potentially broadly benefits society.
For example (in certain parts of Europe, and probably elsewhere too) merchants have to pay a fairly high fixed cost to have credit card terminals in their place of business, and also pay a cut of each transactions to Visa or Mastercard. This is a considerable cost to small business, which have to pass this along to consumers. Now of course most consumers don't use bitcoin or other altcoins to pay for stuff today, however the fact that there's even the possibility of eliminating these types of middlemen is very exciting, and unthinkable even a few short years ago.
Not to mention the very exciting possiblities offered by blockchains and smart contracts, even if the original projects that spawned them fail completely (bitcoin and ethereum).
I think many people are finding cross-border transactions to be the big draw for Bitcoin, especially in places like Venezuela. Ordinary people are using cryptocurrency to skirt government-imposed monetary controls. They don't care about the privacy angle and aren't trying to obtain illegal / harmful products.
It's been several days since I've requested a wire and the company debited that balance from my account. There is no sign of the wire anywhere. I assume, I will eventually get it. It will cost me $30 if there are no intermediates (international wire), but more like $45 I imagine.
The first two are so far from the truth that it's really hard to believe you're being sincere.
As for the third, you've clearly not dealt with wire transfers very much. Dealing with SWIFT for example is infinitely more difficult than using bitcoin.
Bailing out speculative investments gone bad with taxpayers money is a pretty big problem if you ask me.
Cryptocurrency came about as a direct result of a broken political / financial system which effectively rewarded failure and financially punished those who could least afford to be punished.
Well, "more powerful" isn't always a feature. There was some discussion early on how advanced the scripting language really should be, and since the departure of Nakamoto the developers have both taken away and added features to it.
Some very smart people have thought about this, and it's probably far from perfect. But just throwing a VM in there isn't going make things better. Ethereum has had to make some radical changes to their initial idea. I think what we saw not just with the DAO but in fact most valuable contracts demonstrates quite well that it wasn't the most suitable design imaginable.
But things will move on, and new coins will appear to take its place. It has been quite obvious for several years now however that any new cryptocurrency will be bootstrapped from Bitcoin, not from USD. That is one of the reasons I keep an interest in it.
First employee of a major exchange here. High BTC values and regulatory acceptance are good for the crypto-currency sector as a whole. Bitcoin's persent-era limitations are well documented, and these do not affect market capitalization, maturity and the availability of conventional asset exchange infrastructure which are all critical factors in large-scale adoption. Major exchanges that have added ETH essentially represent a de-facto recognition that BTC is not the "one true solution", and that's fine. No system is all things to all people. In heterogeneity lies strength.
Bitcoin's ... limitations .... do not affect market capitalization
I hope I am not misunderstanding but it sounds like you are saying people will use bitcoin no matter how long tx time is or how high fees go?
As a major player in Bitcoin I think it imperative that you guys understand that is not true, users will stop using and new users will never join if it takes too long or is too expensive. I feel the exchanges could have a huge part to play in responsibly forking the system to 2 mb and beyond as a signal to miners and offer confidence to users that there coins are safe no matter what, not all this "We have no official stance" stuff which instills neither confidence nor the feeling there there is even anything important that needs "fixed". You guys should be the front line demand this upgrade, why aren't you?
Firstly, to clarify I am no longer involved in the referenced business except as a shareholder. I am involved in a newly emerging multi-asset financial services business with an interest in using cryptographic currencies for cross-border transactions. I agree with your assessment that high fees will affect volume, however that is really a separate discussion and perceptions of acceptable fees vary widely by scenario.
Bitcoin's value comes from speculators who use exchanges not the blockchain. Their off-chain transactions don't need to confirm and they don't pay (Bitcoin) fees.
Long-term "hodlers" also probably don't care if it takes a full day and a $100 fee to cash out their $100K of profit.
People who actually use the Bitcoin blockchain could all be scared away and BTC would still be $1,000.
Ethereum's currency (ether) is not finite and is predicted to not hold value like bitcoin. Ether is needed to power smart contracts not built to hold value.
Bitcoin wants to be digital gold, ether wants to be digital oil that is used to power smart contracts. This is a good way to explain it to the average person.
It's not finite but inflation is paid out to ETH holders in proportion to the amount of ETH they stake for validation, so on the balance, ETH holdings experience no dilution. Rather, there is constant (and gradual, at a rate of about 1-2% per year) transference of ETH value from inactive holders, who don't stake their ETH, to active holders, who do.
So I think ETH can be both digital oil (or digital solar, if you want to be PC) and digital gold.
Ethereum is an incredibly ambitious and exciting project. I really want Ethereum to succeed, and it probably will.
But it is easy to underestimate the widespread adoption and trust in Bitcoin. Bitcoin will always be the standard cryptocurrency store of value. There may end up being 10 other globally useful blockchains, but they will all use Bitcoin as their base store of value and medium of value exchange.
Ethereum is a complete scam. Amazes me that other technical people can't see it. Can they backup any of their claims of a turing complete autonomous system. Nope! Total vaporware and has no way of scaling to any degree.
My only interest in the project is to see how far a sophisticated scam can go. Can the higher quality commenting on HN spot the scam? Not yet! How far can smoke and mirrors trick an educated audience? It's a very interesting project in this regard
My primary issue with Ethereum is the Turing-completeness.
The more capabilities a language has, the more likely it will be compromised. Complex contracts will continue to be exploited like the DAO, which will put a damper on Ethereum's growth.
> The SEC will decide by March 11 whether to approve one filed almost four years ago by Cameron and Tyler Winklevoss. If approved, it would be the first bitcoin ETF issued and regulated by a U.S. entity.
This would combine the ridiculous volatility of bitcoin with the all-day tradeability of an ETF. What could go wrong?
It doesn't list all of the ETFs that are more volatile but the one they do list is a leveraged ETF. I would imagine most of the other 59 are as well. These leveraged ETFs are specifically designed to be multiple times more volatile than the market they represent. They are meant for traders to speculate on movement of the markets and no sane person would hold them for any extended period of time. A Bitcoin ETF being more stable than them is not an accomplishment and anyone saying as much is showing a complete misunderstanding of the goals of those two investment vehicles.
Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC. There is nothing wrong with that, just like there is nothing wrong with these 60 other ETFs. My point is the initial poster (pdog) is wrong to assume volatility was a problem in and of itself for these ETFs.
>Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC.
Except the Bitcoin ETF isn't leveraged like the example ETF. To borrow a term from your linked article, "It’s a wolf in wolf’s clothing." The example ETF is designed to be volatile, it is clear up front, and anyone investing knows it. The Bitcoin ETF isn't designed to be volatile, it just is because of the volatility of Bitcoin. If the Bitcoin ETF is marketed as a buy and hold type investment, then the volatility is a problem.
This is based on an assumption. These things shouldn't have to be assumed. For example, check out the page for the example ETF from the article [1].
>Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.
It tells you not to buy and hold, not because of the volatility but because of the leverage. Leveraged ETFs are rebalanced daily and designed to offer 2x or 3x returns only on a daily basis, this is why they say:
>...should not be expected to track the underlying index over periods longer than one day.
You shouldn't hold a leveraged ETF for very long because it will become unhinged from a layman's expectation of performance. AKA if I buy $SSO this morning and sell it this afternoon, I will get double the S&P's returns. If I buy $SSO this morning and sell it in June, I may get 1.5x returns or 2.5x returns or anything in between.
This bitcoin ETF won't behave like that so it should be fine, it's a volatile investment, investors should do their DD.
GBTC [0] has been trading since March 2015 [1], as of today is up 714% since inception [2]. My understanding is that nothing serious has gone wrong, so far, in nearly two years.
Also, for some, "ridiculous volatility" is a desirable feature for some portion of their portfolio.
My understanding is that nothing serious has gone wrong, so far, in nearly two years.
GBTC is a bad way to trade bitcoin and the chart in reference [2] you posted shows exactly why. A good BTC tracking ETF would have NAV = market cap, but here you can see that NAV and market cap are unlinked (as are returns for GBTC vs bitcoin) and people are generally paying way over NAV (in some cases over 50%!) to own GBTC. This is presumably due to unsophisticated traders buying GBTC without understanding that they're getting a terrible deal.
In summary, yes something is seriously wrong with GBTC and has been wrong for the entire life of the product.
> NAV and market cap are unlinked (as are returns for GBTC vs bitcoin)
Unlinked is putting it mildly. The gigantic rally in bitcoin after the drawdown in January was almost entirely missed by GBTC. For example if you bought on 01/11/17 and sold on 02/02/17, instead of enjoying the 29% gains of bitcoin (~$778 to ~$1004), you were treated to a loss of 1% ($109.50 to $108.50).
Thank you for pointing that out. I was trying to explain that any new Bitcoin-based ETF is not unprecedented, and no catastrophe has occurred ("What could go wrong?") despite a Bitcoin-based product being publicly traded for nearly two years.
To clarify, I'm not saying I'd touch GBTC. I certainly would not ever buy it. Nor would I consider buying any ETF or ETN claiming exposure to Bitcoin. I have no desire to shoulder such substantial counterparty risk, fees, and tracking risk (among many other issues, these are simply my top three).
I agree that GBTC is a terrible way to trade Bitcoin. Same as how many other ETFs, ETNs, mutual funds, and other financially engineered products are fantastically terrible ways to gain exposure to various assets. They apparently meet some people's needs, though. I don't understand it, but so what? I don't judge. Good for them.
We've been watching the ETF with interest. To gauge market sentiment, we launched an ETF approval binary contract (https://www.bitmex.com/app/trade/COIN_BH17). COIN_BH17 saw a jump from 35% to nearly 50% today. Optimism on the ETF is rising.
Even as a long-time holder of bitcoin, I don't see how the Coin ETF will be approved. There is so much risk in the ETF that your investment may be wiped out instantly. I wouldn't approve it.
My expectation is that it will be rejected, and the price of bitcoin will crash back to about USD$700 or so, and continue its long march upwards. It's important to recognize that that crash would still mean that bitcoin has almost doubled in value vs the US dollar in the past year. It has doubled in value over the past six months.
I'd say the risk of a fork of the thing that you're supposedly tracking, such that you might not even know what you are tracking anymore, is a serious risk that the SEC would consider to be a problem.
Don't get me wrong, I'd love for it to be approved. But for that reason, I don't think it will be.
A fork could definitely cause some temporary confusion, but wouldn't an ETF just be tracking the sum of the value of the forks? At some point they'd need to pick a side, but in the meantime they could just buy/sell equal amounts of the forked currencies. Once they do pick a side they could either sell the other side of the fork, or allow withdrawals (like Coinbase, etc did with ETC).
As long as the rules are laid out ahead of time I'm not sure why the SEC would object.
Bitcoin is within 0.4% of its all-time high (http://www.coindesk.com/price/ - peaked at $1165.89 in 2013). ATH breakout could and probably is going to happen any minute now... In fact many exchanges have already reached their ATH in the previous hours.
Do the article authors have at least 0.01% understanding of what bitcoin is? Or what web is? I'm very suprised of technical incompetence of authors writing about technical stuff in top newspapers.
If you mean that web == HTML + internet ports 80/443 etc., then it's a forgivable error. s/web/internet/ doesn't make the article any more or less effective at getting the main points across (price high, ETF rumors).
The BTC price really is crazy. There's no telling where it is going to end up. The long term chart is pretty amusing: https://cryptowat.ch/bitstamp/btcusd/1w
Bitcoin is surging because it's a globally accepted store of value and means of commerce, and the fixed quantity prevents devaluation. Unlike gold, all transactions can be done remotely and confidentially, an there are no storage cost, eliminating all the problems that are associated with storing large quantities of gold. IMHO, all dips will continue to be bought and the price will keep rising...$4,000/coin is possible...been long since 2013, so I am biased in that regard, but there are real fundamentals here too.
Foreign currencies have lost anywhere from 30%to 99% of their value against the US dollar since 2013. Beginning around 2002 and ending around 2011, many foreign governments carelessly amassed substantial infrastructure debts that now they are struggling to pay off (due to economic weakness for these foreign economies and the surging US dollar), creating a cycle of inflation and currency depreciation, making Bitcoin more attractive to own for people and businesses in these countries. Bitcoin is rising because citizens and businesses have lost faith in the competence of their governments, and rightfully so. America is an exception in that it's well-managed and strong economically and fiscally (especially relative to these foreign economies), which explains the flight to the US dollar, and also Bitcoin.
For example, in 2013, depositors at Cyrus' largest bank lost 48% of their savings above 100,0000 Euros:
NICOSIA, Cyprus (AP) — Depositors at bailed-out Cyprus' largest bank will lose 47.5% of their savings exceeding 100,000 euros ($132,000), the government said Monday.
The figure comes four months after Cyprus agreed on a 23 billion-euro ($30.5 billion) rescue package with its euro partners and the International Monetary Fund. In exchange for a 10 billion euro loan, deposits worth more than the insured limit of 100,000 euros at the Bank of Cyprus and smaller lender Laiki were raided in a so-called bail-in to prop up the country's teetering banking sector.
A second factor may be the rise of global authoritarianism, unrest, and unease, reducing confidence in keeping money in banks, and assets that face geopolitical risk...Bitcoin, because it's decentralized, is immune to geopolitical risk. As long as you have your wallet, you have your wealth.
The US dollar is unique because it's the world's benchmark of wealth. The Forbes 400 list is benchmarked in dollars, not Yen or Euros. The US dollar is not only a reserve currency, but everything (such has oil, gold, etc.) is denominated in US dollars, not Euros, Francs, Pounds, or Yen. This allows the US to persistently run trade deficits without hurting its 'wealth', unlike other countries that wold lose wealth in the form of high inflation and currency depreciation if they did the same. This makes the debt clock almost meaningless, and had someone in 2000 sold short US treasuries in anticipation of high inflation, they would have lost their shirt despite the national debt surging since then.
You should consider detaching comments that divert a thread to discussing competition when it is entirely irrelevant to the topic at hand. Is is a well known and commonly practiced discussion hijacking technique that does nothing more than decrease the value of a discussion forum.
The moderators of /r/bitcoin owe you nothing. If you don't like their moderation policy, go somewhere else. No-one is forcing you to read them, and you can't force yourself to be read by the people who go there if the people there don't want to read what you have to say.
Hearn tried to fork bitcoin, and learned the hard way that the people who use bitcoin didn't like his direction. He then had a whiny rage-quit, and has been throwing rocks from over the fence ever since.
You've been breaking the HN guidelines repeatedly by being personally abusive and uncivil in your comments. We ban accounts that do that, so please stop doing that. I'm sure you can make your points without stooping to that level, and HN will be better for it.
You were the one brought up /r/bitcoin in a discussion about Hearn, not me. And you did it in order to trash /r/bitcoin in an account you created an hour ago. You're exactly the type of user that moderation was invented for.
Over 100k transactions in mempool (waiting to be confirmed)
https://jochen-hoenicke.de/queue/all.html