I don’t fully understand the technical details of Bitcoin transactions but I’ve heard they don’t scale particularly well. What happens if someone, like a nation state, just started doing millions (billions?) of transactions every day for no reason other than just grinding it to a halt? A currency isn’t very useful if you can’t easily spend it whenever you want.
Cryptocurrency
- Thread starter Playboi Carti
- Start date
Bitcoin has many advantages over gold. It is easily divisible and transferrable. Not the case with gold. Gold can be jewelry, fair point. But, you can't reasonably trade minimal amounts of gold. You can with crypto. Can you easily send your family gold overseas? Nope.
Bitcoin is a store of value with the necessary qualities of a currency. It is one of the greatest tech achievements of our time. It solved for the double spend problem while maintaining all of the properties of a currency and store of value.
The volitility of Bitcoin will normalize as adoption increases.
We are in an increasingly digital age. I don't understand your tie to the physical argument. Bitcoin is digital property. Over time, people will prefer it to physical assets.
Bitcoin can be used as a currency. It can also store value over time. Value added to our economy today can be earned and invested into Bitcoin and due to its scarcity hold it's value for future generations. In contrary, dollars I earn today won't be worth $hit for my kids.
That was true years ago. Now, there are layer 2 solutions built on top of the native blockchain. For example, the Bitcoin lighting network has recently made Bitcoin a viable medium of exchange. The tech will only improve if the future is anything like the past few years.
The tech giants will just make their own cryptos rather than adopt one, I mean why wouldn't they? Way more money for them. Heck, Casey's and Kwik Star offer reward points, pretty much crypto.
At some point the new buyers diminishes as they won't get the same returns they could get elsewhere. If BTC hits 100k do people still keep buying the same? I'll be curious to see how it plays out reaching its new ceiling.
Kind of reminds me of the joke about someone who sees 13 standards and wants to combine them to make 1 universal standard. After they do, now there are 14 standards. Google says we are up to 6,500 cryptos already.
Just my 2 cents.
At some point the new buyers diminishes as they won't get the same returns they could get elsewhere. If BTC hits 100k do people still keep buying the same? I'll be curious to see how it plays out reaching its new ceiling.
Kind of reminds me of the joke about someone who sees 13 standards and wants to combine them to make 1 universal standard. After they do, now there are 14 standards. Google says we are up to 6,500 cryptos already.
Just my 2 cents.
Bitcoin isn't a reliable store of value though, because it's value swings so much. If the US dollar was swinging as much as bitcoin does it would create massive issues in the financial system.
Again I have a Helium (HNT) miner in my house. I understand Crypto fairly well and I understand many of it's other use cases.
That's why you invest. That's been the case for a hundred years. If you stuff those dollars in your mattress guess what, it's a bad idea.
I view BTC much like I view gold, and the arguments of the goldbugs are the same. You can't trust government backed currencies and all this stuff. The use case is exactly the same. Here is where I think the risk comes into play for crypto versus something like gold, which is the same storage of value (and for the record I have zero invested in gold):
1. As this continues to grow, it will be regulated. We don't know what that looks like or what kind of impact that will have on the value. It could be significant, it might not be, but anybody who says they know what is going to happen in that regard is lying to you.
2. We just don't know what future technologies could unseat this, or what potential problems could come from advancements in quantum computing and the like. Technology will keep improving. The security of the blockchain is currently sound but with the advancement in technology we have experienced in the last 25 years continues for the next 25 years, that security cannot be guaranteed.
I understand why people like Bitcoin, I really do. But I think people also get really into new technologies, and there are risks here which would absolutely crater the value of it.
And the dollar is traceable? They will outlaw it, but not for any moral reason. It challenges their ability to loot. Period.
They are not at all the same. One of the major value propositions to crypto and public blockchain is decentralization. The Bitcoin network is secured by nodes all over the world. No one person or entity has the power to bring it down. A tech giant or a country for that matter creating their own currency is not an valid comparison for one critical reason, it would be a centralized network.
Concerning the price, people have been saying the same thing during each market cycle. And yet, even just a few years only a little patience was required for bitcoin to bail out even the most poorly timed investments. When BTC hit 20k, people bought it and it went down to 3k. Now they are 3x on their investment.
Maybe you are right. Maybe people will stop buying crypto at some point. I don't think so. The network effect and adoption curve are too far along with too much momentum and the value propositions of crypto are unparalleled.
Small world. I also have a Helium miner! There aren't many of us.
1. I tend to compare bitcoin to gold for people who don't really understand bitcoin. I agree with you that the arguments are very similar. However, I would contest that bitcoin does a better job at being gold then gold does. I could send you a few satoshis in a few minutes. You can't do that with gold. You also can't reasonably send an amount of gold equal to just a few satoshis either.
2. Yes, I agree. In some ways regulation will help crypto and hopefully make the space safer and approachable for everyone. Sure, regulation COULD hurt crypto and destroy its value. That is a risk. However, I think that it is unlikely. For example, I believe the US will ultimately be friendly to the crypto space because if not, they will simply push innovation overseas. Just my opinion though. Additionally, the most populous country in the world has again banned crypto (China). And guess what, crypto doesn't care and price goes up anyway. Time will tell.
3. Yes, this is certainly a possible issue. Although we are probably 5-10 years away from possible security issues from quantum advancements. My bet is the tech/code is upgraded with additional security long before the network could be compromised. The most brilliant minds are in this tech space. That being said, I can appreciate the criticism here. It is probably my biggest concern with the future of crypto.
Lastly, we have focused quite a bit on bitcoin. Let's not forsake the power of the other projects. I have been using decentralized protocols for some time now. Smart contracts have largely replaced my bank. If that isn't a use case, I don't know what is. There are so many things going on in the space to be excited about. For example, IOHK and its aim to use blockchain tech to help Africa, a place without much of a legacy banking footprint. It aims to provide freedoms and opportunities for those who currently do not have access.
@cyfanbr is right, proof of stake is an alternative mechanism that is far less costly. However, before you criticize bitcoin and proof of work you should make sure you understand WHY it is happening and what value it is adding.
Securing a global decentralized network from a 51% attack is no small feat.
I think we're just at a difference of opinion here. If your argument is that you want bitcoin to be a store of value like gold, then I don't particularly care about how transferrable it is, because I'm trying to store the value. Transferring it isn't something I'm interested in. Plus you can just buy gold financial instruments, I don't need to actually physically own the gold, and those are very easily transferrable, and gold is still a physical asset which does matter.
I sell my HNT each month and invest it into legacy financial tools.
I agree the US will be more friendly to crypto but there will be some regulation coming and we don't know what it will do. I'm very skeptical that we'll have thousands of cryptocurrencies around. I think if you own one of the big ones like Bitcoin I think you're well protected but some of these other things, especially something like Dogecoin which doesn't have another use case I think will be eventually left by the wayside if it ever really catches on.
Fair enough on the difference of opinion. To be clear though, my argument is that BTC functions as a store of value because of its scarcity and perceived value by the growing community. It ALSO checks the boxes to function as a currency if needed. I'm sure you are aware of layer 2. My point is that it accomplishes both being a store of value and a currency. Also, I'm sure you are familiar with the phrase "not your keys, not your crypto". This applies to buying financial instruments. If I buy some gold, where is it? Can I see it? Or, did I just buying something that represents gold? Or, is it just a derivative product? I'm not saying you can't just buy gold, but I am saying that even though its supposedly physical, you don't actually have it most of the time.
We are in a digital age and bitcoin will likely overtake the market cap of gold.
I haven't sold any HNT yet. Too early in the cycle.
Just to be clear - decentralization is only a major value proposition to criminals and paranoid anti-government types in developed western countries. If you're talking about a country with either hyper-inflated currency or totalitarian regimes, I can see the value in certain edge cases. BTC or other crypto could get around government control in a way gold or other trade goods couldn't, but you also need people willing to accept it. I've personally always felt that if things get bad enough that we "need" gold or BTC as currency, we've already passed the point where they have any value because food and other important goods will be the most valuable thing and it would be hard to get someone to accept gold when what they need is a can of food or a new pair of shoes.
Centralization exists for a reason - it's superior to decentralization in all ways. The only advantage decentralization has, which is only an advantage for people who have a certain set of values and beliefs, is that it is not able to be controlled by an authority. There are many advantages of centralization. For example, credit card charge backs work because of centralization. No such thing on the blockchain. There is more efficiency in having centralized assets and more stability and control. So if you are not someone concerned about an authority having regulatory oversight over your money, or a bank handling your financial transactions that keeps an eye out for fraud and errors, then there is no benefit to decentralization.
I've always said the same thing. If the dollar craters to the point where it's absolutely worthless and gold is "necessary", well a bar of soap will probably be worth more than a gold bar.
I don't disagree with anything you're saying here but I think you're also pointing out some of the reasons why mass adoption of this is going to be problematic. Layer 2 is good as a way to verify transactions more quickly but now you have another component of this that people don't understand. I think a lot of people that have invested in blockchain technologies don't understand what they are doing, just my opinion of course. Even if you're buying a financial instrument backed by gold, you may not totally get it but you do understand it's just a financial tool backed by the price of gold. It's easy to explain and easy to understand.
My point simply is that this is a developing technology. There is zero evidence anything is going to take off. We don't know if something else will replace this technology. I think there is all of the potential in the world with it, but there are tremendous risks as well. I think pro-crypto people greatly overstate the benefits, and anti-crypto people both don't understand it well and overstate the risks.
I agree it's a store of value and it's a currency. We already have one of those and frankly it does it better.
I agree with the skeptics that there is a lot of risk and there isn't a lot of benefits yet.
I agree that it's a tremendous technological advance that has many uses, but there are currently a lot of questions about if any of it is better than what we currently have.
You state the above, like it is a fact. That is just your opinion. Centralization and authority also come with a cost. Via currency debasement our government uses its power to manipulate and steal from its citizens. This has happened throughout history and tends to not end well.
For those interested, crypto provides an alternative community driven model without any one entity in control. You don't have to be paranoid to support this idea. It's simple, one bitcoin is worth one bitcoin. The supply is capped. Let the community decide its value. If you think it isn't worth anything, great. Don't buy any.
Additionally, the legacy financial system also comes with a cost. It is archaic and slow. Also, do you ever wonder why banks don't pay $hit for interest? They have to pay for all the building and bloat. There is a reason cefi and defi business in the crypto world is so popular. You can earn significant rewards even for stablecoin deposits upwards of traditional equities returns. Of course the reason they can afford high returns is because the bloat of the legacy system does not hamper them and they can reward their depositors.
Thanks for the great chat so far!
I have two criticisms.
1. What would be evidence it "took off"? We have a country accepting as legal tender. ETF approvals on the way. Active bitcoin addresses and hash rate continue to go up year over year. Seems like evidence to me.
2. What would demonstrate a benefit for you? Cefi returns alone demonstrate massive benefits. We are talking 9% returns compounded weekly on stablecoins. Now, cefi and defi are not without risk or criticism. But, I think it shows how crypto can reward users for their deposits. Banks can't do this because it costs them too much to support the infrastructure. I'm sure this will continue to evolve. This is just one example of many I could give.
To be clear, I am not suggesting we dump the legacy system. I just support an alternative system for those seeking the risk/reward/innovation. Also, I only support putting a fraction of net worth into crypto.
1. I mean some sort of mass adoption. El Salvador accepting it as legal tender is great. Taking off to me is being able to walk into Hy-Vee and pay with Bitcoin.
2. Stablecoins are pegged to something else, frequently like the US Dollar, so I don't see the point of not just using US dollars. Defi especially on Ethereum can offer higher interest rates but I'd be curious what the true returns are considering the pretty crazy transaction fees IMO on Ethereum. They can rip banks but charging 4% transaction fees is pretty dang steep. Now that said I'm certainly not an expert here but again, these are now no longer easy things, they are very complex financial transactions and again the more complex things are the less likely they will be to be adopted by the masses.
What I said above is the opinion held by the vast majority of people. What is better or worse is subjective and depends on your priorities. If you don't hold the priorities of an extreme desire to avoid any government involvement in money, then it doesn't make sense to use BTC as currency. I can accept the idea of using it as a store of value and an investment diversification similar to gold or other commodities and think it does have value there. But, I don't believe BTC or other crypto will ever be used as currency unless there is an extreme financial crisis which would likely lead to major wars and disruptions in government. And if that happens, a few people may become extremely wealthy if the world shifts to one crypto or another as a major part of a new global currency in the aftermath. I'll have other priorities at that point.
It does require paranoia, or if not paranoia, then certain specific non-mainstream political views to be in favor of community driven money as opposed to centrally controlled and universally defined and accepted money. I'm not passing judgment on people who feel that way other than that I don't believe their views and predictions are correct.
There is a reason things like defi are popular - they are fads and buzz words that will have their 5 minutes in the spotlight. I'm not saying they'll go away, just that they will have their small chunk of people who use and love them, but long term they'll be forgotten because they just don't provide much over the traditional system. They can make some people who are willing to accept the downsides feel good that you don't have to be part of the system and there's nothing wrong with that. But that's a desire held by only a relatively small group of people.
The existing financial system is not slow, in fact it's faster than BTC in the vast majority of uses - processing regular day to day payments. If you're looking to transfer large amounts of money, or send money internationally, sure BTC/crypto may be faster. But, in my opinion, I prefer a slow and careful process for those things. I think most people agree. You don't need to have a brick and mortar building to be a bank, there are plenty of banks in developing countries and even in developed countries that are online only with no physical location. They're still centrally controlled and part of the financial system. The reason banks pay low interest is not because of their brick and mortar building locations. It's because the Fed has set interest rates extremely low, lowering the cost of the individual banks to borrow money from the Fed, therefore lowering the rates these banks can charge for loans. And all that reduces the amount of interest they're going to pay out for savings accounts.
Ethereum fees are high which is an issue especially for folks with lower capital. However, other chains are much cheaper to use, although more centralized and more risky then ethereum. Cardano just released smart contracts and will challenge Ethereum for a market share. defi will be much cheaper on that platform.
There are also more centralized options like Celsius network for those who don't want to venture into defi. It functions much like a crypto bank. But, of course deposits are not FDIC insured. It doesn't cost anything to deposit there. That is where you can get 9% on stablecoins.
Not trying to shill anything, but it's an example of the power of crypto.
Buy, Borrow, Swap & Earn Crypto | Celsius, Your Home for Crypto
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I can appreciate your well thought out opinion here. In fact, I can agree with most of it. I am definitely more bullish on crypto then the vast majority and that is not news to me! I am also probably more concerned with the implications of our currency debasement then most folks.
To be clear though I would say that I don't think BTC will ever be used as a the primary means of exchange. Store of value is the most important value proposition. But, since it can function as money (unlike gold) that certainly helps its cause. Its not just a store of value that crypto can provide though. Let's not forget about smart contracts which are another real game changer IMO.
@BryceC @JustAnotherTimeline
Why mine Helium? Odds are pretty small for both of you to be mining the same coin, so I am curious lol
Why mine Helium? Odds are pretty small for both of you to be mining the same coin, so I am curious lol
