The Bitcoin Apocalypse Is Coming in Mid-November(blog.rongarret.info) |
The Bitcoin Apocalypse Is Coming in Mid-November(blog.rongarret.info) |
> The bitcoin chain has been hard-forked at least five times, [1]
[1] https://en.wikipedia.org/wiki/List_of_bitcoin_forks
Ouch! Those aren't hard forks— they are forks of the github repo!
In reality Bitcoin has only been hard-forked twice. Once, to fix the bug as described in BIP 50, and once for Bitcoin Cash.
Here's a better resource: http://homepages.cs.ncl.ac.uk/patrick.mc-corry/atomically-tr...
> On one side are those who believe that Bitcoin is … money, currency, …. On the other side are those who believe that it is a commodity, ….
That is the other red flag: Trying to construct two different exclusive camps. This goes along with not mentioning the Lightning Network (LN). Some people still don't see that LN could enable bitcoin to be both: A currency and a commodity.
https://www.reddit.com/r/btc/comments/719vis/lightning_dev_t...
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
If for some reason you don't believe that, then there will always exist credit card companies that could provide instant transactions with guarantee as a middle man. Alternatively, there exists solutions like BitNotes.
†https://bitcointalk.org/index.php?topic=423.msg3819#msg3819
> But, to quote another well-worn and wholly unreliable aphorism, this time it's different. It really is.
and
>... because the only other alternative is chaos, and probably the end of the whole Bitcoin experiment.
I'm very much a Bitcoin skeptic, but, I'm not sure this time is different, or that Bitcoin will die.
For the last 8 years, various sources have been predicting a Bitcoin collapse over and over again. It's still here, alive and well and quite high.
3 years ago: Business Week - Bitcoin Is Collapsing => https://news.ycombinator.com/item?id=8893616
4 years ago: latimes.com - Bitcoin virtual currency is on verge of collapse => https://news.ycombinator.com/item?id=7306035
6 years ago: theatlantic.com - The Bitcoin Economy Is Collapsing with No Sign of Recovery (2011) => https://news.ycombinator.com/item?id=8431092
6 years ago: Bitcoin & Gresham's Law - the economic inevitability of Collapse => https://news.ycombinator.com/item?id=3623549
Some more tidbits of information from my perspective:
>The anti-2Xers argue that the NYA should not be binding because it was negotiated behind closed doors, and that a change of this magnitude needs to be more carefully considered before it is adopted.
No active developers were part of the NYA. Some in the NYA have said that they agreed because they believed Core was party to the NYA.
>But there is another school of thought, which is that Bitcoin is (or should be) a currency rather than a commodity, primarily a medium of exchange rather than a store of value. These are the folks who want you to be able to buy a cup of coffee at Starbucks with Bitcoins.
I don't think anyone, including Core, is against that (higher transaction throughput). But on-chain scaling alone can't get you very far, and it has large costs that need to be carefully considered. The (backward-compatible) Segwit capacity upgrade just happened, and it takes time for people to update their software to make the newer more-efficient transactions. (... If the consensus was that Bitcoin really was urgently hurting for transaction capacity, you'd expect people to be updating to Segwit transactions faster than they are now.) The idea that another capacity upgrade should be rushed so soon immediately after Segwit is kind of silly. The idea that it should be decided so soon behind closed doors by a few CEOs is sillier.
>The 2X advocates have refused, citing the NYA, and secure (at least apparently) in their belief that enough people will update their code that there will be no doubt that 2X is the One True Chain.
Let's be clear about the word "update": it means to switch their software to a fork that none of the active community Bitcoin developers contribute to and that none plan on contributing to. Many have said that if Bitcoin "fails" after the fork, they have no interest in contributing to the Segwit2x fork's software. (The big-blocker anti-segwit movement stalled work for years, politicized the Bitcoin space, and contributed to making many of the core devs be the target of harassment; imagining that unpaid volunteers are going to switch to working on a project made by the latest iteration of that is ... to call it wishful thinking seems too kind.)
In any case, if you believe Bitcoin's main value proposition is as a great store of value, then replay protection simply doesn't matter that much. You wouldn't be transacting enough to matter.
For the opt-in replay protection, that is a proposal which requires people to update their software to protect themselves. That's unacceptable, many people are unlikely to even know that a fork happened. Replay protection needs to be automatic for un-upgraded nodes.
The only case where this is a problem are business to consumer transactions and p2p txs both of which you rarely do, if ever if you use BTC as a store of value.
It has been very interesting to see how he Ethereum has handled many of these same problems. I would be interested in seeing analysis about the impact to alternative crypto currencies such as Ethereum and Litecoin, if Bitcoin ends up blowing up over this.
Adoption increases market depths, which in turn decreases volatility. And volatility is sharply decreasing: https://mobile.twitter.com/lsukernik/status/8649208737189519...
> Bitfinex is introducing new CSTs that will allow traders to speculate on the potential activation and mining of the Segwit2x consensus protocol. We are designating these CSTs as BT1 (Incumbent Bitcoin Blockchain) and BT2 (Bitcoin Segwit2x).
See also: https://www.reddit.com/r/btc/comments/74mgka/why_bitfinexs_c...
Why is it that people so quickly jump to "markets be crazy" as an explanation rather than "perhaps I don't understand the situation and have been sold an exaggerated version by people who profit from clicks or chaos"?
You can easily bet against local apocalypses.
You can't trade, on a market, on the market ceasing to exist. You can of course trade on other markets against the first market, if they're connected.
These companies have definitely lost users due to their support of 2x, and that hasn't gone unnoticed.
It's funny to think what an _actual_ bad actor could do to the platform. Every time I hear the cryptocurrency people crowing about the amazing un-censorable power of the technology I just smile.
One obvious way - whether you agree with it or not - is to use hashrate. It's quite unlikely that both chains will have a nearly-equal hashrate for a sustained period of time.
Just hold on tight, let's see if it can survive protocol upgrades and get more than 4 transactions a second.
The design of B2X is based on getting every user of Bitcoin to switch software before November. If commerce continues on the legacy chain, the value proposition falls in its entirety. B2X has no replay protection to speak of and no emergency difficulty adjustment is possible. The market correctly reflects the probability that B2X will replace BTC. Feel free to bet on it should you disagree, Bitfinex offers futures trading on BTC/B2X.
My only piece of advice is that while it's fine to take money off the table before such events, pay very close attention to what is going on and NEVER PANIC SELL. Anyone who has done so before (myself included) has regreted it.
Bitcoin has been pronounced dead many times before and yet is very well alive.
He should put his money where his mouth is (but of course he probably won't).
I haven't been keeping up lately, but I would guess that whichever camp the Chinese miners were in is going to lose, since Chinese mining itself may be headed for rapid decline.
I just went to steemit blog network, now my grandma can use a blockchain
In theory, Bitcoin is supposed to be a payment system, digital cash. But that seems to be pretty much dead. Consider the opinion of Fred Wilson, a big Bitcoin booster, who has stopped using it for payments: http://avc.com/2017/08/store-of-value-vs-payment-system/
Merchant acceptance is actually in retreat: http://www.businessinsider.com/merchants-arent-accepting-bit...
It is still being used for speculation, of course. And for some crime. But the 2010 vision of a digital cash that replaces Western Union, Visa, etc? It certainly hasn't arrived, and it seems farther off than ever.
Bitcoin has a predetermined graph of coin production with time that converges soon. In 2022, 90% of all bitcoins will be produced, and the ideal inflation will be lower than most fiat currencies.
But inevitably, people die, and the knowledge of their private key with them, removing bitcoins from circulation. The amount of bitcoin will therefore decrease impredictably
All in all, it will be as volatile as currently traded gold (which is not as good a long-term store of value as fiat money as a result), and slower to use in transactions (in November, the European Central Bank will launch SCT Inst, a SEPA mechanism that provides transactions in less than 15 seconds, which is better than Bitcoin's recommended 2 hours).
Beating the improvements of traditional systems will require new cryptocurrency designs.
Wrong. Bitcoin payments processors report growth, eg. BitPay processes $1 billion in payments per year, up 328%! https://blog.bitpay.com/bitpay-growth-2017/
The source you quoted is laughably bad: it tries to estimate payment growth by looking at how many of 500 retailers accept Bitcoin. That's like saying "out of 500 persons only 3 own (not bought) a Porsche this year compared to 4 last year, so worldwide Porsche sales are down."
It's other description, as a form of digital gold, applies now more than ever though and I think that's how the market is treating it: largely as a hedge and store of fungible value.
While other cryptocurrencies may give you near perfect anonymity or sub-second transaction times with no fees, none of them are so secure and dependable.
Edit To replies: It does if the SEC decides the concept of cryptocurrency is one which fundamentally exists to bypass regulations for the purpose of fraud. I’d disagree, you’d disagree, but only their agreement matters.
They are already doing just that in the last couple of months, and bitcoin remains unaffected.
The SEC only has jurisdiction in the US. I don't see how this would impact Bitcoin's use in the rest of the world. Bitcoin is a phenomenon that's worldwide.
It's 'high' mostly because there are a large number of holders who are just sitting there on it.
If it's not being used as a currency, than I can't see how in the long term, people consider it to be a 'store of value' when it could be regulated, deemed illegal, or declared all sorts of things by regulatory bodies which fundamentally change it's nature.
And as an arbitrary store of value? We have tons of 'stores of value' available to us already that are considerably less volatile and more liquid.
So what is the point again? What problem does it solve, and why should anyone want it for a material reason?
I too agree that it will be around for a very long time, but what happens when the very speculative press - and even HN readers get 'bored' of all the news? When the Google queries start to wane (and BTW I think BTC will enjoy a huge surge in interest by 'everyday folks of the world' for a while before it wanes), but eventually, people will lose interest if it's just a 'store of value'.
I think you fail to envision how the dynamics will play out if Segwit2x wins. Core will simply merge the ~1k lines of code that make up the segwit2x features, and mostly everyone will be back to business running Bitcoin Core instead of BTC1, since the two code bases would be equivalent. That's it. No big war. No mass resignation of Core devs. No ceding the control of Bitcoin to "another group". Most Segwit2x supporters want a smooth "reintegration" scenario like that to take place. We don't want to "fire Core" or such nonsense you might read on r/Bitcoin.
Things would be a lot simpler if Core simply agreed to double the block size. That's all we want. A one-time block size increase, to give the blockchain some breathing room while we all continue to work on off-chain scaling (NimbleWimble, LN...) that we all already agree are the proper long-term solutions.
Hasn't been true since July: https://blockchain.info/charts/avg-block-size
> full blocks and high fees have caused Bitcoin to lose many users to alts (LTC, ETH, ETC, DASH...)
What's the evidence for this? All my friends own btc and alts... but none of them transact in it. They own them only for investment purposes. I don't think anybody is using alts for their higher throughput.
7% in two months. What kind of adoption had you expected? Everyone won't switch over night, that's the whole problem behind why flag dates in distributed systems are hard, and why many people adocate backwards compatible changes whenever possible.
> if Core simply agreed to double the block size
Core is the name of the Bitcoin software. Perhaps you mean the Bitcoin community? The functionality needed to roughly double the block size was released last year and finally took effect in August. If that's too slow for your use case, then you are probably on the edge of where Bitcoin is useful anyway. It's hard to imagine any sort non-contentious hard fork planned and executed in less time than that, without endangering other people's money.
The NYA happening with a few CEOs "behind closed doors", was pretty much a result of the year and a half of no progress on the safe hard fork part. Also remember the miners aren't really a fan of cheap transactions, which eats into their profits, and does fundamentally alter their ROI.
Segwit2X was originally sold as a compromise. Activate SegWit for the future since it requires software updates as you noted for the additional transaction formats, and schedule a 2X HF to help the network grow immediately.
> The big-blocker anti-segwit movement stalled work for years, politicized the Bitcoin space, and contributed to making many of the core devs be the target of harassment
I agree sadly, but unfortunately it was the same story on the reverse side. Look at the ridicule and scorn Mike Hearn and Gavin got for their big block proposals in 2015.
They were invited but declined: https://www.reddit.com/r/btc/comments/74ow7f/erik_voorhees_o...
> I don't think anyone, including Core, is against that (higher transaction throughput). But on-chain scaling alone can't get you very far, and it has large costs that need to be carefully considered.
Meanwhile, no one has yet provided a believable scenario how miners can get paid in the long term that isn't high transaction volume at low cost.
> The idea that another capacity upgrade should be rushed so soon immediately after Segwit is kind of silly.
This debate is ongoing since almost four years. I wouldn't call that rushed.
> The idea that it should be decided so soon behind closed doors by a few CEOs is sillier.
See above, regarding invitations.
> Let's be clear about the word "update": it means to switch their software to a fork that none of the active community Bitcoin developers contribute to and that none plan on contributing to.
And many others see 2x as the first real sign of the incentive system actually working.
So just merge (or reimplement) segwit2x's consensus changes back into Core and continue as if nothing happened?
SegWit2x is basically the mining faction stealing the network away from the Core development group, forcing everyone in Bitcoin to switch software if they still want their transactions confirmed.
Not that I really disagree with them - as _something_ needed to happen, as demand (whether real or manufactured) has led to 100% full blocks for months, resulting in long transaction delays and high fees, and the rise of competing currencies, fracturing the market.
We will see if one side backs down before the HF, but due to both incredibly entrenched positions I think we are going over the edge.
I think that 2X will destroy a lot of confidence in Bitcoin, as it proves that the network can be stolen away to change the rules, and would be managed by a much smaller dev group.
Though, the Bitcoin network can survive as a zombie forever with just a couple miners and zero devs. So it may not 'fail' in that sense, just become very stable.
"The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it."
https://bitcoin.org/bitcoin.pdf
Just because one group of devs calls themselves the arbitrators of all things Bitcoin doesn't make it so.
That language is very revealing: It never belonged to 'the Core development group' in the first place.
In theory, the "economic majority" controls the consensus rules, not miners or developers. https://en.bitcoin.it/wiki/Economic_majority
I'm guessing Core will be prepared to reluctantly merge segwit2x's consensus rules and release a new version in the case that segwit2x succeeds. Core wouldn't lose much market share if they act quickly.
What makes you think the end cannot come before pensions and mutual funds start investing? What if panic selling triggers a deep loss in value, which then triggers miners to shut down as the mining reward falls below the energy cost; if enough miners shut down, someone could pull off a double-spending attack, and when people see that it will further reduce their confidence in the system. The result could be that confidence in Bitcoin never recovers.
Or Bitcoin could just be a fad that slows unwinds and fades away, and twenty years from now we'll all be laughing about it over drinks. I can think of a few other technologies that were "definitely going to take over" and are barely remembered today...
If a pension fund were bullish on Bitcoin, I think they'd be much better of going long a VC fund that is investing in the space.
dot com stocks themselves may have been a lot of hype but at least they had the precedence of several hundred years of capital market infrastructure around them to lend some credence.
Yes it's true. I said WEIGHT not SIZE. A distinction few understand. Check the kWU column at https://blockchain.info If a full node has built a 4Mweight/1MB block, it is full, because non-segwit txs have wasted the 4M weight quota and prevented the block from growing over 1MB. If segwit adoption stays low, blocks WON'T be able to grow much beyond 1MB.
In fact the problem is that the rate of adoption of segwit is too low compared to the rate of increased txs that Bitcoin needs to be able to support. Therefore blocks are going to continue to stay at or near the ~4M weight quota.
The tx rate of ETH, LTC, and other alts started sharply increasing in March/April 2017, which is exactly when Bitcoin blocks reached capacity (~250k tx/day)
Also, automated system may have no way of handling it if those automated systems are not upgraded. Which means a merchant could end up with thousands of payments that they have to manually fix. And, those merchants will be forced into adopting the new software to correct the issue, they will have no choice to o ignore it.
It FORCES every deployed system in the entire ecosystem to upgrade, even systems that don't consent to the change. That's absolutely unacceptable.
That's simply not true. If the utxo gets spent on the other chain, the two coins are permanently split.
> Also, automated system may have no way of handling it if those automated systems are not upgraded. Which means a merchant could end up with thousands of payments that they have to manually fix. And, those merchants will be forced into adopting the new software to correct the issue, they will have no choice to o ignore it.
And incur legal liability? Businesses will gladly do lots of manual work to avoid thousands of lawsuits.
Fact is, it's really only a problem for the businesses and even without any replay protection, they can very easily split coins by using either post-split coinbase coins or any coins ever mixed with any post-split coinbase coins.
Pretty sure that forcing thousands of businesses to upgrade their systems to avoid defrauding users is grounds for a lawsuit itself.
Imagine if Google, Apple, and Microsoft teamed up to make an incompatible change to web browsers that broke all existing websites and exposed all of the users of those websites to risk of finical loss of the website admins did not perform an upgrade.
Who is liable? The admins who didn't even realize an upgrade was required, or Google, Microsoft, and Apple for creating the situation?
Hash power is relevant to 'regular' forks, as the longest chain that follows the rules will be followed. However hash power is not relevant for deciding what those rules are. That is done by full nodes, whether miners or not, and doesn’t depend on costly work or anything else. Nodes that don’t agree on the rules just stop talking to each other, and the network splits.
Then, the final decision about which network and chain trades as “BTC” is made by ordinary real world consensus, probably mainly among exchanges, wallets, and users in general.
Edit: Changed 'soft fork' to 'regular fork' because a soft fork is a protocol change. POW chain-following doesn't even rise to that level.
For Bitcoin, the difficulty adjustment would also need to be sped up, to keep the minority chain from being very slow for a while.
To be clear, I'm not saying 2X is itself an attack (IMO, awfully close to crossing the line, though). I'm assuming that in your scenario, some mining faction is spending part of its compute on running 2X, and part on explicitly 51% attacking the original network.
None of this is very relevant to the uptake of segwit transactions however, unless as a what-if scenario had segwit been done as a hard fork instead. That was the original intent of the proposal, if I remember correctly, and there was a lot of discussion at the mailing list exactly how this should best be deployed. Looking back at it, it is quite clear it could have been deployed quicker had another mechanism been chosen.
If you're saying, as the blog post says, that it's getting used more for other things than typical ecommerce, that's a different argument.
For all we know the JPMorgan report making this claim could be wrong, as it doesn't even list which 500 retailers it studied, and which are the 2 that dropped Bitcoin. I wouldn't expect quality Bitcoin research coming from JPMorgan anyway, as their CEO is staunchly anti-Bitcoin, so their analysts are probably not enticed or instructed to spend that much time and effort studying it.
That's certainly a metric that Bitcoin advocates would have been happy with, say, 5 years ago. Then they were agitating for major retailers to accept it as the obvious coming thing.
The fact that new major merchants are not joining and old merchants are going to the trouble of taking it out is a sign that earlier vision was flawed.
I wouldn't call it vaporware. Yes, there are unsurprisingly open questions. But nothing which can't be solved.
1: https://github.com/lightningnetwork/lnd 2: https://github.com/ACINQ/eclair 3: https://github.com/ElementsProject/lightning 4: https://github.com/lightningnetwork/lightning-rfc
Give particular figures please, no vague nonsense I hear all the time.
As for these implementations, I will believe it when I see it. You didn't even try to address the particular issue I mentioned.
So Starbucks ask you to pay via Litecoin, which is fine by you even though you don't have a Litecoin balance. Atomic swaps over lightning network funded by some bitcoin you own, converted to Litecoin, is how you'll pay for your coffee.
https://en.m.wikipedia.org/wiki/Long-arm_jurisdiction
https://en.m.wikipedia.org/wiki/Disgorgement
http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?arti...
http://www.scotusblog.com/2017/04/argument-preview-long-arm-...
Especially as countries like Japan are embracing cryptocurrencies. That must make other countries wonder whether trying to attack cryptocurrencies will end up leaving them at a competitive disadvantage.
No hero needed just honest nodes
The answer isn't inherently obvious. Bitcoin seems to be doing just fine without a leader and with competing factions. The November issue will probably resolve itself just like all the issues that came before.
And there are a lot of advantages to Bitcoin's model. Having a face means tying the fate of the currency to that face, one way or another. Their word starts to matter much more.
On a personal basis I feel much more secure knowing a respected member of the community has enough faith in their product to tie their identity to it. Litecoin also has features that bitcoin doesn't. Faster block generation time, different hashing algorithms, larger supply. Charlie gives me confidence that the leadership of Bitcoin has not.
Both of you are suspiciously avoiding a direct and simple question. How does LN work on Bitcoin in this case?
Maybe a bit late, but you finally understood why Bitcoins get more valuable over time: their number grows slowly or maybe decreases, while the number of people wanting them increases.
That's why Bitcoin is the best Store Of Value ever devised.
Yes - you are right to point out that as BTC's disappear, it's not such a bad thing.
But why do you assume people would continue wanting them?
"That's why Bitcoin is the best Store Of Value ever devised."
It's currently one of the worst 'stores of value' possible.
It's massively volatile, and inherently risky: governments could decide to regulate it tomorrow - or even ban it. It's highly susceptible to popular whims. It has massive chunks owned by individual investors who could 'change their minds' on something.
If you have $X USD and want to 'diversify' and have 'strong store of value' - there are many other better options. Real estate being on the top of the list. Over the long-haul, there are innumerable places in the world where real estate will hold it's value for hundreds of years. Baskets of commodities, currencies, decent bonds.
Bitcoin is a very speculative asset, which makes it the 'opposite' of a 'store of value'. And if it's not a currency, then why are we using it again?
Let me put it differently:
In 200 years - do you think there will be demand for real estate in London? There has been for 1000 years. What about Tokyo? Shanghai? Of course there will. Maybe less, but certainly some, and probably more.
Will there be demand for BTC in 100 years? It's hard to say. Possibly, but there's a decent chance nobody will know what it is then.
Reward and risk are strongly related. Nobody should know that better than startup people.
That's a strong disadvantage vs nation-state currencies, which have clear inflation targets (generally in the 0-2% range) and the ability to hit them. It may be great for speculation, but it's terrible for a medium of exchange. For that, you want the value to be constant or very slightly decreasing.
And I don't think that's fixable. If the Bitcoin supply is limited but those tokens are used in a world of continuous economic growth, then Bitcoin will always be deflationary.
[1] https://bitcoin.stackexchange.com/questions/31933/why-is-bit...
Don't forget it's still relatively hard for average folk to purchase crypto. But once you have acceptable ETFs and funds that you can purchase at a click of a button through your brokerage account -- a lot of people (and pension funds!) will probably allocate 1-2% of their portfolio to crypto. That is 1-2% of $300tn or so, or 30 to 60 times the amount of money in the space today (in terms of market cap).
If you think this bubble will run for a while, then I also think it's not unreasonable to assume you can multiple your initial investment by 10x by investing in either Bitcoin or Ethereum. But that's my opinion (and this is obviously not investment advice).
Whether it'll be around in 40+ years, I don't dare make that bet. But no one is saying you can't move money around to the better investment opportunity at a specific time.
But the precision can be increased from the current 8 decimals. Even if all but 1 Satoshi/0.00000001 BTC is lost, it could still be split into smaller units, or used to bootstrap a chain with higher precision. It can be fixed as required.
Volatility decreases as the number of users and therefore liquidity increases. It should decline further with rising use of the network for payments instead of a pure store of value.
I agree that "viability as a payment system" is where Bitcoin is stuck right now, but scaling the system is the stated goal of all current Bitcoin developer groups. One of them will get it right eventually.
And again the sample size is way too small. Two (2!) retailers dropping it means nothing, in particular because other larger more significant data points contradict this small sample size: BitPay doing 1B/yr at +328% growth... hardly a sign the "vision was flawed".
The largest 500 retailers is an excellent representation of major retailers. It's also a reasonable indicator to use for general consumer behavior, because what makes retailers the largest is their use by consumers.
You could claim that a loss of 2 retailers isn't significant proof of decline, although since it's 2 of 5, a 40% decline seems notable to me. But regardless, having less than 1% market penetration in this segment (and declining) is a pretty good sign that it is not currently successful. If you pitched some VC partners with that as proof of traction, they'd laugh you out of the room.
The BitPay post is definitely interesting, but they're cagey enough about their numbers that it's hard to tell what's actually growing. You might be able to use it to make an argument that BitPay is succeeding in some other segment. But it definitely doesn't prove mainstream consumer ecommerce success. Which apparently isn't interesting to you, but to major ecommerce companies, it's very interesting indeed.
Any percentage value is irrelevant because a change of ±2 among 500 retailers is statistically insignificant. If it was ±20 it would be significant.
What if we went from 1 to 2 accepting BTC, would you say "acceptance went up 50% among top 500 retailers?" It would be highly misleading and improper to report it as such.
Gavin Andresen was that force in Bitcoin for years, as lead developer and chief evangelist, but now he plays a minor role; recently with big $$ in play and the big community split, not to mention the insane personal attacks, it is much harder to maintain influence.
You need to think of the reason for an investment. If you are set for life, and want to gamble on it... cool, buy BC. You could also go to vegas, or bet on horses, or start a HFT trading shop. All are reasonable ways to gamble for fun and possibly profit.
If you are looking to build a nest egg to retire when you are old, it is very unlikely that BTC is a good route for that ;)
Please don't compare this to Vegas, where the odds are known to be against you.
Have a small/tiny % of your investment in cryptocurrency is a smart move.
So something that only people with significant incomes and the ability to lose 98% of their investments should touch it? I am fine with that definition. Not sure most BTC investors would qualify to invest in a startup though (see qualified investors law)
> Please don't compare this to Vegas, where the odds are known to be against you.
The odds are against you in many markets. I would argue the odds are against you in BTC. It is a zero sum game, and there are many people looking to steal or scam. In a zero sum game with scammers, your EV is negative unless you yourself also want to steal or scam (which is a different conversation to head down.
> Have a small/tiny % of your investment in cryptocurrency is a smart move.
Why? Should you put a tiny % of your investment in horse races? For most people, a small bet with an unknown payoff is not something they should touch.
Bitcoin is a religious subject among the tech crowd.
The most fascinating thing about BTC has nothing to do with 'block-chain' - it's the manner in which it has created hype among tech circles.
Techies look at it from a tech perspective, financial types from a financial perspective.
From a financial perspective, BTC is downright bizarre. Even the 'threat of disruption' aside, it doesn't make a whole lot of sense.
But from a tech perspective, is uber-cool.
So it's hard to have a discussion about BTC because almost nobody talks about it as a financial instrument - it's always about tech.
The amount of systematic hype is surreal - constant streams of articles etc. etc..
It's going to get bigger before it gets smaller as the hype is just starting to reach mainstream.
I am really impressed with it as a technology. It's absolutely brilliant.
But when I put on my business hat, I'm still not seeing it. For quite a number of years I've been asking for proof of daily use among significant market segments. For just as many years, I've been getting, "OMG THINK OF THE FUTURE!!!" as an answer.
I have some hope that we're at peak BTC hype, though. A lot of the enthusiasm (and the bigger scams) seem to have moved on to smart contracts, ICOs, etc. It's much harder now to ignore Bitcoin's years of not being very useful.
There are an amazing number of people who own a little BTC and are in on the hype.
And this is like Facebook 2007, where I already thought 'everyone was on it'. No. The 'rest of America' is just learning about it - then the 'rest of the world' - and then the other 3 billion or so people who are barely on the Internet. FB grew for quite a very long time after 'we thought we all were on it'.
BTC though is tricky to access, my Mother is on FB, she will never buy a Bitcoin.
But I do believe BTC has a lot of popular hype to ride yet.
I suggest it will start to wane quite a long while after the press stops talking about it daily. A lot of people will just 'hold' so I don't think we'll see a crash though.
There are caveats:
The press is notorious for flipping on things. They could turn on BTC and make enough noise. Since it's highly speulative, it's easy to see a flood of people rushing out to 'cash in'.
And of course governments: A Scandinavian country could opt to regulate it, or treat it like 'real currency' and require transparency etc. - which for any other currency would be 'great' because it's validation, but really, the whole point of BTC is anonymity etc. - esp. for black market transactions, so really, it's not a good thing.
It's a brilliant and fun excercise we're going through, but since it's doubtful BTC can ever be an actual currency or medium of exchange, I really wish we would 'move on' because it's not really a useful thing in the end.
Somebody may come along with an actually useful crypto - but i don't think that BTC or the ICO's we're seeing are it.
If you only invest 1%, you can only lose 1%. And with bitcoin, you can invest at $1 if you want.
> I would argue the odds are against you in BTC.
Seems that in reality they weren't.
> Should you put a tiny % of your investment in horse races?
Still talking about Vegas? In that case you don't seem to understand risk-return. NOBODY should invest in horse races or Vegas, or the lottery. Nobody! Not rich, not poor. Why? Because the risk-return ratio is known to be < 1. Why? Because casino's and bookmakers make sure it is < 1.
The risk-return of Bitcoin is not known to be < 1, and neither are that of startups. Therefore people can actually make money investing in these high risk things, by averaging them out.
Let me put this in another way, if you place a huge amount of Vegas bets, you average out the risk-return, and you will end up with < 1 return. If you place a huge amount of 'bets' on startups and similar investments, you can end up with > 1. That's why people are making money with it.
Instead of arguing with me, maybe you should consider that there might be a tiny bit in truth to all of this. And then maybe that wisdom can make you some decent money in the future. But I won't lose any sleep over it if you don't. I have a sane, pretty conservative investment strategy, and it's doing fine.
You cannot judge future performance by past results. That is the fundamental thing you need to understand before investing. Zoom in on the right part of 2000, and pets.com and a really nice upswing. There have been other stocks that had a nice and steady growth for years and years.. before exploding.
BTC has been on a wild ride, and could evaporate at any moment. I don't think it will, but it could, since there's no reason for anyone anywhere to own it.
There's no question the safer bet is S&P 500.
Now - in the range of outcomes, admittedly, the BTC owns the higher end of the spectrum - no doubt, there are possibilities where BTC completely outraces the S&P, however, it also owns the lower end of the spectrum of outcomes, where a lot of those outcomes are 0.
One fundamental of investing is that stocks represent an economically productive asset. In contrast, commodities just sit there. If I buy a chunk of a company, that company is working to become a bigger, more effective, more value-generating company. If I buy an ounce of gold, it stays an ounce of gold.
Index funds represent a broader bet still. Because they're composed of many things, volatility is lower and you're betting on whatever the common factors of the index are. So buying an SP500 index fund could easily be said to be a bet on the American economy.
And in many ways, Bitcoin is worse than gold. The historical value of gold is known. Bitcoin is new. Gold's floor price is set by the practical use value of it, both industrial and decorative. Bitcoin's floor price is that of bits. That is, zero. The gold market is broad, with producers and consumers all over the world, and open markets in many countries. Bitcoin is effectively controlled by a relatively small number of people and requires careful long-term cooperation of those people.
So it seems pretty obvious to me that Bitcoin is much higher risk. Which can mean higher reward. But as anybody who has shares in a failed startup knows, higher risk doesn't guarantee higher reward.
Oh, and so many people "who are in control of it" have too much of their own money invested into it to allow it to fail.
Commenting against BTC is sure to get you down-voted.
It's ok though, it's just one of many HN quirks we're all used to :)
I own 1 share of a SP500 ETF. That gives me an actual fractional ownership of Apple. That gives me an actual cut of the dividends of real american companies. It has an actual meaning of what you own.
What does 1 BTC give you? What is the fundamental purpose of a BTC?
Tulips went up in price too, but they were not a very smart investments. Tulip chases do not win in the long term.
The definition of reasoning is: "the action of thinking about something in a logical, sensible way."
As if evidence could not be a component of reasoning that leads one to logic and sense.
The only reason why you don't want to engage this further is because you knew your quip was fruitless from the start.
Owning a BTC is the same as owning a dollar, functionally. The main difference is that dollars, on the whole, tend to lose value, and that BTC tends to gain.
What is the floor price of Bitcoin, once you eliminate all speculation/hoarding?
Gold has use value in that even if the commodity speculation activity drops to zero, I can still turn the gold into jewelery and sell that. Or I could sell it to somebody who needs it for industrial purposes. Heck, I could sell it to the people who put gold leaf on candy.
Bitcoin has no such intrinsic floor. It only has exchange value. If people stop accepting it as a medium of exchange, you're left with bits. Bits are approximately free.