[Andrenid]

I consider myself pretty tech-savvy, but I'm still completely lost as to whether Bitcoin is basically a pyramid scheme set to crash massively, or something huge that will continue climbing.

I probably should've taken the time to mine some back when my friends were doing it and tried convincing me too. Ah well.

(Queue heated comments from both sides. Discussing bitcoin is like bringing up religion AND politics at the dinner table at the same time)

[weddpros]

There's no pyramid scheme. It's a hyped asset, to say the least, but there's no pyramid. Like a hyped startup, it doesn't do much yet, but it is promising, so people buy it. It may be "worth" much or zero in the end, it all depends on the final outcomes.

It's also the easiest/cheapest/most open asset to trade (depending on where you trade).

In the long term, Bitcoin can be seen as a safe heaven in case of economic chaos, like gold, but way easier to buy and hold. It can also be seen as an interesting economic experiment: what if currency wasn't managed by a government? Or you can give trading a try for a few $$ as a gamble (with more chances of success than in a casino).

It's also a useful currency in some cases: I'm a "digital nomad" which my bank can't seem to understand. Getting my Debit Card to work online from a foreign country, with an ever changing phone number (they insist on using SMS as a 2FA), sounds like an obstacle to them, but not to BTC.

[0bsidian]

I think most of the people putting larger checks into Bitcoin are betting that it will become a store of value asset.

Going from memory, a recent Bloomberg article called Bitcoin: "Gold for millennials".

Or, similarly, Peter Thiel said recently [1]: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."

[1] https://www.cnbc.com/2017/10/26/bitcoin-underestimated-peter...

[romanovcode]

All people who are owning Bitcoin are betting.

[0bsidian]

Agreed, I was just trying to say that currently, one of the most popular investment theses for Bitcoin is "Gold for millennials", not "anonymous paypal" or "decentralised stripe".

[g09980]

A post [1] shared a couple of days ago made a thesis that BTC price needs to grow for it to become a viable "store of value." Maybe this is what we are seeing.

"Market cap size is critical for adoption of a store of value. It needs to be large enough to “fit” even very large amounts of fiat, ideally without affecting the market. Gold market cap is estimated at 7 trillion USD, which means that even the richest people can move all their assets into gold and not move the market. (At least one at a time. All of them at once will move the market big time).

Bitcoin market cap of about 70B USD is not large enough for even one of the richest people on the planet. This implies that if the market cap does not grow, Bitcoin is likely to fail as store of value."

[1] https://grisha.org/blog/2017/09/25/bitcoin-value-2/

[jungans]

FYI Bitcoin marketcap as of today is 120B USD but your point still holds.

[pbhjpbhj]

Ultimately that's true of any non-backed currency (and those too I suppose) isn't it, it's just the bet looks far safer for a country/region wide fiat currency.

I wonder if much of the medium term success of Bitcoin has been because the money put in couldn't be laundered readily in any other way, so whilst Bitcoin is a relatively high risk the alternative was just to dump the money without a way to use it?

[grey-area]

No.

People actually use other currencies as a medium of exchange first, and store of value second (usually they purchase assets to store value long term).

Bitcoin is the other way round (at present at least).

[weddpros]

Most currencies suffer from inflation: it's more interesting to buy now than later because your wealth will go down with time.

BTC with its fixed supply works the opposite direction, devoid of inflation: you'd rather keep your BTC as a store of value that will increase, than spend it on goods you can still buy later for fewer BTC.

[omgbananas]

I save more than I spend, so wouldn't I be mainly using it as a store of value rather than a medium of exchange?

[charlesdm]

If it's intended to be a store of value, it's an asset, not a currency. Like property.

[npongratz]

I think I do not understand. If I possess a certain amount of currency, is it not my property?

And why would it matter what's the "intended" usage of it? Who determines intent? Might every holder of the asset/currency/property (whatever one calls it) have different intentions for it?

[weddpros]

You're always betting when you're investing. At least the odds are better than in a casino.

[wolco]

In some ways we all are but I think we are forgetting the most important aspect. Using it for payments. That utility use case is more important because at some point the price will go down

[Scea91]

That is the problem with deflation. People expect that their money will be worth more tomorrow so they are more reluctant to spend it.

[wolco]

But if you use it as a currency you exchange money for bitcoin as soon as possible and use it when required. Money is always increasing so you try to earn more.

[feedjoelpie]

Gold without millenia of collective psychology to give it staying power as a store of value once more useful, cheaper, and faster to transact cryptocurrencies get any uptake.

[dagaci]

Bitcoin isn't suffering from a lack of uptake, right now.

[mrhappyunhappy]

That’s why I got into bitcoin. It has far more potential as a global vault for store of value than a currency. I don’t expect it to ever function as efficient currency and don’t think that it really needs to given other crypto currency developments.

[pbhjpbhj]

It's like a pyramid scheme in that so long as people keep buying in on the hope of a profit you'll keep making more and more. As soon as people say "hang on this is a con" and convert to another currency then this factor of the supposed value of Bitcoin could deflate to zero. It's not formalised like a pyramid or MLM scheme but it has some of the same structure.

[buchanaf]

A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this.

From what you described above, every single speculative/overinflated asset would be a pyramid scheme. That's not the case.

[zanny]

It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its tx rate is awful and costs a ton to move any of it around the chain.

The only value in bitcoin is in how much it exchanges for at this point, and that is definitionally a pyramid scheme, because current buy-ins need more adoption to drive the price up so they profit off their investment.

3% of all addresses control 97% of all coins. 0.01% of all addresses control 21% of all coins. And bitcoins mint rate is slowing every four years and almost 80% of all bitcoin that will ever exist already exists.

Its absolutely a pyramid scheme. Early adopters were incentivized with large quantities of limited coins to persuade them to mine and participate when the value was low. Those really early wallets (circa 09-12) amassed over half of all bitcoin ever and are now worth extreme fortunes. Those fortunes are based on demand for BTC, demand for the tiny amounts actually left circulating.

The real question is how much of that old money is actually dead - lost wallets and lost passwords - and how much is just waiting to cash out for absolute fortunes. All it would take is one early wallet carrying thousands of BTC to liquidate to cause a panic.

[SippinLean]

What you said still falls quite short of a literal pyramid scheme, which has a pretty specific definition. There is no central organization to recruit new members. People that buy bitcoin receive a real, usable product. Every person holding bitcoin profits when the price goes up. This is all in stark contrast to a true pyramid.

The way specific ICOs are structured, I could see an argument for some kind of pyramid; but "bitcoin is a pyramid scheme" is easily proved false.

[mywittyname]

Well, there are two components to a pyramid scheme: 1. returns to early investors are generated by contributions from new investors. 2. Each new investor attempts to recruit two or more new investors.

The "profits" for existing investors are paid with money from new investors. So it checks the first requirement to be a pyramid scheme. Now, this isn't explicit, but people still understand that the more BTC investors, the higher the price.

And BTC investors go online and evangelize. They talk about how BTC is a full-proof investment that can only go up-up-UP. Even this thread is full of them. So that checks the second requirement to be a pyramid scheme.

[mrhappyunhappy]

Bitcoin is highly divisible so I think your point regarding it being fixed is unjustified.

[pbhjpbhj]

Have you bought some BTC, I made a killing on it, it's free money, get some now because after the fork you'll be able to bank at least 20% of your initial sum, ...

The peons in pyramid schemese usually aren't committing fraud, they don't realise that they're in a scheme, they're not lying, they are really convinced that they found the money tree and if only people buy in it will bear fruit forever.

I still think the analogy is useful.

[weddpros]

Forks are a corner case. As long as someone is willing to pay for the minority coin, why not sell it: the fact that someone is willing to pay for it makes it valuable.

"The peons in Theranos didn't commit fraud, they didn't realise they were in a scheme, they were not lying, they were really convinced that they found the money tree and if only people buy in it will bear fruit forever".

You can't call every company that has failed a pyramid scheme.

You can't call every company that seeks funds through VC or IPO a pyramid scheme, yet they know that they'll only get rich if others buy in.

[aw3c2]

> A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this.

Haha, have you ever looked at what Bitcoin owners/speculaters post online?

[coryfklein]

More specifically, a pyramid scheme requires that you recruit others to make money. If you bought $10 of bitcoin 5 years ago and never told another soul or recruited another person, then you'd make a profit. The same cannot be said for a pyramid scheme.

[weddpros]

The same can be said of any startup/company.

Founders throw 1k$ in the pot, investors 100M$, the public 1B$, yet the founder has benefited a lot, by being there first.

If people start thinking "he's a con", the company's value will drop to 0. Bankruptcy.

Is the whole stock market a pyramid scheme?

A market isn't a pyramid scheme just because you didn't enter it at the beginning (that's also true for real estate).

The alternative would be a market where you'd benefit more if you enter last, which means there would be no incentive for anybody to enter first and create the market. That's why the alternative doesn't exist and markets do reward the first mover.

[mrb]

"It's like a pyramid scheme in that so long as people keep buying in on the hope of a profit"

You just described any investment. FX market, stock market, housing, etc. It doesn't make them "pyramid schemes".

[wbl]

I could buy a bitcoin and hope to sell it later. Or I could buy the S&P 500: a market cap weighted set of pieces of companies that will conduct business and grow by the time I have to sell them, and some will give dividends. Which seems better to you?

[cableshaft]

Determining that one thing is better than another thing (by however means you determine it, I think both are good for different reasons and have money in each) does not mean the less good thing must therefore be a scam, and definitely not a pyramid scheme, which has a specific definition that bitcoin doesn't fit.

Yes, bitcoin benefits from having more people participating in it, but so does Facebook, so does Twitter, so does Youtube, so does the Internet, so does the US dollar, so does the stock market, etc etc etc. That doesn't make these all pyramid schemes.

[coryfklein]

Historically speaking, if you bought bitcoin at any point and time and held on to it for 2 years it would outperform an S&P 500 index. We can argue about how long that trend would continue, but those who have chosen to invest at least something in bitcoin have made a good investment so far.

Yes, it is a high risk investment, and yes you could lose 99% of your investment. If you don't have a tolerance for that kind of risk, then bitcoin shouldn't make up much (if any) of your portfolio.

[wolco]

For the next few months you would be better off dividing the assets based on your risk profile. Based on current market trends the s&p may go down in the short term so bitcoin may allow you to spread that risk

[mrb]

Bitcoin changes the world: a permissionless decentralized financial ledger reduces payment friction hence boosts trade, gives access to the unbanked/underbanked, helps people escape inflation, etc.

[njarboe]

Investment used to mean putting up capital to create or own something that, with some work, would return a stream of income. Farmland produces food with the work of farming. A factory produces goods with lots of people working. A mine produces iron or copper with lots of machines and effort. With the financialization of the economy, lots of people are increasing their "wealth" by speculation and skimming a percentage on transactions. When people start believing that speculation is the only form of investing, society is in for a hard fall at some point.

[mrb]

By your definition, this still leaves FX trading as a "pyramid scheme". Trading fiat for fiat doesn't "put up capital to create something".

[matthewmarkus]

In FX trading people are putting up capital to create exchange ratios, which is information. Right now people are putting up capital to determine how much coin issued by a central bank with a "deflationary" bias written in code and run and administered by a collective (i.e., Bitcoin) is worth vis-à-vis USD. Something is most definitely being created.

[IgorPartola]

You talk about a “final outcome” as if at some point we will all collectively say “great. We are done with Bitcoin and it is from now on and forever what it currently is.” That’s not going to happen. It may hit a period of more stability than it has now, but I highly doubt there will be a final outcome.

[weddpros]

You know what I mean... For a startup or for Bitcoin, people wonder "will it fly?".

I do think BTC is flying, but some are still sceptical, despite a 100B market cap...

[jstanley]

> Like a hyped startup, it doesn't do much yet

It does plenty already. I live almost exclusively on Bitcoin. I only get income in Bitcoin, I pay with Bitcoin whenever possible, and I have a Bitcoin-funded debit card for when that's not possible.

[mattpk]

Why? At the moment this seems like hassle, and possibly more expensive due to txn fees.

[weddpros]

I do understand... maybe I wasn't clear enough: it will do more in the future! but it's not Facebook scale yet. Coinbase has 10M users, not 100M, not 1B.

I do bet on BTC to change the world... so I pay in BTC when I can too!

[pawelwentpawel]

Does the company that you work for receive their income in Bitcoin too?

[jstanley]

I work for myself. My customers pay in Bitcoin.

[weddpros]

you could always use bitwage (never tried)

[mrhappyunhappy]

Just wanted to echo your sentiment about banking on the go. I’m sad to say that the world is still not very friendly to borderless people. We have to jump through hoops and pay unnecessary fees just to do basic of tasks. Somehow a vast majority of people I deal with have a hard time grasping that you can work on the go or from home and that the cookie cutter 9-5 lifestyle is not the only lifestyle out there.

[tixocloud]

The big risk for banks is that they need to know who you are and to a certain extent how to reach you if there ever was an investigation into your activities.

That being said, is there a way for a bank to always contact you? A bank designed for digital nomads would be a very interesting proposition for me given I'm in banking and am looking to discover new models.

[weddpros]

Yes, I think KYC is a problem with digital nomadism. All things administrative become a huge burden when you're travelling full-time, rent a furnished house in a tourist location without utility bills, etc.

Some banks are already trying to address such needs, like Monese (which I'm also using).

[tixocloud]

Thanks for the reference to Monese. What did you have to provide as part of KYC?

[weddpros]

Skype-like conversation in front of my passport + a european postal address... Their customer service has been very good.

[sharemywin]

I wouldn't keep a large portion of your "wealth" in it.

[petercooper]

I probably should've taken the time to mine some back when my friends were doing it and tried convincing me too. Ah well.

The thing I keep telling myself is if I'd mined even 1000 bitcoins (which was viable at the time I first learnt about it) I'd have totally sold out at $10.. there is zero chance I would have made it to $1000 :-D

[bbarn]

I sold my 200 at 40. Something for nothing, right?

/facepalm

[abledon]

not sure if not ever mining/buying, or doing the above would be more frustrating haha

[coryfklein]

It doesn't have to be all or nothing. The proper strategy would be to sell a percentage at $10.

In fact, if you started in 2011 with 1000 BTC and every year you sold 50% then today you'd have (by my rough calculations):

8 BTC (worth about $50k)

$160k USD

Of course it's not the millions you'd have if you just held each time, but for many that is a life changing amount of money and you would have obtained it in a responsible manner that doesn't just rely on the value of Bitcoin shooting to the moon.

[simias]

Cryptocurrencies have a niche use, mainly to buy things on the black market but also for small peer-to-peer international payments when other options are not practical. For this reason I don't expect that cryptocurrencies will completely disappear any time soon.

However the value of bitcoin is mainly driven by speculation at this point, a currency that's so volatile is very difficult to use if you're a business. At best you accept it at the current exchange rate and you immediately convert it to fiat. Anything else is very risky.

But that might be temporary, eventually the exchange rate might stabilize, at which point speculation could be vastly reduced and it would work better as a currency. That's kind of a chicken-and-egg problem though, in order for the exchange rate to stabilize you must attach a real world value to the currency by buying and selling things, paying taxes etc... But that won't happen as long as the exchange rate is so volatile.

I'm also very much unconvinced that a deflationary currency can work at all in the long run or that bitcoin will end up fixing the problems its proponents say it will, but that's up for debate.

[lallysingh]

> However the value of bitcoin is mainly driven by speculation at this point, a currency that's so volatile is very difficult to use if you're a business. At best you accept it at the current exchange rate and you immediately convert it to fiat. Anything else is very risky.

Note that any business that already deals in multiple currencies (say, having offices in two countries) already runs an equivalent risk. And many use their currencies to make a bit more money on the forex market.

[simias]

Sure, but that's why most international trade deals in Dollars, Euros or some other reasonably stable currency. The EUR/USD change rate does not typically vary by orders of magnitude within a few years, the Bitcoin/USD exchange rate does. The risk is wildly different.

[sei33qd]

> a currency that's so volatile is very difficult to use if you're a business

This is not an issue. There is a bunch of automated software in the developed world to mitigate the risk. In the third world, there are buildings full of cheap/slave labour that perform the same function manually.

[Jommi]

Your first sentence mostly fits Bitcoin, but misses the point on most of the other cryptocurrencies.

[simias]

Please do enlighten me then, what do other cryptocurrencies offer?

I also think my first sentence applies to bitcoin and ethereum which together have a bigger market cap than all the other cryptocurrencies added together.

[Jommi]

>Please do enlighten me then, what do other cryptocurrencies offer?

Other cryptocurrencies can provide:

- Private, near untracable ways of doing payments

- Efficient, near 0-cost ways of transfering funds.

>I also think my first sentence applies to bitcoin and ethereum which together have a bigger market cap than all the other cryptocurrencies added together. "Cryptocurrencies have a niche use, mainly to buy things on the black market but also for small peer-to-peer international payments when other options are not practical. For this reason, I don't expect that cryptocurrencies will completely disappear anytime soon."

If you want to talk about Bitcoin and Ethereum, say Bitcoin and Ethereum, and not "Cryptocurrencies".

Bitcoin is not anonymous. Bitcoin has high transaction cost. Ethereum is not anonymous. Ethereum has a comparable high transaction cost.

These facts mean buying on the black market, and small international payments are not ideal to do with these cryptocurrencies.

[agumonkey]

Big banks are already looking seriously into cryptocurrencies. Like seriously.

[madamelic]

I think you might be confusing cryptocurrency with blockchain.

Cryptocurrency uses blockchain but blockchain isn't cryptocurrency.

Blockchain technology is already incredibly useful for banks doing interbank currency trading iirc.

I guess you could be talking about banks doing crypto trading, then I would guess that they are but a number are still stuck in the stone ages.

[tlrobinson]

A “blockchain” without a cryptocurrency facilitating decentralization and incentivizing security doesn’t solve any new problem.

[base698]

Banks are doing more than just blockchain now: https://techcrunch.com/2017/09/28/fidelity-ceo-abigail-johns...

[agumonkey]

I think they're using both, as a mean to scale for billion or more number of accounts.

[simias]

Using the blockchain, a technology that's shown to have trouble handling single digit numbers of transactions per second, to scale for billion of accounts? That's interesting.

I wish people in this entire thread weren't allergic to providing citations and references though.

[nikcub]

There's nothing about blockchain's that prevents them from scaling beyond single digit transactions per second - you're referring to the design decision Bitcoin has made to opt for a smaller blockchain in order to ensure distribution and decentralization.

A settlement blockchain between financial organizations doesn't have the same design parameters, and could conceivably run larger blocks, shorter block times, or not store block history at all but rather reach consensus on state (which is what Ripple does)

[agumonkey]

I can't cite, it was a CS guy working for a large bank explaining us why they were paying him.

Calm down

[oldboyFX]

Big banks are looking into all kinds of high-risk speculative assets — as we've seen in 2008.

[AznHisoka]

My view is that its egotistic to pretend to know whats going to happen. even the financial experts dont know.

So i just put 1% of my net worth into it, set a price alert for $20,000 and try not to check the price (or read any stories on it) If i ever get the alert, great. if not, no big deal.

[ideonexus]

This is my strategy. It's a very volatile, high-risk investment, but one I'll hate myself for missing out on should it take off. So I've bet what I'm willing to lose on it (<1% for me) and told myself I won't read any news on it so I won't invest more or get scared into selling.

And yet here I am. :)

[mo87]

Back in 2002-2005, I knew a whole lot of "tech-savvy" people with top-notch pedigree, who never believed FB/Youtube/Twitter etc would scale as no one had ever built a "many-to-many", pseudo real-time network at that kind of scale before (both technically/financially). Let alone a bunch of 20 year olds.

I was quite convinced by their arguments. Where I was wrong was believing technical arguments mattered.

What matters is the psychology of the herd.

[wolco]

The worst group to validate new ideas against are developers.

[cableshaft]

Pretty much. They'll tell you a hundred reasons why any single idea you have could never work, for technical or other reasons. I say this as a developer, and I've been guilty of this before.

[viach]

For me Bitcoin is neither pyramid nor something which will last forever. I think it is a great experiment in human psychology/nature and in this sense, it's outcome is not destroyable and the facts about people it brought up will be known and usable (for various applications) forever.

[oldboyFX]

It's a pyramid scheme in a sense that you depend on others to keep buying the bitcoin. If everyone suddenly lost trust in bitcoin you would lose everything, because technically, it has zero real value.

That's why all the "bitcoin enthusiasts" keep hyping it up. They know that once the mania stops, people who didn't cash out will be left holding the bag.

Currently, it's nothing more than a speculative asset. You might as well invest in high-yield risky stocks.

The blockchain itself is pretty great though.

[jon_smark]

> It's a pyramid scheme in a sense that you depend on others to keep buying the bitcoin.

Please don't use the expression "pyramid scheme" lightly, because there are actual pyramid schemes out there, and we want the expression to keep its power so we can warn people against them.

Bitcoin may be in a bubble, but it's definitely not a pyramid scheme.

[coryfklein]

It does not have "zero real value" - it definitely competes well against established money transfer services like Western Union. You can send $1000 to your mom in Japan for a $5. That is a good enough value for money transfers that Bitcoin won't ever go completely to $0 value while Western Union can charge $20 for the same service.

And that is at current bitcoin price. Since the fee is paid in bitcoin, if the price drops down to $100/bitcoin then you can send $1000 for pennies.

[googletazer]

Another "blockchain without bitcoin" post. You can't have one without the other.

[tluyben2]

> set to crash massively

It crashed multiple times this year with a lot of people crying 'told you so' and 'it's all over'. But that didn't happen. There might be a big, longer period, crash coming, but since China dropped out, it seems to be pretty stable (including altcoins). I still wouldn't call it investment, but it's safer than most gambles. But sure, never put money you cannot miss as it is a gamble.

[Jommi]

It's a virtual currency with a limited supply, but with a constantly growing interest(demand). This interest is not primarily driven by bitcoin's inherent qualities but more through:

1. Using bitcoin to acquire other cryptocurrencies 2. Promises of future profits 3. Getting "free money" by having bitcoin (Bitcoin cash, bitcoin gold)

The first one might actually be healthy, while 2 and 3 are most close to a pyramid scheme / "tulip mania" style scenario.

One thing is for sure. No one knows what exactly is going to happen.

[vazamb]

(i am somewhat familiar with the tech but don't follow the business side of bitcoin) what I find weird is the forks. A major selling point of bitcoin is that there will ever be only 21 Mio coins. You know, unless there is a hard fork and now there are suddenly twice as many coins. Presumably one of the resulting coins' value will drop but you are still creating value out of thin air, something that the crypto people hate about fist currency run by a central bank.

I also don't really know what to think about it. I am sure blockchain tech will be hugely successful in the banking and government sector and maybe (a comment I read yesterday) once it is proven to work the central banks will issue blockchain based currency. But bitcoin as a store of value? I don't know...

[namelost]

The forked currencies are just the same as altcoins, you can't sell 1 Bitcoin Cash for $7000. The fact that people are willing to accept money for them doesn't change the value of one Bitcoin.

[vanderreeah]

Forgive my total ignorance of bitcoin but - why can't you sell 1 Bitcoin for $7000?

[Slaul]

You can, it's confusing but there is Bitcoin, Bitcoin Cash, Bitcoin Gold, and soon to be another one Bitcoin Segwit2x or some such.

Each of these other "versions" of bitcoin were created by a fork. As far as I know, when a fork happens you get an equal number of "new coin" as you have original coin. Seemingly creating value out of nothing.

[vanderreeah]

Ah I missed the different name. Thanks for the clarification. I was thinking of comments I've seen before where people say that if you have 100 bitcoins you'll have a hard time converting them to (e.g.) $700k cash.

[madamelic]

You would.

If you put a sell order at 7,000 with a volume of 100, it would (likely) cause a flash crash

You can see flash crashes all the time when someone offloads a bunch of coins without balancing across exchanges.

Plus, you would have to find quite a few people that wanted to buy coins @ 7,000 and finding them before your order causes a flashcrash isn't likely.

[mywittyname]

My understanding is that most exchanges won't allow you to move more than $10k/day or so out of your account. So, if you use three separate exchanges, it might take you a month to liquidate the entire stake.

[psyc]

Bitcoin Cash is a different, suggestively named currency (it’s not Bitcoin) that was bootstrapped by copying Bitcoin’s blockchain.

[slindz]

Bitcoin Cash was born out of necessity to save Bitcoin from disaster when it was hijacked by corporate interests (funded by AXA/Mastercard).

Both sides of the SegWit fork (SegWit1X vs. 2X) ~Nov. 16) are intentionally crippling transaction speeds/costs to move transactions off the blockchain and into the pockets of said corporate interests.

The true spirit and potential of Bitcoin lives on through Bitcoin Cash.

[psyc]

That could be entirely true (and I believe there are several alts that are technically superior to BTC), however if a friend asks me for Bitcoin, I am not going to tell him to install a BCH wallet, send him BCH, and tell him not to worry about it because it's Bitcoin in spirit and it's going to be great.

[joosters]

The forked currencies behave very oddly. When bitcoin forked, the bitcoin price didn't change but the new coins had a non-zero value (something like 10-20% of btc, if I remember). So some extra value was created out of thin air. It makes little sense!

[acjohnson55]

Hypothetically, Bitcoin would have the sum of all these values if there were no fork. But in reality, it's a massive bubble.

[ForHackernews]

> I am sure blockchain tech will be hugely successful in the banking and government sector

Are you? Why? So far, no bitcoin/blockchain advocates have been able to explain to me a single non-illegal use case that isn't better served by a traditional, centralized database.

A single large Postgres instance could handle all the global transaction volume of bitcoin, and it would be faster and orders of magnitude more energy efficient, too.

(Cue bitcoin people telling me about how it's 'trustless', and I should just trust the miners, devs and exchanges and hurry up and buy some)

[tom_mellior]

> a single non-illegal use case that isn't better served by a traditional, centralized database

You know how PayPal blocked payments to Wikileaks? (Back when it wasn't yet obviously evil.) That's what traditional, centralized databases can do for you. Note that donations to Wikileaks weren't illegal, governments were just efficient in pressuring PayPal into enforcing rules that didn't even exist officially.

Also, traditional, centralized banks simply do not currently offer me the possibility of near-instantaneous money transfers. (This varies depending on where you live.) Bitcoin does.

There are a lot of things wrong with Bitcoin, the fees are much too high, and yes, its proof-of-work scheme is terribly wasteful. But the view that it doesn't offer anything useful is a bit one-dimensional.

[ForHackernews]

> the possibility of near-instantaneous money transfers.

Maybe the possibility. In actual fact, don't bitcoin transaction confirmations sometimes take >24 hours?

[splintercell]

I can even make a bitcoin tx take more than a month by not attaching any tx fee to it.

Attach a higher fee, and it will get cleared in 10 mins, attach a lower fee, and it would take time.

[ForHackernews]

So that seems...much worse than "legacy" banking solutions.

Here in the UK, I can send an extremely fast (matter of minutes) "faster payment" to any UK account for free, and a pretty-darn-quick (matter of hours) SWIFT transfer to any European account for a very low flat fee.

[tom_mellior]

Sometimes. You can throw money at the problem, but yes, it's a gamble. It should be all that easier for banks to beat this, but they don't.

[lucozade]

Having a globally ordered, immutable, common ledger is a really useful thing in banking. Particularly in the inter-bank space where a vast quantity of data is shoveled around and everyone keeps partial, flawed copies.

Any given piece of data is, usually, required to be private to a small number of parties but is, usually, all required to be available to some parties i.e. regulators.

Doing all that is absurdly costly and error-prone. And that's when you're doing it well. Do it badly and the costs are eye-watering (ask, well, anyone).

Some of the ideas and techniques, particularly the cryptographic ones, used in the blockchains have opened the banking folks eyes to what could be possible. And this is a very active area of interest.

But it's not the bitcoin blockchain, per se, that's particularly interesting. For example, the trustless piece is largely a pointless waste in the problem I outlined above. We know all the participants and can safely move keys etc around. In the same vein, proof of work is unnecessary, we can identify block creators and easily use external remedies if they play silly buggers (no-one is suggesting we get rid of all our lawyers).

Now, you could argue that, if using the relevant techniques, you could keep all of that in a big, central DB and you'd be right. But it's not "big, central"-ness that's key. It's the "globally ordered, immutable, common"-ness. Along with selective privacy. Postgres doesn't give us what we want any more than Bitcoin does. The real change has been that we know relational DBs really well but we're learning about the possibility of the crypto and block chain tools. It's as much a mental shift as a technical one.

One final, minor point. A central DB, though possible, would be quite painful in practice. Although not fundamental, having a distributed ledger is actually quite handy. Although it would mean that we wouldn't completely do away with reconciliation hell, it wouldn't surprise me if something like a gold copy plus validated replicas approach or similar became popular. And again, some of the crypto techniques make this sort of thing much more tenable.

[acjohnson55]

> But it's not the bitcoin blockchain, per se, that's particularly interesting. For example, the trustless piece is largely a pointless waste in the problem I outlined above. We know all the participants and can safely move keys etc around. In the same vein, proof of work is unnecessary, we can identify block creators and easily use external remedies if they play silly buggers (no-one is suggesting we get rid of all our lawyers).

Yep, you could basically accomplish the same thing with Git and some rules for how to model a ledger and consensus. In that sense, there's nothing particularly new about the concept of an immutable distributed history. Now there's simply an implementation that cuts the banks out of the loop and lights a fire under them to offer better service.

[lucozade]

> Yep, you could basically accomplish the same thing with Git

Not entirely sure that "Git and a bit" is likely to be sufficient but, yes, there are some intersections. The idea isn't new at all.

The belief that practical solutions for a common ledger that meet strict privacy and confidentiality requirements is relatively new.

> Now there's simply an implementation that cuts the banks out of the loop

Not sure what you mean here. If you're talking about Bitcoin as a product then I don't think the banks are that concerned. It's starting to be interesting as an extra option for portfolio diversification but that's about it. If anything, the well publicised schoolboy errors have been net positive for the banks.

As I said, where it has generated most interest as a technology is in inter-bank. There are 3rd parties appearing in this space but that's been encouraged (and often funded) by the banks. It's a space with a lots of cost and operational risk but very little actual value.

[eksemplar]

Maersk uses it to fight corruption in container ownership claims. It used to be a piece of paper, that cost more than the actual container to transport because whoever held it could pick the container up at the port.

These days it's run on block chain making it virtually impossible to claim a container that isn't yours.

A similar use case could be used for almost any sort of ownership record in the public sector, like landownership.

[the_stc]

Can not a database or simply digital signatures do the same thing? Why does Maersk need a trustless system?

[jypepin]

I think with some sort of blockchain technologies, it would be harder for central banks to do things like what happened in Argentina, Greece or Zimbabwe.

[simias]

That's a very broad claim. What "things" are you referring to and how would blockchain technology have prevented them?

Very simply put the Greek financial crisis was mainly due to poor bookkeeping by the Greek institutions (that's being kind), rampant tax evasion and foreign governments (especially within the EU) not wanting to keep footing the bill. I'm not sure how a clever use of SHA-256 would solve these systemic, cultural and diplomatic issues.

Especially since tax evasion would be significantly easier in a bitcoin world where you can launder and hide money extremely easily. No need for a hidden account in some tax heaven, just generate a new RX address and you're good to go, receive all the bribes and "off the record" payments you want.

[charlesdm]

I think he meant the fact that banks were locked down by the Central Bank and Greek people couldn't withdraw cash they legally owned (yet foreigners, with foreign cards etc could).

Re tax evasion, perhaps for small amounts, but not meaningful sums. That money still has to show up somewhere in the banking system, at some point, if a counterparty accepts it. You could make the same argument about diamonds or gold ingots (though those are obviously less convenient to move around)

[charlesdm]

I'm not a libertarian, but I do believe it's good there are ways to hold relatively liquid assets outside of the traditional banking system. Greece is a great example.

Each system has their flaws, but Bitcoin is not worthless. The question is more, how much is it actually worth? I don't think anyone really knows at this point.

But the more you think about it: easy money policies might help keep the economy afloat, but at a significant price. Cash is losing value fast (perhaps not due to traditional inflation, but because assets just increase so much in value). I don't really believe this is going away anytime soon -- there is just too much money in the world looking for yield, and rates will be kept low.

Let's say you were a wealthy person with $5m in 2008. If you had the guts to put that into an S&P fund and borrow another $10m through portfolio margin (= $15m), you'd be worth around $50m today (excluding taxes, interest expenses, etc etc).

[xiphias]

The only extra thing blockchain based cryptocurrencies provide is decentalized ordering of transactions. David Chaum tried what you suggest and his currency was shut down by the government quite fast and easily (and people lost their money as their tokens were worth nothing after the incident).

[weddpros]

Imagine you don't want a single person to control everything in your country (dictator), and you don't want a single person to control your currency.

Against dictators, we have democracy.

Against a centrally controlled currency, there's not much but crypto currencies. They're actually democratic, the majority wins.

Also, I don't want to be the one who will handle security for the single server with a Postgres database that has 100B$ in it. Do you? Do you want to be on call when the RAID array crashes or the datacenter goes dark?

I do believe there will be alternatives to proof of work, but a single database server isn't one of them.

[EliRivers]

They're actually democratic, the majority wins.

Majority of what? Not the demos, I bet; not so democratic. Majority of bitcoins? Majority of processing power?

[psyc]

Bitcoin resists pithy statements about who has the power. Be skeptical of anyone trying to dumb it down to "it's the miners" or "it's the nodes". It's a complicated system of checks and balances, by design, and the fact that all of this was thought through in depth and then proven in practice is the reason we're having this thread today.

This essay does a decent job of summarizing the checks and balances:

https://medium.com/@twobitidiot/bitcoins-constitutional-cris...

[weddpros]

Majority of participants in the network. I run a full node, I don't mine, but my voice counts. Of course I don't like the weight of huge mining farms, and I hope there will be viable alternatives to proof of work, to make BTC more democratic.

In the meantime, not a single country controls BTC, and even heavy weight miners can't decide unilaterally...

[EliRivers]

Is it the majority of nodes, then? If I run ten nodes and you run one, I get ten times as many votes as you?

[130434089]

Only miners really matter, if you only have a full node you don't have control over the network, just the ability to verify it. You will have to follow wherever the miners lead you.

[SilasX]

I'm more interested in your dismissal of the fact that it can be used to do illegal activity. Do you plan to go the rest of your life without ever breaking a law? And as a sibling poster noted, there can be financial chokeholds even on activities that they didn't bother to make illegal, like donating to Wikileaks.

(I don't think you responded to the point that Wikileaks is a non-illegal use case for BTC.)

[ForHackernews]

> (I don't think you responded to the point that Wikileaks is a non-illegal use case for BTC.)

Ok, you're right: Transferring money to unsavory-but-legal groups is a use-case for bitcoin. You could also mail a check.

I'm still not convinced that makes it a promising technology with a bright future, but I've certainly been wrong before.

[SilasX]

>Ok, you're right: Transferring money to unsavory-but-legal groups is a use-case for bitcoin. You could also mail a check.

That’s vulnerable to the same financial blockade techniques as for credit cards and forces you to put your name on the donation. (Not to say bitcoin guarantees anonymity but it’s not immediately detectable.)

[vidarh]

> Are you? Why? So far, no bitcoin/blockchain advocates have been able to explain to me a single non-illegal use case that isn't better served by a traditional, centralized database.

I agree if you change "isn't" to "couldn't be".

Consider if I'm a small company and want to process cards. So I try to sign up for a payment provider. Except, oops, I'm outside the US where terms tends to be stricter. And, oops, I'm in a legal field (in my jurisdiction) but one that the payment provider considers risky or morally suspect, such as, say gambling, or adult products, or prostitution, or even just travel.

A lot of companies find themselves spending ages sorting out payments because of this. I've worked with startups (in travel, in one case) that spent weeks getting approvals from one provider before suddenly getting "no" - in the end it took four attempts and several months in case; we developed the whole platform faster than we could get approval from a payment provider. That's unusual, but it happens, and in general having dealt with payment processors in various companies over a period of nearly 20 years: it's been nothing but pain and misery most of the time.

That's not a problem of the "traditional centralized database" directly, but indirectly because the centralized database allows for centralized gatekeepers of transactions: Your payment provider may or may not care about the nature of your business, but if the card association does, or the issuing banks does, or the bank handling the merchant account does, it doesn't matter.

This, to me, is the biggest potential value of crypto-currencies: The rising importance of card payments over cash have been one of the largest un-democratic power-grabs of our time by handing power to those controlling the approvals process.

Some previous developments, like PayPal, had the potential to change this, but quickly ended up as steeped in problems as the card providers.

I understand why: They're taking significant risk, and they're managing that risk. I'm not suggesting some sinister cabal trying to control morality through payments; merely that these companies first interest is to protect their share holders investment, not the public interest.

But crypto-currencies has the potential to give us "digital cash", of sorts, in that while it's not exactly the same (it's much easier to track for starters), it is much closer to cash than cards in terms of inability to control its use. We can track it after the fact like we can with cards, but we can't easily stop people from making payments or taking payments.

That has value. Whether that's enough to sustain Bitcoins current momentum is another matter.

[matthewmarkus]

Bitcoin IS a central bank. It is an "alternative" central bank with a "deflationary" bias written in code and run and administered by a collective. Is that a good thing? Probably, from the perspective of providing competition to other central banks. Also, that's Bitcoin's core value proposition. Everything else (e.g., transaction speed) is secondary. Bitcoin will be a store of value as long as people believe its rules for creating Bitcoin are sound.

[charlesdm]

> I am sure blockchain tech will be hugely successful in the banking and government sector

Then it's worth looking into Ethereum.

[Delmania]

Best advice I have heard is to learn about the blockchain and look at something like Ethereum. If buying Bitcoins feels to risky, don't invest, but blockchain technologies will certainly have a role to play in the future.

[jboggan]

I would say that the current bull run in Bitcoin is mainly due to folks with early stakes in ICOs taking their money and running from Ethereum.

[wyager]

You can’t expect to reason about this without some background in economics. Instead of telling you what I think (because to you I’m indistinguishable from all the other people responding with random guesses), I’m going to suggest that you read some introductory texts about economics and finance and you can probably form some reasonable opinions yourself.

[growt]

You'll probably do better with an understanding of economics than tech in predicting a crash.

[kibrad]

"whether Bitcoin is basically a pyramid scheme set to crash massively, or something huge that will continue climbing" --- you can say the same thing about regular money

[kgwgk]

Regular money doesn’t climb.

[mywittyname]

Sure it does. The USD has surged in value in the past few years. It's gone up like 20% against most other major world currencies in the past five years.

[kgwgk]

4% p.a. doesn’t look like climbing to me...

[mywittyname]

Well, it is in the up direction, at least.

[ryanmarsh]

If you're pretty tech-savvy then the Satoshi's white paper should help. Have you read it?

[AnonToday]

Bitcoin isn't a pyramid scheme. It just does not have any value. Fools and their money are easily parted. (The comments on this site have as much or more value.)

The Fractional reserve system is(), (Dollar, Pound, Euro, etc.) They require a constant recreation of debt to keep going.

(less a pyramid more just Ponzi)

[hikarudo]

"This time it's different!"

[loceng]

It is very much like a decentralized global pyramid scheme, unfortunately there's no concise resource to explain it all clearly - primarily because there's no VC money pumped into anti-crypto assets that are structured and incentivized like a pyramid scheme, e.g. the most popular blockchains such as Bitcoin and Ethereum's Ether. The issue is the unreasonable amount of wealth transfer that would occur if and as society adopts the crypto-assets more and more, and as bad actors manipulate society to take part - whether through lobbying or bribing politicians or worse; there essentially can be a wealth transfer of 40% plus for people having done nothing except trying to perpetuate this system.