[vzcx]

Where did you acquire this point of view? You sound very certain, but I think you've got it completely backwards: You say bitcoin cannot be a currency because it is highly volatile, but I'd argue that it's just as true that Bitcoin has high volatility because it isn't in widespread use as a currency. I suppose they can both be true: it's a network bootstrapping problem. This is the future bitcoin long-term buyers are speculating on, that the network will succeed and become more widespread.

And though the network is small, people spend bitcoin all the time. You say this is irrational, and maybe it is in some very static model of economic action, but as we know, the real world is dynamic. That is, it has a time component, the future is unknowable and there are very few guarantees. It turns out, that at some point people tend to decide they would rather have something now than wait for later and potentially get it more cheaply. A man's gotta eat, and sometimes he wants to enjoy a few luxuries as well. People didn't stop trading things when there were "massively deflationary" commodity monies in the past, and I don't see why that would be different today.

In fact, the whole "deflation" bugaboo is only indirectly about price. The real core of the matter is credit: "deflation" acts like a higher interest rate, which makes life difficult for debtors. We can already create debt products linked to inflation, and I see no reason why that term can't have a negative sign next to it. This changes one's view of what investments look wise or not, but that is not necessarily a bad thing at all.

[mjburgess]

My issue isnt it's volatility, which is dramatic and a barrier to adoption. But it's inherently deflationary -- we know how deflationary currency works, and it's a nightmare. The only people able to spend on luxuries are those who have so much wealth that holding it has lower marginal utility than the luxuries they want.

Everyone else spends only when they absolutely have to on necessities, as everything else is irrational. It's just better to hold the currency. This is the poverty trap of human history.

Crypto will never be a currency because it is designed as a speculative asset which transfers wealth to early adopters, in the manner of a bigger-fool scam. The early buyers paid $10/coin, and the fools paying $100k/coin will be the ones funding the cash-out by providing that USD liquidity just before the collapse.

If it collapses to $1k/coin, the early adopters will make their 10,000% return, second phase 100%, and the vast majority of people will be running at -100000%+

You could not design a worse system to be used as actual currency. It is incredibly slow, incredibly inefficient, a handful of early adopters hold all the power, etc. etc.

[vzcx]

I recently sent a low-fee, nearly instantaneous payment over the lightning network with exactly zero trusted intermediaries. LN may or may not be ready for wider-scale adoption, but it was incredibly cool. It gave me that same feeling of power and possibilities as when I first learned to program a computer. I'm not sure if I can convince you but there is actually some there there.

If, as I predict, volatility goes down as the network grows and bitcoin becomes used for more things, so does average return. In other words, the "deflation" rate reaches some small but steady level. The days of number go up will be over, bitcoin would be something boring that goes up only slowly over decades. Like the foreign exchange of a virtual country, its market price vs other currencies would be determined more by balance of trade than by currency speculation.

Of course, that future is far from certain. Buying bitcoin now is like buying an option that pays out if that future comes to pass. The price of an option is very volatile, but it is never zero until it expires. Bitcoin might wax or wane in popularity, but it will never expire.

This is all that the words "speculative asset" entail: they are risks that work out in some possible futures and don't in others. So it doesn't bother me that some people bought bitcoin and $10 and are now sitting on a nice stack. That bitcoin could have easily gone to 0.01 today. They took that risk. Why shouldn't they reap that reward? Without those early market participants in bitcoin, wouldn't be even more highly concentrated? My advice to such whales would be to spend their bitcoin on business investments that help spread the coins and bootstrap the network. Bitcoin-related businesses that pay employees in bitcoin. There are still bold people out there who want to live in an alternate future and try to make it real.

Of course, I don't think everyone should get into speculation... It's got a pretty high attrition rate even among the professionals. But you know, oddly enough, it's when inflation rates are higher that the more people are forced to be speculators just to stay in place.

Being on the cutting edge means that most of the time, what you are doing just doesn't work.

I've been listening to old timers tell stories about working at MOS technology back in the 70s. MOS was rather vertically integrated, with chip design and fabrication feeding all the way to consumer products. So chip designers dealt with buggy manufacturing processes, board engineers got buggy new chips hot off the wafer, and software guys got buggy dev boards. A lot of time was spent trying to go back and fix bugs at the lower layers, sometimes all the way down to manufacturing defects. It might sound crazy today, but for a time they could do things that very few other companies could.

"It's slow", "it's buggy", "it's inefficient"... all of these are ways of saying "I can't, I won't". Expressions of fatigue. They don't lead anywhere.

"I'll make it fast," "I'll make it work," "I'll make it efficient"... all are expressions of will. This is the attitude that the builds the future.

[mjburgess]

Sure, this is the defence. Some basic questions that would be asked in any (ordinary) policy proposal conversation:

* What are the major problems with existing currency systems?

* Which of these specific problems does crypto solve?

* What problems does crypto create? Are these less serious than the existing ones?

* How well/reliably does crypto solve them?

* Who are the stakeholders that will determine crypto adoption?

* Which of these stakeholders would switch to crypto, and why?

* Why wouldn't they?

* If crypto sees no widespread adoption, is there any market value to it as an asset? What would this value be? Why?

Let me remind you: crypto is backed by a highly centralised companies largely controlled by early adopters who hold the vast amount of the crypto value within the system; their relative control can only increase overtime as the asset is deflationary. The entire economy is determined by the immutable blockchain, unless its forked to preserve the interests of those with massive holdings. The immutability of the blockchain makes fraud irreversible, unless the chain is forked -- so fraud is only reversible against high stakeholders. The chain is incredibly operationally expensive to run, centralising service control to a few companies, and incredibly slow. The whole economy is public, so once your identitity is known, you're entire economic life is visibile to everyone -- making blackmail, fraud, and "ruthless and abtiary credit checks" easy.

We know what a society based on a deflationary stake captured-early is like: its called feudalism.

Crypto is an anti-democractic economically illiterate project to create a feudal society in which power is proportional to holdings; and redress requires convincing the powerful to "fork the economy".

If it had any chance of success at all, it would be necessary immediately to organize a massive political project to ensure it was stopped. The reality is its just a group of fanatics engaged in a get-rich-quick scheme thinking that in the future where they are rich, they'll have the power (by design of the system)!

Thankfully it's genuinely silly and ineffective, and the only thing crypto has ever done is be sold to the next fool along. No one really needs to worry, within the decade crypto will have collapsed. I'd say 5 years, but of course, bernie madeoff ran his greater-fool scheme for 30.

[sirspacey]

Genuinely curious - what forcing function will create this collapse in a decade?

It appears the “greater fool” + deflationary currency creates a sustainable feedback loop for rebound.

[ianai]

Why would anybody continue operating nodes once all the pre-programmed bitcoins are minted? It's currently minted over 18 million and the max is a little over 21 million. It rewards its miners with new btc every so often. If it loses miners then transactions take longer to complete. Paraphrasing from this: https://www.quora.com/What-if-everyone-stop-mining-Bitcoin

If the main developers decide, no, we can mint more coins then the premise gets even more muddy.

[nybble41]

> Why would anybody continue operating nodes once all the pre-programmed bitcoins are minted?

There are two parts to the reward for mining a block: newly minted bitcoins, which follow a fixed distribution and decrease over time (halving every four years), and transactions fees. The intent is that as the supply of new bitcoins decreases the transaction fees will make up the difference to sustain a reasonable level of competition among miners even with no new bitcoins entering circulation.

> If it loses miners then transactions take longer to complete.

Only in the short term. As long as the loss isn't too sudden, over time the difficulty will adjust until one block is once again being solved every ten minutes on average. (There is some risk from sudden reductions in the hash rate, as the adjustment takes some time—and that time is measured in blocks mined at the higher, unadjusted difficulty.)

[mjburgess]

I think people holding the major amounts know it's a scam. They're waiting for enough liquidity to exit.

Perhaps at some point it'll "go to the moon", and people will start to cash-out. In many ways, the more popular crypto becomes, the less stable/usable/sensible it will be.