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Bitcoin is no long the only game in crypto-currency town

economist.com

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Re: Bitcoin is no long the only game in crypto-currency town

#51

Post by jonnydubowsky »

There is important work being done to create a general framework for valuing cryptoassets. We might consider a few key concepts, total addressable market (TAM), percent penetration of that market, velocity, and number of coins outstanding. It's essential to understand the token velocity, and the degree by which a network is effectively capturing some of the value it delivers to its users/token holders.

Chris Burniske, a crypto fund manager writes "these aren’t companies; they don’t have cash flows. Hence, using a discounted cash flow (DCF) analysis is not suitable. Instead, valuing cryptoassets requires setting up models structurally similar to what a DCF would look like, with a projection for each year, but instead of revenues, margins and profits, the equation of exchange is used to derive each year’s current utility value (CUV). Then, since markets price assets based on future expectations, one must discount a future utility value back to the present to derive a rational market price for any given year".

“Cryptoasset Valuations” @cburniske https://medium.com/@cburniske/cryptoasset-valuations-ac83479...

Re: Bitcoin is no long the only game in crypto-currency town

#52

Post by seanp2k2 »

innoprenuer wrote: post #25

"Even Facebook has reportedly started looking into creating a token. Should the world’s biggest social network ever make that move, bitcoin’s days as the leading crypto-currency would almost certainly be numbered" > this is a paradox, blockchain technology's best use case is decentralization of data (and power from companies like facebook). And if Facebook issues crypto coin and it starts dominating the market (not n…

>decentralization of data

IMO, having many cryptocurrencies above an arbitrarily-large threshold of USD equivalency (let's say $1b, which according to https://coinmarketcap.com/ right now gives us 40) dilutes the overall chance of cryptocurrencies ever becoming viable for commerce, instead positioning them more similarly to stocks or other speculative investments.

To meet my definition of "succeed" as currencies ("when in actual use or circulation as a medium of exchange"), we would likely need just a few, or likely, one, that works e.g. at brick-and-mortar places. Overstock, Newegg, Steam, etc give good credibility to this idea, but look at which cryptocurrencies they accept (and how the price in those is tied to the real-time market rate).

Also regarding decentralization, and again because these cryptocurrencies largely have value right now only because of their order books on a handful of exchanges, are we actually in a better place? If the feds in the US decided that they wanted to regulate / shut down the big exchanges for whatever reason (e.g. billionaire gets burned and cries to his politician buddies to "fix" it), sure the coins don't go away, but as long as you can't realistically spend them on basic needs like food and shelter, are they actually decentralized? To me, cryptocurrencies are the similar to Chuck E. Cheese tokens that vary thousands of percent in value per year; they have some cash equivalency if you're able to convert them, but alone, they have no real utility.

Re: Bitcoin is no long the only game in crypto-currency town

#53

Post by jonnydubowsky »

ucaetano wrote: post #40
hathym wrote: post #36

Earlier quoted context omitted.

Show me your white paper :D

As requested, my white paper: https://cdn.shopify.com/s/files/1/0858/9696/products/122_102...

You win hacker news today for this double hitter of comments. I love your mental model regarding market cap and implied valuation. Your white paper is more honest then most!

Re: Bitcoin is no long the only game in crypto-currency town

#55

Post by seanp2k2 »

uberswe wrote: post #3
mojomark wrote: post #2

What the hell is up with economist.com proofreading. A grammatical or spelling error in the article title is a red flag to me that screams "I'm a piece of garbage, don't read me". Time to reestablish quality over quantity.

Haha, I saw the same thing. No way I would pay 20 euro to read that.

I used to play a game when I'd read TechCrunch for whatever misguided reason: I'd read until the first obvious spelling or grammatical error. I don't believe that I ever made it beyond the second paragraph. US journalism today is largely awful clickbaity crap, and the ad revenue encourages a race to the bottom for content quality. It'd be awesome if there were a way to align incentives for this to not be case. So far, nothing I've heard of seems to be working very well aside from running ads and trying to sell subscriptions, sometimes despite low-quality content.

Re: Bitcoin is no long the only game in crypto-currency town

#56

Post by jonnydubowsky »

Klathmon wrote: post #43
deadlycrayon wrote: post #27

Earlier quoted context omitted.

I agree with you, but that's idealistic. See: Ripple ( https://ripple.com/ )

For all the talk of Ripple being centralized, they aren't by design, and they have a plan in place to reduce and eventually eliminate that centralization (to a point). They decided that it would be a good idea to start centralized, then over time wane themselves out of the "validation" of transactions until it's in the hands of a diverse group of validator nodes where no one person has the ability to change things.

How about the part where the founders hold enough tokens that they could crash the price or manipulate the market at will. I understand that they have loose structures in place to keep them honest, but they could absolutely still act badly. We trust that they won't.

Re: Bitcoin is no long the only game in crypto-currency town

#57

Post by Isomatik »

ericb wrote: post #32
jdc0589 wrote: post #15

Earlier quoted context omitted.

I honestly don't know a ton about cryptocurrencies, but I though confirmed transactions were.....more or less whole point? can you give me an ELI5 version of why 0-confirmation transactions are ok?

It depends on the use-case. If you look at credit card transactions, they are only "confirmed" after 120 days (when chargebacks become harder...not impossible). A 0-conf transaction will work for all scenarios where you would trust a credit card with about the same amount of certainty. For those other scenarios, 10 minutes is better.

I think it's really only comparable for online transactions, where all credit card transactions are Card Not Present and you aren't able to 100% guarantee that the delivery went to the correct person or that the card wasn't stolen, making fighting the chargeback sometimes not worth it. A brick and mortar doing swipe transactions should have everything they need to effectively fight chargebacks, so I wouldn't consider that money to be 'gone' the way it would be in a double-spend.

Re: Bitcoin is no long the only game in crypto-currency town

#59

Post by ericb »

jstanley wrote: post #39
grey-area wrote: post #17

Earlier quoted context omitted.

A 0-confirmation transaction normally is just fine. It's really not fine at all. The competition is full confirmation transactions on a debit card or bank account in seconds with much lower or zero fees.

> It's really not fine at all. Actually, it really is. I've been accepting 0-conf transactions for nearly a year and had negligible double spends. https://incoherency.co.uk/blog/stories/zeroconf-payments.htm... The small number of double-spends that did occur since I wrote that blog post I think are mostly due to bad luck (and opportunism) rather than malicious intent upfront, and represent only ~0.1% of payments.

Interesting that a bunch of arm-chair downvoters "know" this won't work, but in practice, it does...
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