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The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

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Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#371

Earlier quoted context omitted.

Crypto certainly has, if not more, at least the same utility than jewelry. Trust less, distributed ledgers--these aren't tulips.

They do not have the same utility. I can walk out of my house and find people deriving value from wearing jewelry. Trustless, distributed ledgers, on the other hand, not so much. At the moment, Bitcoin's primary non-speculative use case is light financial crime: money laundering, capital control evasion, ransomware, buying various illegal stuff, ponzi schemes, etc. I agree that it's possible that one day trustless, d…

The only developments in cryptocurrency that I've personally found interesting have been smart contracts. Even then, there's no reason that couldn't be done by a traditional financial institution using fiat currency. The fact that smart contracts were first implemented with cryptocurrency is an implementation detail, not a fundamental requirement.

Frankly, I'd probably rather use smart contracts with regular currency. If there was some kind of scam or theft then the financial institution might be able to reverse some of the charges.

Most of the advantages of cryptocurrency don't really sound like advantages to me.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#373

Earlier quoted context omitted.

> By that reasoning, investing in gold is also speculation. What else? However, gold has some utility as jewelry etc. Cryptocurrencies are (currently) pure speculation.

> Cryptocurrencies are (currently) pure speculation. False. Cryptocurrencies are _mostly_ speculation. Go to any dark web site and everything for sale is being transacted in crypto. Look at XRP - there are clearly large commercial organizations using that crypto for business purposes.

What exactly are people doing with XRP? Honest question.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#374
post #221

Earlier quoted context omitted.

This assumes a sudden collapse event happening within the 10 minutes that it takes to reset the hash rate. I'm struggling to think of global scenarios where that can happen so quickly. What are the chances that collapse is a sudden event vs a cascading deterioration event?

It takes two weeks to reset the hash rate, if the hash rate stays constant. If it starts dropping, the time goes up.

can you explain this further?

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#375

Earlier quoted context omitted.

That's true, but Bitcoin has been marketed as a replacement for both traditional currency and traditional payment processors, and certainly encourages people to keep way larger amounts in "cash" than they'd otherwise be comfortable with.

s/marketed/embraced

Marketed is really the more accurate term.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#376
post #231
post #216

Earlier quoted context omitted.

Those dollars continue to circulate, contributing to a functional dollar economy. Those bitcoins don't, so we don't have a functional bitcoin economy.

At some point, after the last central bank and Buffet bought bitcoin reserves, it will stop appreciating in value. Then it can start to circulate.

But what bitcoin owner is going to be willing to sell up and lock in their losses? They'll keep HODLing to the end, with only the occasional sale (to someone else in the ever-shrinking circle of people who care about bitcoin) to meet immediate needs.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#377

Earlier quoted context omitted.

Can you just loan your money directly to the US Government? In the UK the "National Savings & Investment" bank is actually outright owned and operated by the British government, specifically for this purpose. Instead of raising money commercially with a debt security, and then having banks buy that take savings from their customers to afford the securities and keep a cut as profit, the NS&I gets rid of the middle man…

> Can you just loan your money directly to the US Government? Well, you can buy, e.g., savings bonds directly, but only $25,000 worth per year.

But there are lots of types of US bonds and you can literally buy as much as you want (~$500b worth of them trade every day), it's the most liquid market in the world.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#378
post #374

Earlier quoted context omitted.

It takes two weeks to reset the hash rate, if the hash rate stays constant. If it starts dropping, the time goes up.

can you explain this further?

Sure! The difficulty is supposed to adjust approximately every two weeks, and it readjusts based on how quickly blocks were found after the previous readjustment. The target is for blocks to take an average of 10 minutes.

The trick is that the difficulty adjustment time is not actually measured in weeks (or seconds), but in blocks. Since blocks are supposed to take 10 minutes, the difficulty readjusts every 2016 blocks. It looks at the time needed to complete the last 2016 blocks, and readjusts so that the next 2016 blocks will take two weeks at that rate.

If the hash rate is steady, then that readjustment will happen close to the two-week mark, and of course it will do very little because the rate is steady.

If the hash rate is increasing, then the period becomes smaller. As a simplified example, consider what happens if the hash rate is constant for the first week of an adjustment period, and then doubles. The first 1008 blocks took a week. The next 1008 blocks will take about 3.5 days. The next readjustment will therefore happen after about 10.5 days, not 14 days. The real Bitcoin network looks a little bit like this: over its lifetime, the actual difficulty readjustment period has averaged 13.17 days, not 14 days, because of the steadily increasing hash rate.

Now consider the opposite case, where the hash rate is cut in half after a week. The second batch of 1008 blocks will take two weeks, for a total of three weeks.

Worse, consider a case where the hash rate is cut in half every week. You'll (probably) never reach the next difficulty readjustment, and blocks will take longer and longer to mine until they're taking days or weeks instead of just 10 minutes. You could get into a spiral where a single event that significantly cuts the hash rate results in the network becoming much slower and less useful, so people use it less, so miners earn less, so they drop out and the hash rate drops further, etc.

It's hard to say just how the real-world hash rate would change in response to a catastrophe, of course. Maybe that sort of shock wouldn't happen. But this is the general idea of why Bitcoin could run into trouble due to a quick but not quite immediately apocalyptic decrease in the hash rate.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#379

Earlier quoted context omitted.

> Can you just loan your money directly to the US Government? Well, you can buy, e.g., savings bonds directly, but only $25,000 worth per year.

But there are lots of types of US bonds and you can literally buy as much as you want (~$500b worth of them trade every day), it's the most liquid market in the world.

Oh, yeah, I forgot that individuals can buy Treasuries directly from the government, I was thinking they only could on the secondary market which would not have been responsive to the query.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#380
post #155

Earlier quoted context omitted.

What's the backup for various failure cases? House fire? I'd guess off-site backups. House fire that kills you? Do you stick recovery instructions to your backup in a will, or how do you leave money to your heirs? (Or just you don't?)

Unfortunately I have too much bitcoin to say where I store it. The only thing I will say is that I keep my bitcoin in MANY locations and MANY wallets.

Right but that would be my worry. If I die and nobody knows how to get at my assets, that really fucks over my heirs. With traditional financial institutions, the courts know how to figure out how to disburse your money after death.
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