The Wealthy Are Hoarding $10B of Bitcoin in Bunkers • Hacker News Board

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

#381

Post by realusername » Thu, May 10, 2018, 3:54 AM UTC

gamblor956 wrote: post #320

realusername wrote: post #195

Earlier quoted context omitted.

Traditional currency isn't backed by anything but its usage as well.

Traditional currency is backed by the requirement that it be used in transactions conducted with the issuing government, and also by the requirement that it be accepted as a method of payment for all debts under the jurisdiction of that government.

That does not change anything in practice, just ask Venezuela how that goes for them. If people don't believe in your currency it's game over. The only backing traditional currency has is that people believe in them.

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

#382

Post by wpietri » Thu, May 10, 2018, 3:56 AM UTC

actsasbuffoon wrote: post #371

wpietri wrote: post #309

Earlier quoted context omitted.

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…

Exactly. Reversability by a trusted party when things go wrong can be a huge benefit.

Even financial markets will do it as needed. I used to write trading software. Some of our traders were trading on the DTB; being German, they were sticklers for rules. One day our traders jumped on something and made a lot of money. But it turned out that somebody at another company had fat-fingered an order at a very low price for a very large quantity. Large enough that it would have destroyed their company.

The exchange decided there was no point in that, so they unwound all the trades. I thought our guys would be mad. They were a little disappointed to lose the expected profit, but they were otherwise fine with it. They didn't see any sense in that kind of destruction just for a short-term gain.

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

#383

Post by TomMarius » Thu, May 10, 2018, 8:10 AM UTC

algo646464 wrote: post #253

theseatoms wrote: post #227

Earlier quoted context omitted.

A deflationary currency regime would raises the bar for both investment and consumption. Investors would be choosier about speculative opportunities because the yield on the risk-free asset would be much, much higher. Consumers would still buy essentials, but they'd be extremely incentivized to hold currency rather than spend it. Regardless of whether or not a deflationary end-state is better or worse, it seems non-c…

> Investors would be choosier about speculative opportunities because the yield on the risk-free asset would be much, much higher. It won't help how choosy investors are, or how well the economy performs. The money supply is fixed. So for someone to make 120 bitcoins from an investment of 100 bitcoins, someone else has to lose 20 bitcoins, which would be other investors, or the public (workers / consumers).

Or Bitcoin grows its value.

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

#384

Post by simias » Thu, May 10, 2018, 9:12 AM UTC

TomMarius wrote: post #383

algo646464 wrote: post #253

Earlier quoted context omitted.

> Investors would be choosier about speculative opportunities because the yield on the risk-free asset would be much, much higher. It won't help how choosy investors are, or how well the economy performs. The money supply is fixed. So for someone to make 120 bitcoins from an investment of 100 bitcoins, someone else has to lose 20 bitcoins, which would be other investors, or the public (workers / consumers).

Or Bitcoin grows its value.

Bitcoin growing its value (deflating) is precisely the problem because then you have no reason to take the risk to invest in the first place since you'll reap the benefits by merely doing nothing and holding your coins that keep getting more valuable.

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

#385

Post by simias » Thu, May 10, 2018, 9:17 AM UTC

realusername wrote: post #381

gamblor956 wrote: post #320

Earlier quoted context omitted.

Traditional currency is backed by the requirement that it be used in transactions conducted with the issuing government, and also by the requirement that it be accepted as a method of payment for all debts under the jurisdiction of that government.

That does not change anything in practice, just ask Venezuela how that goes for them. If people don't believe in your currency it's game over. The only backing traditional currency has is that people believe in them.

The problem with Venezuela is definitely not that people stopped believing in the currency. That's a consequence, not the cause. It's not like people are going to wake up some day and stop believing in the dollar. If the economy of the USA was to collapse however, then that would be a problem.

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

#386

Post by simias » Thu, May 10, 2018, 9:20 AM UTC

keymone wrote: post #327

simias wrote: post #200

Earlier quoted context omitted.

That's definitely not what the overwhelming majority of people buying bitcoin today are counting on though. Like, at all. Otherwise "HODL" wouldn't be the meme it is. It doesn't make sense to hold inflationary currency.

I disagree. HODLing is a thing not primarily because hodlers believe in deflationary aspect of bitcoin, it’s because inflationary schedule is known beforehand and is not subject to change by bunch of central bankers and more importantly it’s the belief in that value will increase due to growing adoption.

>it’s the belief in that value will increase due to growing adoption.

Right, deflation.

"In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency."

Merely increasing the number of available coin doesn't create inflation unless it matches the demand for it.

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

#387

Post by pbhjpbhj » Thu, May 10, 2018, 10:32 AM UTC

acdha wrote: post #356

pbhjpbhj wrote: post #307

Earlier quoted context omitted.

You can have the contract in local currency, eg $, convert at the moment of payment and reduce the risk considerably.

From a business perspective, what value does using Bitcoin add at that point other than the time delay, exchange and transaction fees?

It's the same as the benefits normally, the buyer didn't have to convert at that point, they just have to pay the pegged rate.

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

#388

Post by sireat » Thu, May 10, 2018, 10:36 AM UTC

simias wrote: post #17

>the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting. It also demonstrates the costs associated with non-reversible transactions, these vaults aren't storing gold ingots or priceless artifacts, just private keys. Banks around the world don't need to w…

This is a problem/misfeature with cryptocurrencies: You are never truly sure that you own any of it, until you spend/send it elsewhere.

No matter what layers of indirection(multi-party-sigs,bio-metric based encryption, etc) you put on it, at the end the private key has to come out in order to use it.

With Gold, you see gold in your vault, you know it is yours.

You see dollar in your pocket you can be sure you can spend that dollar tomorrow.

You see a strip of paper with your private key in your pocket, there is no guarantee that you can spend those cryptocoins tomorrow.

You see a private key(encrypted or not) on that Gold Bar, you do not know that it is truly yours unless you managed all steps of the encryption yourself.

If you did manage all the steps of encryption yourself, then storing that information in a vault was pretty much pointless.

I suppose one way these vaults can offer some sort of safety is that you come to them with your wallet, you make an onchain transaction into wallet whose private keys require both you and the vault to decrypt.

This way both parties can be reasonably sure that the wallet stays unaffected until you come with a request to open it.

Still a problem remains, you have to trust the vault to stick around and not lose their encryption keys.

If you do not need vault's keys to open your wallet you've gained nothing by storing your keys at the vault.

If you need the vault's keys you have to put your faith in vault not mishandling those keys, which means a single point of failure.

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

#389

Post by st1ck » Thu, May 10, 2018, 1:06 PM UTC

coryfklein wrote: post #350

Cthulhu_ wrote: post #34

Earlier quoted context omitted.

And you think this bank (re: the article) falls outside of those? You won't be able to get your btc out quickly in this one either. Same with online exchanges for that matter. They also have much lower transaction fees.

Exchanging directly for cash at or above market rates is definitely practical with LocalBitcoins. There are a large number of brokers there that do it professionally and value their reputation on the platform much higher than they value the potential for ripping you off. Of course, if you need to liquidate $1B in Bitcoin, that's going to take time, but you can still do it much faster than you could get it out of a Cy…

AFAIK those who had more than €100k in deposits just plainly lost a portion of their money:

https://www.reuters.com/article/cyprus-bankofcyprus/cyprus-c...

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

#390

Post by logfromblammo » Thu, May 10, 2018, 2:13 PM UTC

astrodust wrote: post #290

logfromblammo wrote: post #243

Earlier quoted context omitted.

"Us"? Who, exactly, is "us"? Since around 1980, all the "amazing global growth" has largely gone to those who own and hold financial instruments, while those who make and those who serve have just been treading water all this time. I can't imagine how unbelievably wealthy I would feel if my class's wages had risen commensurate with increases in productivity, but I certainly don't feel all that rich now.

American wages have been stagnant. Meanwhile the rest of the world has been industrializing. I'm sure it's just a coincidence but the 1980s was the beginning of the "off-shore everything" trend.

And yet social mobility has also been stagnant in the developing world for the last 30 years. So offshoring made a few people outside of W.Europe/US more rich in the 80's, but then the party was over for them, and it was back to the wealthy class sucking up all the excess production, everywhere.