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Is Bitcoin a Scam?

theguardian.com

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Re: Is Bitcoin a Scam?

#71

Post by cturner »

jjcm wrote: post #51
stuaxo wrote: post #24

- Proof of work is inherently wasteful. - The ever expanding blockchain is wasteful (in storage, computation, network). - Having every transaction recorded forever is the opposite of anonymity ("pseudonymous" - come on!). - The energy usage is insane. - The throughput is way too slow. While there may be an anonymous digital currency that doesn't use a lot of energy, it probably has to be based on something other than…

Etherium 2.0's move to proof of stake will help with the ridiculous energy usage that bitcoin has, but I don't see a blockchain ever being able to handle the traffic of a major card processor like visa. Even with sharding, your latency between shards compounds to the point where the UX is degraded. What I see value in for a blockchain is store of value (which arguably is basically a pyramid scheme), smart contracts f…

The definition for /pyramid scheme/ is straightforward, and Bitcoin does not match it.

Re: Is Bitcoin a Scam?

#72

Post by G3n0t »

aww_dang wrote: post #66
G3n0t wrote: post #55

Earlier quoted context omitted.

> Proof of work is inherently wasteful. But it's a necessary evil for a _distributed_ currency. It's a way to protect payment validation from being controlled by a single operator by making a "hostile take over" very expensive. IMHO criticizing Bitcoin for its "proof of work" algorithm only converys a serious lack of understanding of how crypto currencies actually work. There is an alternative, namely, the "proof of…

> criticizing Bitcoin for its "proof of work" algorithm only converys a serious lack of understanding of how crypto currencies actually work Other algorithms exist and further innovations are likely. I don't agree that BTC's design features are beyond criticism.

I didn't mean to imply Bitcoin shouldn't be criticized. But saying Bitcoin simply wastes energy by applying a "proof of work" scheme is totally naive. It's not easy to replace and the advantages and risks of "proof of stake" are not clear, yet, I belive.

BTW: For others who have never heard of "proof of stake" and "proof of work" ...

"Proof of work" requires miners to solve a cryptographic puzzle taking the giant share of all computing time required to validate a block of transactions. This is to assure nobody gains complete control over the blockchain and, hence, keep it being a decentralized effort. On the other hand, by providing a miner fee and a reward (currently about 6 BTC) the system creates incentive for miners to keep on validating Bitcoin transactions despite the costs. It's a careful balance and probably the most difficult aspect of the Bitcoin system to grasp.

"Proof of stake" means the miner with the highest monetary stake receives the largest share of the mining fees. In this scheme a miner needs to deposit quite a lot of money to be allowed to compete in the creation of the next transaction block. So it's not computing power enabling a successful miner but his or hers prior investment in the crypto currency. I think you understand now, why such a scheme would have been impossible to implement in Bitcoin 12 years ago.

Ethereum is preparing to switch over to "proof of stake" at the same time as they're preparing to run multiple block chains at the same time. Ethereum 2.0 hopes to save a lot of cost in maintaining its block chain and at the same time to boost its transaction turn over significantly. But it's also a risky undertaking. Keep that in mind if you plan to invest in Ethereum.

Re: Is Bitcoin a Scam?

#73

Post by G3n0t »

2muchcoffeeman wrote: post #53
G3n0t wrote: post #33

Earlier quoted context omitted.

The question of value is one of the most fundamental ones in economic theory. It's got nothing to do with crypto currencies or technology in general. If you really want to understand why we consider Bitcoin valuable (and btw: fiat money, too) go google for "subjective theory of value" and, more specifically, "regression theorem".

But you can’t actually use Bitcoin for anything? The Regression Theorem, first proposed by Ludwig von Mises in his 1912 book The Theory of Money and Credit, states that the value of money can be traced back ("regressed") to the goods and services it obtains. In other words, money is backed by some commodity that has intrinsic value. Recently, there has been a debate about applying Regression Theorem to Cryptocurrency…

> But you can’t actually use Bitcoin for anything?

Well, in US and Europe this is certainly true. I've yet to see a reasonably large shop accepting bitcoins. But my vision is blurred by the fact I am living in a wealthy Western country that has a comparably free banking system.

In other parts of the world, South America for example or Asia the situation is difficult for the average Joe to earn savings either due to galloping inflation or tight banking regulations. In those countries street markets are practically run by crypto currencies or derivatives.

Re: Is Bitcoin a Scam?

#74

Post by lxgr »

G3n0t wrote: post #69
jpmoral wrote: post #64

Earlier quoted context omitted.

> Yes, 10 minutes is not very fast. However, compare that to inter bank transactions and this number seems blazingly fast again Near instant bank transfers have been available in a lot of countries for many years now. Or did you mean something else?

Well, "SWIFT" international bank transactions require up to 5 work days. Here in Germany, sending money from one bank to another still takes at least one up to three _work_ days. So in the worst case, you're wiring money to sb on Friday and he will receive it by Wednesday. Compare that to 10 minutes required by Bitcoin anywhere on the planet. Of course, there are special purpose banking products to accelerate transac…

I'm in Germany as well, and bank to bank transfers across Europe (not just Germany) usually take either 1-2 seconds (when both banks support SEPA Instant) or a few hours otherwise.

Both methods are significantly cheaper (usually free) than Bitcoin transaction fees at the moment. As a concrete example, EUR withdrawals from Coinbase to a SEPA bank account are both faster and cheaper than BTC withdrawals to a wallet at this point.

If a transfer takes any more than two full business days (IIRC), one of the banks involved is out of SEPA compliance.

The only thing that _really_ slows down bank to bank transfers is when your payment gets flagged for review for security or compliance reasons, but arguably, both also benefit you (as a customer not wanting to lose money or a citizen not wanting to indirectly cover the effects of somebody else's tax evasion or money laundering). In my experience, this also happens very rarely, but performance of this can vary from bank to bank.

Re: Is Bitcoin a Scam?

#75

Post by aww_dang »

G3n0t wrote: post #72
aww_dang wrote: post #66

Earlier quoted context omitted.

> criticizing Bitcoin for its "proof of work" algorithm only converys a serious lack of understanding of how crypto currencies actually work Other algorithms exist and further innovations are likely. I don't agree that BTC's design features are beyond criticism.

I didn't mean to imply Bitcoin shouldn't be criticized. But saying Bitcoin simply wastes energy by applying a "proof of work" scheme is totally naive. It's not easy to replace and the advantages and risks of "proof of stake" are not clear, yet, I belive. BTW: For others who have never heard of "proof of stake" and "proof of work" ... "Proof of work" requires miners to solve a cryptographic puzzle taking the giant sha…

Nano has no fees or mining. Instead of traditional distributed proof of stake, it uses open representative voting.

https://docs.nano.org/what-is-nano/overview/#representatives...

If nano (or any other tech) achieves greater utility for transactions without using proof of work, then it is arguable that BTC's use of energy is wasteful.

However, to be specific I would defend the consumer/miner's choice to use energy in whichever way he subjectively feels brings him the most value. I'd say it is debatable whether BTC's proof of work is wasteful. Calling this claim naive appears as short sighted. Tech is a constantly evolving landscape. Increases in efficiency are arguably already here.

Re: Is Bitcoin a Scam?

#76

Post by lxgr »

tmarice wrote: post #47

The amount of FUD in every Bitcoin-related thread on HN is mind boggling. The network is decentralized, permissionless, pseudonymous and cheap. It is a stable protocol and layer 2 solutions are being built upon it to address the downsides blocking every day use. He who controls the money, controls the world. The control is slipping and the roaches are starting to run around in panic.

> cheap

[citation needed]

Re: Is Bitcoin a Scam?

#77

Post by enzo1982 »

G3n0t wrote: post #69
jpmoral wrote: post #64

Earlier quoted context omitted.

> Yes, 10 minutes is not very fast. However, compare that to inter bank transactions and this number seems blazingly fast again Near instant bank transfers have been available in a lot of countries for many years now. Or did you mean something else?

Well, "SWIFT" international bank transactions require up to 5 work days. Here in Germany, sending money from one bank to another still takes at least one up to three _work_ days. So in the worst case, you're wiring money to sb on Friday and he will receive it by Wednesday. Compare that to 10 minutes required by Bitcoin anywhere on the planet. Of course, there are special purpose banking products to accelerate transac…

We have mandatory 1 business day bank transactions in Euro currency in Germany and the EU since 2012. If your bank is taking "up to three _work_ days" for regular Euro transactions they are violating the law (§675s BGB).

As of last year, most banks also offer instant (10 seconds) transactions for a small fee. This is planned to be made mandatory at the end of 2021. My bank is charging 0.50€ for such transactions which is significantly less than the median Bitcoin transaction cost (more than $1 in 2020 average, more than $5 currently).

Re: Is Bitcoin a Scam?

#79

Post by jpmoral »

G3n0t wrote: post #69
jpmoral wrote: post #64

Earlier quoted context omitted.

> Yes, 10 minutes is not very fast. However, compare that to inter bank transactions and this number seems blazingly fast again Near instant bank transfers have been available in a lot of countries for many years now. Or did you mean something else?

Well, "SWIFT" international bank transactions require up to 5 work days. Here in Germany, sending money from one bank to another still takes at least one up to three _work_ days. So in the worst case, you're wiring money to sb on Friday and he will receive it by Wednesday. Compare that to 10 minutes required by Bitcoin anywhere on the planet. Of course, there are special purpose banking products to accelerate transac…

In Australia, instant bank to bank transfers are free. And I always thought it was behind the rest of the world (except the US).

Re: Is Bitcoin a Scam?

#80

Post by lxgr »

Traster wrote: post #15
hd4 wrote: post #8

>Is x a scam because I don't understand it/I'm priced out? Uh, no. Though fiat currency is definitely a scam.

I worked with some guys and I could never work out why they were doing things the way they were. I didn't really interact with what they were doing that much so I just assumed they were experts in the area and I just didn't understand. Overtime I ended up working with them more and more and I started looking at what problems they were solving and how they were approaching it. The more I looked the more I didn't under…

> What they were really doing - in my opinion - was cargo cult software development practices. They'd worked with complex well designed systems that they hadn't really understood and were reproducing a weird facsimile of it.

This is a very concise summary of most of the crypto/blockchain projects out there. Ideas are cheap, and calling out that you understand the CAP theorem and basic distributed systems theory doesn't mean you will be able to effectively solve problems as they practically arise.

However, it makes a lot of sense if you consider who the target audience of such whitepapers is. (I'd argue it's not engineers.)

I also don't think this generalization applies to all projects out there, but at this point, it seems like it's become more than a full-time job to see beyond the cargo culting, shiny landing pages and jargon-filled "whitepapers".

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