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Ask HN: Could Bitcoin be replaced by an ERC-20 token?

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Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#11

Post by bradwood »

latchkey wrote: post #8
TekMol wrote: post #7

Earlier quoted context omitted.

Then how is that a "threat to bitcoin"?

Bitcoin maxi's get their panties in a twist as people stop using their network and all the bitcoin gets wrapped up into these bridges. The real value gets developed elsewhere.

I think maxis like Saylor think that the L1 bitcoin network will become one where fewer big blocks are traded (like gold transactions) rather than where daily payments are running. The tx fees will become bigger too.

And L2s like lightning or the various wrapped BTCs will be quicker and more commonplace for smaller sizes.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#13

Post by DenseComet »

TekMol wrote: post #7
latchkey wrote: post #5

Earlier quoted context omitted.

I'm not talking about replacing bitcoin. Bitcoin, the network, needs to stay around. There needs to be one asic controlled network. The usage model does not. This is likely part of why the lightning network struggles so much for adoption. It doesn't add the same amount of value as tokenized bitcoin. I can borrow any coin against my tokenized bitcoin (which can often result in a positive apy), then move that coin to a…

Then how is that a "threat to bitcoin"?

Block rewards will eventually be replaced by transaction fees, meaning that to keep transaction fees low, transaction volume needs to be high. If most transactions aren't taking place on the Bitcoin network, then either transaction fees will have to increase to incentivize miners, or the security of the network could be jeopardized.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#14

Post by latchkey »

bradwood wrote: post #11
latchkey wrote: post #8

Earlier quoted context omitted.

Bitcoin maxi's get their panties in a twist as people stop using their network and all the bitcoin gets wrapped up into these bridges. The real value gets developed elsewhere.

I think maxis like Saylor think that the L1 bitcoin network will become one where fewer big blocks are traded (like gold transactions) rather than where daily payments are running. The tx fees will become bigger too. And L2s like lightning or the various wrapped BTCs will be quicker and more commonplace for smaller sizes.

Yes, that pretty much sums it up.

Once emissions stop on BTC, fees should have to increase to replace the emissions. Except that fees won't increase because fewer people will be using the network, having long moved to L2's. The majority of transactions will be checkpoint transactions for L2's.

If you zoom out, transactions per block have flatlined, even during this last couple year bull run...

https://www.blockchain.com/charts/n-transactions-per-block

Miners will stop mining because they depended on the emissions and not just the fees. Difficulty will go down and so will power usage, but the network will remain as secure because of the adjustments.

This is part of why we see such a large land grab right now to mine as much BTC as possible. I'm sure Saylor owns large stakes in mining companies.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#15

Post by randomhodler84 »

rvz wrote: post #6

> Could Bitcoin be replaced by an ERC-20 token? No. Here's why. Ethereum is already a pre-mined, VC fuelled project that is compromised by the fact that it was able to reverse its the hack due to the DAO hack situation to cater to these investors who lost money. If another giant hack like that was to happen again, it seems that the founders can do just that again; something the Bitcoin maxis would reject and detest.…

Oh hi :-) It cannot be “replaced” by a token, any more than webpages can be replaced by hyperlinks. I agree with your position.

ERC20 tokens are a contact state variable, Bitcoin is a global peer to peer software and network. It’s a shared memory address vs actual software product.

I have relaxed my position on WBTC as I am seeing it’s value as a neutral store of value as collateral on EVM networks, etc. I do see some value here and I believe it further increases demand for the underlying BTC asset. Non-ETH EVMs can transfer BTC cheaper than Lightning (however you lose the privacy implicit to LN).

An uncharitable position would be that all tokenized Bitcoin is just an excuse at rehypothication, but I think with transparency this can be dealt with.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#16

Post by randomhodler84 »

randomhodler84 wrote: post #15
rvz wrote: post #6

> Could Bitcoin be replaced by an ERC-20 token? No. Here's why. Ethereum is already a pre-mined, VC fuelled project that is compromised by the fact that it was able to reverse its the hack due to the DAO hack situation to cater to these investors who lost money. If another giant hack like that was to happen again, it seems that the founders can do just that again; something the Bitcoin maxis would reject and detest.…

Oh hi :-) It cannot be “replaced” by a token, any more than webpages can be replaced by hyperlinks. I agree with your position. ERC20 tokens are a contact state variable, Bitcoin is a global peer to peer software and network. It’s a shared memory address vs actual software product. I have relaxed my position on WBTC as I am seeing it’s value as a neutral store of value as collateral on EVM networks, etc. I do see som…

In addition, the immutability of EVMs (demonstrated in ETH, BNB, etc) does pose a risk to the integrity of BTC ownership. But treating it like any L2 pre-settlement is fair, in that buying WBTC on-chain is practically equivalent to buying on coinbase until you settle on BTC L1.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#17

Post by latchkey »

DenseComet wrote: post #13
TekMol wrote: post #7

Earlier quoted context omitted.

Then how is that a "threat to bitcoin"?

Block rewards will eventually be replaced by transaction fees, meaning that to keep transaction fees low, transaction volume needs to be high. If most transactions aren't taking place on the Bitcoin network, then either transaction fees will have to increase to incentivize miners, or the security of the network could be jeopardized.

Security won't be jeopardized because of PoW difficulty adjustments. The 'fear' here is that say 50% of the hashrate turns off, difficulty adjusts... and then it all turns back on and attacks the network.

That won't happen as long as mining is as decentralized as it is today. Saying that 'China' controls the hashrate is wrong because it isn't 'China'... it is a bunch of smaller individuals and they are acting in their own best interests. Attacking the network wouldn't help them at all.

AA covers this in a video:

https://www.youtube.com/watch?v=KUd8ZGgm6Qo

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#18

Post by wmf »

latchkey wrote: post #10
wmf wrote: post #4

Bitcoin maxis believe that Ethereum won't be stable and secure in the long term so everything running on Ethereum inherits that concern. People would also worry that the Ethereum community could modify the token in some way due to the precedent of The DAO hack.

It isn't about modifying the token, it is about rolling back transactions with hard forks. This could be done on any blockchain. The social consensus of the bitcoin miners is the only thing that prevents this from happening.

If you replace Bitcoin with a smart contract, a hard fork could change any aspect of its behavior, such as removing the 21M cap. The social consensus of Bitcoin is that no changes will ever be made, but Ethereum is much more open to changes.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#19

Post by joneholland »

latchkey wrote: post #5
TekMol wrote: post #3

Earlier quoted context omitted.

Could it be that these 3 approaches still rely on the existence of Bitcoin? I don't think "tokenized Bitcoin" would replace it. As Bitcoin would still be the basis for the tokens. Similar to how "tokenized Tesla shares" would not replace Tesla. Tesla would still be needed for those tokens to have value.

I'm not talking about replacing bitcoin. Bitcoin, the network, needs to stay around. There needs to be one asic controlled network. The usage model does not. This is likely part of why the lightning network struggles so much for adoption. It doesn't add the same amount of value as tokenized bitcoin. I can borrow any coin against my tokenized bitcoin (which can often result in a positive apy), then move that coin to a…

Your last paragraph exists in the form of margin loans and is already well utilized by savvy people.

Re: Ask HN: Could Bitcoin be replaced by an ERC-20 token?

#20

Post by vineyardmike »

latchkey wrote: post #5
TekMol wrote: post #3

Earlier quoted context omitted.

Could it be that these 3 approaches still rely on the existence of Bitcoin? I don't think "tokenized Bitcoin" would replace it. As Bitcoin would still be the basis for the tokens. Similar to how "tokenized Tesla shares" would not replace Tesla. Tesla would still be needed for those tokens to have value.

I'm not talking about replacing bitcoin. Bitcoin, the network, needs to stay around. There needs to be one asic controlled network. The usage model does not. This is likely part of why the lightning network struggles so much for adoption. It doesn't add the same amount of value as tokenized bitcoin. I can borrow any coin against my tokenized bitcoin (which can often result in a positive apy), then move that coin to a…

> You simply borrow against your existing holdings and pay that debt back while earning interest on your holdings. This model makes that 1-5% cashback on credit cards look like a joke.

You can do this today with existing investment portfolios. If someone is willing to give you an unsecured line of credit -without the risk of margin call- why would you borrow against holdings?

The magic issue is that markets don’t always go up so borrowing against a depreciating asset (even short term) is asking for trouble.

(Also most people don’t have serious investment holdings, and if you live paycheck to paycheck this model doesn’t work. Also you’d need a nearly free interest rate since credit cards have no interest until the bill is due which can be 30+ days after the purchase.)

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