Bitcoin: the Stripe perspective • Hacker News Board

Re: Bitcoin: the Stripe perspective

#51

Post by brg444 » Mon, Jul 21, 2014, 7:17 PM UTC

nlh wrote: post #5

This is one of the best posts on the "state of the Bitcoin economy" I've read yet. They nail a few key points that shows they get it in a real-world sense. * Mass-consumer adoption of Bitcoin is a tough sell in developed countries (USA, etc.) * Bitcoin the Network may ultimately be more valuable than BTC the currency * "No chargebacks!" is a pitch to merchants for BTC, not consumers. Consumers like chargebacks & trus…

> * Bitcoin the Network may ultimately be more valuable than BTC the currency

This is a fundamental misunderstanding of Bitcoin. Because each and every Bitcoin function as a sort of "token" that provides access to this payment network, their value is closely tied to the value of the network. For Bitcoin to become an international payment gateway system, liquidity requires every Bitcoin to be worth a lot.

Re: Bitcoin: the Stripe perspective

#52

Post by mseebach » Mon, Jul 21, 2014, 7:18 PM UTC

MichaelGG wrote: post #21

napoleond wrote: post #10

Earlier quoted context omitted.

Are there counter-examples of enormous, open platforms that escaped into the wild at just the right time? Because sure, IPv4 and JS have their problems, but it is impossible for me to conceive of an alternate universe where they were perfect at launch.

Really? Instead of JavaScript, essentially any other language could have been shipped and done a better job.

With hindsight, sure, but was that really obvious in 1995 when JavaScript shipped?

1995 saw Java's first public release. PHP was a CGI-thingie that powered Rasmus' personal homepage. Tcl and Perl was the state of the art of scripting languages. Ruby was released (it would be another four years before it started getting traction outside Japan). The first edition of O'Reilly's "Programming Python" was published in 1996.

Re: Bitcoin: the Stripe perspective

#53

Post by Symmetry » Mon, Jul 21, 2014, 7:19 PM UTC

They copied my blog post! [1] Ok, that's actually extraordinarily unlikely, and I'm glad that other people think we need to look at Bitcoin through the medium of exchange/unit of account/store of value trichotomy and I'm glad that they seem to be going forward with using bitcoin as the basis for an electronic money system without denominating anything in bitcoins.

[1] http://hopefullyintersting.blogspot.com/2014/07/thoughts-on-...

Re: Bitcoin: the Stripe perspective

#54

Post by webmaven » Mon, Jul 21, 2014, 7:20 PM UTC

Money isn't the only relevant unit of account. Even in stable economies, stocks, bonds, and the like are very high friction, and there is a lot of room for disruption and innovation.

Re: Bitcoin: the Stripe perspective

#55

Post by drcode » Mon, Jul 21, 2014, 7:21 PM UTC

freedom123 wrote: post #44

Bitcoin, no matter how you word it or rationalize it will always have a root problem and inherent risk...it is backed by nothing. Users today think its usage gives it market value and it can but to a limit. Money (USD) originally (the dollar bill) worked because it was back by gold. A metal that worked because everyone on the planet wants it. That dollar bill was a "check" or agreement stating, this dollar bill repre…

If gold wasn't used as a store of value its value would be very maybe a hundredth of what it is now: Gold-plated jewelry in our modern era is essentially indistinguishable (even at the level of a physics lab using scales/xrays/etc if need be) from solid gold jewelry.

Gold, for all intents and purposes, is also "backed by nothing".

Re: Bitcoin: the Stripe perspective

#56

Post by krschultz » Mon, Jul 21, 2014, 7:22 PM UTC

jarin wrote: post #30

Taking this a step further, when using it as a pure transport medium, the cryptocurrency itself doesn't matter. It could be Bitcoin, Litecoin, Dogecoin, 2304293f20983uf2089j2f3coin, or whatever, as long as it's liquid enough to convert back and forth. What we really need is a gateway system that will intelligently convert between your local currency -> the cryptocurrency with the best liquidity/exchange rate -> the d…

I agree with this completely. BTC is proving out the idea, but the total market cap is only $8 billion.

What stops Goldman Sachs from seeding a cryptocurrency tomorrow with a market cap that massively eclipses BTC? The big IBanks are sloshing billions and billions of dollars around all the time. There is this assumption that BitCoin is so big that it is the winner, but it is "so big" relative to a bunch of people that aren't in the world financial system today.

Re: Bitcoin: the Stripe perspective

#57

Post by sassypants » Mon, Jul 21, 2014, 7:23 PM UTC

boucher wrote: post #37

sassypants wrote: post #35

Earlier quoted context omitted.

What exactly is the problem with a store of value with 500% annual returns? I read people talking about the supposedly awful volatility, but they fail to mention that the volatility has a very distinct trajectory. Bitcoin is volatile as it increased in value by orders of magnitude year after year. The article repeats this fear of volatility in the context of one's live savings. How frequently do people tap their life…

Unless of course they invested when bitcoin was over $1000. Ever heard the phrase "past performance is not an guarantee of future returns?"

I've been meaning to build a chart to evaluate this. The question would be: What are the longest periods of time one could have held Bitcoin and lost money? And secondarily, how frequent were the opportunities to have lost money?

My ballpark guess would be that the longest you might have held Bitcoin at a loss were if you purchased during a few day span during the peak of 2011. You would have had to have held for almost two years to have turned a profit. But on 95-99% of days in which you could have purchased bitcoin, you would have profited within 1 year.

I'll try and put that together. Should be interesting.

Re: Bitcoin: the Stripe perspective

#58

Post by brg444 » Mon, Jul 21, 2014, 7:25 PM UTC

zby wrote: post #43

sassypants wrote: post #35

Earlier quoted context omitted.

What exactly is the problem with a store of value with 500% annual returns? I read people talking about the supposedly awful volatility, but they fail to mention that the volatility has a very distinct trajectory. Bitcoin is volatile as it increased in value by orders of magnitude year after year. The article repeats this fear of volatility in the context of one's live savings. How frequently do people tap their life…

The growth has to stop very soon - exponential functions can go on only so long. And when it stops the volatility will not stop - this is a prediction of course - but I am pretty sure that it will be this way.

exponential growth of other technologies did not stop until they reached mainstream adoption. Bitcoin is very far from that

Re: Bitcoin: the Stripe perspective

#59

Post by seliopou » Mon, Jul 21, 2014, 7:26 PM UTC

mbesto wrote: post #41

napoleond wrote: post #9

This is my favourite article about Bitcoin to date, and properly describes one of the main ideas I wish Bitcoin detractors would come around to. Bitcoin has a lot of problems as a unit of account and as a store of value, but that is not primarily what Satoshi was building ( https://bitcoin.org/bitcoin.pdf ). Bitcoin is, and has always been, a medium of exchange first and foremost. It still has some shortcomings in th…

> Bitcoin has a lot of problems as a unit of account and as a store of value, but that is not primarily what Satoshi was building ( https://bitcoin.org/bitcoin.pdf ). Bitcoin is, and has always been, a medium of exchange first and foremost. Which is consistent with the primary function and origin of money: because there is a division of labor it means a common medium of exchange must exist. The secondary functions of…

You have the supervenience[0] of "medium of exchange" and "store of value" reversed. If something is valuable then there will be demand for it. In fact value and demand in the domain of economics, according to Aristotle, are equivalent. (Aristotle also wrote over two thousand years ago that money is not "real" but that's another story.) When there is demand for something it can become a medium of exchange. Asserting that something is a medium of exchange does not make it so unless there is underlying demand for that something.

Primary and secondary is the wrong way to think about. "Medium of Exchange" is a high-level property that depends on the lower-level property "In Demand". And that is why the value of, or the demand for, bitcoin is critical to its success as a payments platform.

[0]: http://en.wikipedia.org/wiki/Supervenience

Re: Bitcoin: the Stripe perspective

#60

Post by jp555 » Mon, Jul 21, 2014, 7:29 PM UTC

freedom123 wrote: post #44

Bitcoin, no matter how you word it or rationalize it will always have a root problem and inherent risk...it is backed by nothing. Users today think its usage gives it market value and it can but to a limit. Money (USD) originally (the dollar bill) worked because it was back by gold. A metal that worked because everyone on the planet wants it. That dollar bill was a "check" or agreement stating, this dollar bill repre…

Aluminum was more expensive than gold until a cheap way to purify it was developed. Now we wrap our food in it. Gold is only valuable until the first metallic asteroid is placed into high Earth orbit. Not tomorrow, but probably sooner than you think.