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Why the practical applications of Bitcoin will be limited

sidazhang.com

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Re: Why the practical applications of Bitcoin will be limited

#31

Post by StavrosK »

DennisP wrote: post #28
StavrosK wrote: post #19

Earlier quoted context omitted.

I think he means transactions per block, which is hard to increase 250x.

The Bitcoin devs are working right now on something that could increase the block size more than that. The main thing that limits the size is latency in propagating large blocks. But most miners already have most of the transactions in each block. All you really need to send is a small data structure that lets the miner reconstruct the full block, from the transactions he already has. An invertible bloom lookup table…

Huh, interesting. I'm not familiar with the problem with large blocks, so I don't know why this proposed solution is good, but I'm glad it exists. If anyone wants to explain the problem, I would be indebted.

Re: Why the practical applications of Bitcoin will be limited

#32

Post by kordless »

etchalon wrote: post #9
sida wrote: post #8

Earlier quoted context omitted.

And in Bitcoinland, objections against Bitcoin are also often flagged as trolling, and dismissed immediately

There is definitely a pervasive culture within cryptos of people either "getting it" or "not". It's a bit disturbing.

We are discussing trust. It's obvious that one trusts or not, so why is it surprising we see it mirrored in a group of people discussing trust? Answer: It's not.

Re: Why the practical applications of Bitcoin will be limited

#34

Post by mrb »

The author's post is full of misguided opinions, and inaccuracies.

"Reason 1: Bitcoin will not replace retail payment systems"

Bitcoin is more of an enabler than a replacer. There are many financial transactions that do not take place because current financial platforms do not let them happen. For example with Bitcoin I could in theory pay an artist in Namibia who makes little sculptures and ships them to worldwide. This economic activity does not exist today because there is no safe/efficient way to pay some random guy in Namibia who does not have a bank account.

"Scenario 2 [transaction count must increase 250 folds] and 3 [Price increases 250 folds to $65000/BTC] are not likely to occur"

So the author hand-waves that and says it cannot continue to happen with zero reasons? To see a combined 250 fold increase all we need to see is a number of transactions increasing by 25x (which will happen with the upcoming block size increase) and a price increasing by 10x. Consider that:

- the number of transactions has already increased 1,000 fold (and more) in the past few years, and there is no sign of it slowing down: https://blockchain.info/charts/n-transactions?showDataPoints...

- the price has already increased 1,000 fold (and more) in the past few years: https://blockchain.info/charts/market-price?showDataPoints=f...

So the author ought to explain to us why he thinks such increases would suddenly stop.

"Fiat conversion makes Bitcoin transactions even more expensive"

The author completely ignores the economic incentive of transactions within the Bitcoin economy itself. When I give 1 BTC to my father, he can spend 1 BTC on Dell.com. No fiat conversion takes place.

"Reason 2: Bitcoin will not end the need for trusted central parties"

I agree with this, but I do not see at all why the author listed this as a reason why Bitcoin will not succeed. In some cases having a central trusted party does make sense, in others it does not.

"When is censorship resistance so important that it is worthwhile to make those trade offs? The answer is: illegal use cases"

Or: oppressive governments who seize the bank accounts of dissidents, Paypal when they decide to shut down the accounts of donation receivers (because their fraud system incorrectly interprets such sudden flows of money as fraud), etc. You see, the world is bigger than you. There are many instances where censorship resistance is important and is needed for legal use cases.

"Whereas most Bitcoin users are primarily using Bitcoin as a speculative asset and illegal transactions"

The author provides no source for the "illegal transactions", because he has no data to back this up, because this claim is false. In fact the biggest illegal shops have been shut down (SR 1.0, SR 2.0). And the number of legit merchants continues to increase (now surpassing 100,000 merchants accepting Bitcoin worldwide).

"Internet did not make design trade-offs to primarily focus on censorship resistance at the expense of other qualities (such as speed)"

Yes it did make trade-offs. Internet was designed to be decentralized to make it resilient (which is similar to censorship resistance), at the expense of complexity (it took decades to develop a stack that works well: BGP / IP / TCP / UDP / DNS / HTTP).

"If online gambling were to become legal and widely accepted by banks, Bitcoin would not be used to gamble online"

Another flawed argument. Let me try this: "if online reselling were to become legal and widely accepted by banks, Bitcoin would not be used by online merchants". Yet 100,000 merchants are using Bitcoin...

"However, Bitcoin has shown us the promise of blockchain technologies"

The author does not understand that Bitcoin's block chain technology simply cannot exist without Bitcoin (the currency): why would miners mine if they received no bitcoins rewards? For the block chain technology to succeed, Bitcoin needs to succeed, and vice versa.

Re: Why the practical applications of Bitcoin will be limited

#35

Post by post- »

lsadam0 wrote: post #18
Mahn wrote: post #6

Despite the click-bait title, the article makes valid points which are very often overlooked or downright ignored by hardcore bitcoiners. As someone who's been watching bitcoin for the past few years, this is in my opinion the plain reality.

The problem with that article is not that it makes 0 valid points, it's that it makes some terrible correlations as an attempt to prove cryptos won't be huge. What does a scammer selling unlicensed shares in porn production have anything to do with the success or failure of cryptocurrency? Bitcoin was simply the method of payment, nothing more. That example is immediately followed with the eBay + TicketMaster example…

> The problem with that article is not that it makes 0 valid points, it's that it makes some terrible correlations as an attempt to prove cryptos won't be huge.

Actually, the article doesn't set out "to prove cryptos won't be huge," and ends on a crypto-positive note:

> Bitcoin has shown us the promise of blockchain technologies despite its design shortcomings.

> The future of the technology will probably evolve towards a model that more resembles real world needs, rather than the needs of “cyberpunks”.

To diverge from the article a bit and respond to your final point, I don't know that the mantra of individual empowerment in the Bitcoin world amounts to anything other than solipsism. Bitcoin, as far as I can tell, ignores structural biases preventing people from accessing the cryptocurrency. We can see evidence of this in the "Bitcoin in Africa" startups, which on the surface seem benign and even benevolent, but are hiding an uninterrogated colonialism: their chief assumption, it seems to me, is that the developed world will always control more of Bitcoin's limited resources, and the value of spreading a small portion of those resources to the developing world comes from lock-in. It's a classic unfair trade agreement, and it doesn't take much thought to see how problematic this situation can become.

eBay can bend you over with fees because they control the market; Bitcoin's limited resources are susceptible to the same kind of market control. That's the discussion I wish more people were having.

Re: Why the practical applications of Bitcoin will be limited

#36

Post by GlickWick »

lsadam0 wrote: post #23
GlickWick wrote: post #11

The title is very click-baity, I think we can all agree on that. However, a lot of the points made within are completely legit. The Bitcoin world is rife with scams and one of the primary uses of Bitcoin is to engage in illegal transactions. The benefits of de-regulation are obvious, but the downsides are killing it right now. A lot of people are stuck on the "regulation is evil!" rehtoric due to the current issues w…

I won't disagree that CryptoCurrencies have by and large been used for illegal transactions. Though, my response would be: So? Any technology can be applied to do something illegal. Do you think this fact played 0 part in the Internet itself thriving? I don't see us scrambling to throw away steak knives just because some people have been stabbed.

The problem is that the majority of money changing hands appears to be for illegal uses.

When the internet was in its infancy, this was absolutely not the case. I'm sure there was something going on, but it wasn't the primary use.

Re: Why the practical applications of Bitcoin will be limited

#37

Post by DennisP »

StavrosK wrote: post #31
DennisP wrote: post #28

Earlier quoted context omitted.

The Bitcoin devs are working right now on something that could increase the block size more than that. The main thing that limits the size is latency in propagating large blocks. But most miners already have most of the transactions in each block. All you really need to send is a small data structure that lets the miner reconstruct the full block, from the transactions he already has. An invertible bloom lookup table…

Huh, interesting. I'm not familiar with the problem with large blocks, so I don't know why this proposed solution is good, but I'm glad it exists. If anyone wants to explain the problem, I would be indebted.

The time to propagate blocks is proportional to the block size, and if it takes too long compared to the block frequency, you end up with forks. That's the main reason we only have a block every 10 minutes, and limit to 7 tx/sec. But the transactions are sent separately, so the miners can make blocks out of them. There's no need to duplicate them all in the blocks themselves.

Re: Why the practical applications of Bitcoin will be limited

#40

Post by jgrowl »

GlickWick wrote: post #11

The title is very click-baity, I think we can all agree on that. However, a lot of the points made within are completely legit. The Bitcoin world is rife with scams and one of the primary uses of Bitcoin is to engage in illegal transactions. The benefits of de-regulation are obvious, but the downsides are killing it right now. A lot of people are stuck on the "regulation is evil!" rehtoric due to the current issues w…

I find arguments against Bitcoin by talking about scams and illegal transactions completely baffling. The same thing happens with cash simply because it is a medium for exchanging value. It is an inherent property of currency.
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