Why the practical applications of Bitcoin will be limited • Hacker News Board

Re: Why the practical applications of Bitcoin will be limited

#81

Post by ynd » Wed, Mar 04, 2015, 8:50 PM UTC

post- wrote: post #35

lsadam0 wrote: post #18

Earlier quoted context omitted.

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 towa…

Bitcoin is not susceptible to market control like eBay. eBay is a single entity so it is easy to coordinate self-serving decision. Bitcoin is multiple agents that have to co-operate. That prevents any one agent from making unilateral decisions.

Another huge difference is that anybody can become a new agent in Bitcoin. You just buy the hardware. You cannot influence or join eBay in the same way.

Re: Why the practical applications of Bitcoin will be limited

#82

Post by TheCoelacanth » Wed, Mar 04, 2015, 8:59 PM UTC

placeybordeaux wrote: post #78

The real practical application for bitcoin that I see will be machine to machine transactions, not human to human transactions. Pre-bitcoin if you want to set up a static website that accepts donations to keep on serving it's content you absolutely have to have a human in the loop to faciliate those transactions. If your webserver is overloaded and you need to charge browsers 0.0001 cents per connection to filter out…

Did you read the article? If you accept his conclusions, then long term even using bitcoin for $1 transactions much less for $0.000001 isn't economically feasible since he proposes that the true cost of a bitcoin transaction is ~$10.

Re: Why the practical applications of Bitcoin will be limited

#83

Post by placeybordeaux » Wed, Mar 04, 2015, 9:00 PM UTC

TheCoelacanth wrote: post #82

placeybordeaux wrote: post #78

The real practical application for bitcoin that I see will be machine to machine transactions, not human to human transactions. Pre-bitcoin if you want to set up a static website that accepts donations to keep on serving it's content you absolutely have to have a human in the loop to faciliate those transactions. If your webserver is overloaded and you need to charge browsers 0.0001 cents per connection to filter out…

Did you read the article? If you accept his conclusions, then long term even using bitcoin for $1 transactions much less for $0.000001 isn't economically feasible since he proposes that the true cost of a bitcoin transaction is ~$10.

Thats for transactions on the main block chain. For true micro transactions there are a multitude of options for increasing throughput or decreasing latency.

Re: Why the practical applications of Bitcoin will be limited

#84

Post by sharpneli » Wed, Mar 04, 2015, 9:01 PM UTC

vanzard wrote: post #75

sharpneli wrote: post #66

Earlier quoted context omitted.

tx/block did not stop increasing. But the transaction volume in USD has been flat recently due to the falling price: https://blockchain.info/charts/estimated-transaction-volume-... The amount of value transferred in bitcoin network has seen no growth at all lately. On the other hand it has not diminished either. I simply wanted to point out that you cannot cherry pick the time periods. Right now on a 6-12 month times…

> But the transaction volume in USD This is again irrelevant to the point the OP and blog post author were making. If the number of tx/block continues to increase, then the current level of network security will increase, all else being equal (eg. USD price of Bitcoin staying flat). > on a 6-12 month timescale bitcoin has been absolutely terrible investment Absolutely, but long price downtrends have happened multiple…

OP made the argument that it's enough for the price to go 10x and transactions 25x. That's why I pointed out the price. If the price stays down the transactions must go 250x.

I didn't say this is necessarily the end of bitcoin. There are intermediate stages between "to the moon" and total crash. Personally I think it's quite likely that bitcoin will simply stagnate and remain little used.

I don't doubt that the bitcoin purchases have increased since 2009. It's just that the raw numbers which we do have (your link did not have any hard numbers) show that it's not really doing that well when absolute sales figures are taken into account.

The fact that only hard numbers which we do have show poor adoption indicates that it's the same elsewhere, otherwise we'd see bitpay and others jumping up and down and telling the great numbers to everyone to increase the adoption even more.

Re: Why the practical applications of Bitcoin will be limited

#85

Post by aminok » Wed, Mar 04, 2015, 9:02 PM UTC

JoeAltmaier wrote: post #71

frozenport wrote: post #69

Is anybody worried about the terrible consequences if Bitcoin does succeed? It will be a like putting the world back on the gold standard, except with even less inflation! Is anger at online transaction fees worth destroying the world economy?

I'm worried as you are. That silicon valley snobs will ignore a thousand years of learning, just to spite 'the man'. We've seen abominable cheating, lying and abuses in virtual currency systems - that surpass anything physical currency systems have experienced, in that they happen at the speed of the internet if nothing else.

I don't believe people should be banned from doing a whole host of things to ostensibly prevent cheating and fraud. The faith you have in centralised authority is extremely dangerous and leads to things like the multi-trillion dollar LIBOR scandal. Unlike with a market system, industries centralised through thousands of regulatory bans cannot evolve because they are typically dominated by a small number of super-giants, and are monocultures. Super large organisms and monocultures are rare in nature for that reason. If anything is snobbish, it's your willingness to impose your will on others through forceful bans that dictate their personal financial activity.

As for the hacks and thefts that have occurred thus far, it's worth nothing that Bitcoin is a young and immature sector, that is going through its growing pains. There were similar concerns about crime and fraud in the internet's early years too. I can link you to news stories from the 1990s that demonstrate this. It's not reasonable to generalize Bitcoin's first six years to the inherent qualities of p2p electronic cash.

Re: Why the practical applications of Bitcoin will be limited

#86

Post by aminok » Wed, Mar 04, 2015, 9:05 PM UTC

frozenport wrote: post #69

Is anybody worried about the terrible consequences if Bitcoin does succeed? It will be a like putting the world back on the gold standard, except with even less inflation! Is anger at online transaction fees worth destroying the world economy?

Bitcoin succeeding would not be like putting the world on a gold standard. Bitcoin is outside the control of governments, and would be an additional currency, that supplements, rather than substitutes, the current money stock.

Re: Why the practical applications of Bitcoin will be limited

#87

Post by JoeAltmaier » Wed, Mar 04, 2015, 9:07 PM UTC

aminok wrote: post #85

JoeAltmaier wrote: post #71

Earlier quoted context omitted.

I'm worried as you are. That silicon valley snobs will ignore a thousand years of learning, just to spite 'the man'. We've seen abominable cheating, lying and abuses in virtual currency systems - that surpass anything physical currency systems have experienced, in that they happen at the speed of the internet if nothing else.

I don't believe people should be banned from doing a whole host of things to ostensibly prevent cheating and fraud. The faith you have in centralised authority is extremely dangerous and leads to things like the multi-trillion dollar LIBOR scandal. Unlike with a market system, industries centralised through thousands of regulatory bans cannot evolve because they are typically dominated by a small number of super-gian…

No faith; just experience. Virtual currencies are unregulated, and behave like it. That sort of system got us the great depression and numerous recessions.

I appreciate some supporters are there for good reasons; 'snob' may be too strong a word. But it's naïve to believe a pure unregulated market is a good idea, especially one that responds at the speed of light.

And where did that comment about banning bitcoin come from?

Re: Why the practical applications of Bitcoin will be limited

#88

Post by aminok » Wed, Mar 04, 2015, 9:12 PM UTC

jedunnigan wrote: post #55

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…

Transactions not having to propagate across the network a second time in blocks is certainly nice, but that doesn't solve all the problems of large blocks. As you said, that proposal is focused on maintaining an incentive for miners to create large blocks without having to worry about orphan races. All full nodes still need to process everyone else's transactions, so bandwidth requirements are still hefty, just not s…

It doesn't follow that if there are 6500-7000 nodes now, there will be fewer with larger blocks. If larger blocks allow for a larger economy, there will also be more candidates for running full nodes. Things are different when the percentage of world population using Bitcoin increases from 0.01% to 20%. Spent tx pruning, which has not yet been implemented, can also help increase full node count. From what I've seen, projections on how the block size will affect full node count don't take this into account.

tl;dr: optimizations like pruning, combined with a much larger economy, could result in a far higher full node count under a large-block-size scenario than there is now.

Re: Why the practical applications of Bitcoin will be limited

#89

Post by TheCoelacanth » Wed, Mar 04, 2015, 9:17 PM UTC

placeybordeaux wrote: post #83

TheCoelacanth wrote: post #82

Earlier quoted context omitted.

Did you read the article? If you accept his conclusions, then long term even using bitcoin for $1 transactions much less for $0.000001 isn't economically feasible since he proposes that the true cost of a bitcoin transaction is ~$10.

Thats for transactions on the main block chain. For true micro transactions there are a multitude of options for increasing throughput or decreasing latency.

But that wouldn't be bitcoin anymore. It would be a different crypto-currency.

Re: Why the practical applications of Bitcoin will be limited

#90

Post by aminok » Wed, Mar 04, 2015, 9:18 PM UTC

sharpneli wrote: post #48

NoMoreNicksLeft wrote: post #20

> At the same fee level, transaction count must increase 250 folds. Or, How is this not plausible, given how few transactions must occur there?

The transaction count can only increase if they allow the block size to increase. Right now it's 1MB at maximum. The community is torn about the issue so it's an open question if it will ever happen.

Almost everyone agrees with the 1 MB block size limit being removed, and replaced with something else. The only question is what it will be replaced with.