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

Re: Why the practical applications of Bitcoin will be limited

#101

Post by aminok » Wed, Mar 04, 2015, 11:08 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…

There's nothing wrong with the developed world providing a service to the developing world. It's a symbiotic relationship, as both are better off from the arrangement. Mining farms in the developed world giving Somalians in the developing world a secure currency that can't be expropriated, and lets them receive international remittance at a fraction of the fees they paid before, is a good thing.

With respect to fairness, what's important is the characteristics of the framework within which the resource is used, that enable rent-seeking. With Bitcoin, each individual is their own bank. They control their own private key, meaning access to money is not intermediated by rent-seeking third parties with their lock-ins and closed networks.

Mining is ultra-competitive, because there are no barriers to market entry to the open mining network, ensuring transaction fees are driven down to the maximum extent possible. The algorithmic money supply ensures that no powerful organization and its host of satellite institutions can inflate the currency on a perpetual basis, to slowly the tax the people over generations.

Any way you look at it, Bitcoin is a force for distributing power and control, by eliminating the roles of rent-seekers.

Re: Why the practical applications of Bitcoin will be limited

#102

Post by dmihal » Wed, Mar 04, 2015, 11:12 PM UTC

stcredzero wrote: post #42

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…

You know why I would prefer a decentralized trustful solution like OpenBazaar? Because eBay bends me over with fees. In fact, they double dip. And there's nothing I can do about it. Isn't that why established players will mostly prefer not to use decentralized currency? Won't the network effect always relegate things like Bitcoin to the fringes?

Market leaders don't have as much incentive to adopt Bitcoin, but competitors do

Look at Amazon and Overstock. Amazon doesn't need to implement Bitcoin to be successful, but Overstock was able gain some market share by accepting it

Re: Why the practical applications of Bitcoin will be limited

#103

Post by frozenport » Wed, Mar 04, 2015, 11:21 PM UTC

aminok wrote: post #100

frozenport wrote: post #92

Earlier quoted context omitted.

Your post mentions nothing about the necessity of inflation for economic recovery and growth. Indeed is has nothing to do with economics, just listing difficulties for regulators. You bring up the internet but remember that it is goverment regulator who protect and enforce Net neutrality - not Comcast.

Hardly anyone thinks Bitcoin is going to displace national currencies. In a Bitcoin success scenario, bitcoin would be an additional currency that co-exists with inflationary currencies. As governments will always retain the power to tax, their currencies will always have value, and they will always be able to spur activity through inflationary monetary policy. " You bring up the internet but remember that it is gove…

>>The telecommunication industry naturally gravitates to a oligopoly, because it provides a utility.

Facebook tried to brand itself as a utility. Is my grocer a utility, I need food as much as I need water? I don't know what makes utilities prone to monopolies, but it probably the large investment and slow payoff - this is true of things that aren't traditionally called utilities like pharmaceutical companies, oil wells, or defense systems. These guys could use a good 'regulating.

Indeed, everything gravitates towards a monopoly as it maximizes shareholder value at the expense of the large economic community, this is was recognized by antitrust regulations in the 1890s which aimed to promote capitalism.

>>If the internet itself had been subject to thousands of regulatory bans

Yeah but it wasn't, perhaps because they regulators didn't fail. In many ways this is a success story.

Regulation is necessary, you can debate the merits of a particular method, you can say some regulation is bad or some is good but remove the goverment ability to regulate currency leaves the economy vulnerable deflation during recession which is has been attributed to the recession of the 1930s.

Will high credit card transaction fee's plunge civilization into a new dark age?

Re: Why the practical applications of Bitcoin will be limited

#104

Post by aminok » Wed, Mar 04, 2015, 11:48 PM UTC

frozenport wrote: post #103

aminok wrote: post #100

Earlier quoted context omitted.

Hardly anyone thinks Bitcoin is going to displace national currencies. In a Bitcoin success scenario, bitcoin would be an additional currency that co-exists with inflationary currencies. As governments will always retain the power to tax, their currencies will always have value, and they will always be able to spur activity through inflationary monetary policy. " You bring up the internet but remember that it is gove…

>>The telecommunication industry naturally gravitates to a oligopoly, because it provides a utility. Facebook tried to brand itself as a utility. Is my grocer a utility, I need food as much as I need water? I don't know what makes utilities prone to monopolies, but it probably the large investment and slow payoff - this is true of things that aren't traditionally called utilities like pharmaceutical companies, oil we…

>Facebook tried to brand itself as a utility.

However it's not. Its social network is neither a necessity to join nor impossible to compete against.

Utilities are those things we traditionally call utilities, like electricity, water, telephone line and nowadays, an internet line. It's the combination of high capital costs and the limited geographical scope of users per capital project, that makes the market naturally uncompetitive.

>Indeed, everything gravitates towards a monopoly as it maximizes shareholder value at the expense of the large economic community,

In a free market, only utilities gravitate to a monopoly. Other sectors are open to competition, which periodically causes the market leader to be displaced. We've seen this in tech for decades. First it was IBM, then it was Microsoft, then Google, for a brief time Apple, and next who knows.

>Regulation is necessary, you can debate the merits of a particular method, you can say some regulation is bad or some is good but remove the goverment ability to regulate currency leaves the economy vulnerable deflation during recession which is has been attributed to the recession of the 1930s

The 1930s recessions was not primarily due to monetary policy. You can look at the crash of 1921 to see that sharp deflation does not lead to a bottomless downward spiral. The 1930s were a testbed for interventionist policy. It was these policies that kept the economy depressed and suppressed capitalist recovery. Not any dearth of controls by the government.

Deflation itself can only exist when creating competing currencies is prohibited. What the Federal Reserve Act in the US, and similar regulations in other countries in that period, did, is outlaw competing bank notes. It created a banking cartel, with a fragile monetary mono-culture.

So no, regulatory bans are not needed. They are harmful, and unethical. No one has a right to ban an activity that is consensual.

>Will high credit card transaction fee's plunge civilization into a new dark age?

Depends, will competition emerge, or will it be sabotaged by the complicated set of bans that is our regulatory system? E-gold eventually succumbed to the bans, but Bitcoin and its decentralized structure look to be more immune.

MasterCard in Asia certainly hopes the government will step in with more regulations to stop Bitcoin:

http://www.coindesk.com/mastercard-executive-argues-bitcoin-...

He's counting on people like you buying the argument that freedom doesn't work, and the greater economy shouldn't be left free of regulatory bans like the internet was.

Re: Why the practical applications of Bitcoin will be limited

#105

Post by Retra » Thu, Mar 05, 2015, 12:15 AM UTC

lsadam0 wrote: post #21

etchalon wrote: post #9

Earlier quoted context omitted.

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

I believe both sides of the aisle hold some responsibility for this disconnect. Detractors of cryptocurrency often like to cite the shady world of BitCoin securities, just like this article does. However, that's not a valid criticism. BTC functioned only as the method of payment. You can't criticize the future utility of a technology based upon how someone has misused it. If that were the case, we should ban the Inte…

I think the bigger picture here is that there is a serious worry that bitcoin will benefit those who participate in illegal activities far more than those who do not -- that it offers an advantage that most legal activities don't require or value heavily.

Re: Why the practical applications of Bitcoin will be limited

#106

Post by lsadam0 » Thu, Mar 05, 2015, 1:04 AM UTC

Retra wrote: post #105

lsadam0 wrote: post #21

Earlier quoted context omitted.

I believe both sides of the aisle hold some responsibility for this disconnect. Detractors of cryptocurrency often like to cite the shady world of BitCoin securities, just like this article does. However, that's not a valid criticism. BTC functioned only as the method of payment. You can't criticize the future utility of a technology based upon how someone has misused it. If that were the case, we should ban the Inte…

I think the bigger picture here is that there is a serious worry that bitcoin will benefit those who participate in illegal activities far more than those who do not -- that it offers an advantage that most legal activities don't require or value heavily.

I must give you credit, this is very well said. This is a legitimate concern. I feel as though this is what others have been attempting to say when using the "illegal activities" argument.

Re: Why the practical applications of Bitcoin will be limited

#107

Post by vanzard » Thu, Mar 05, 2015, 1:06 AM UTC

sharpneli wrote: post #84

vanzard wrote: post #75

Earlier quoted context omitted.

> 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 bitco…

> If the price stays down the transactions must go 250x.

I understand you now. That's right. But my point was the price is unlikely to stay down... Anyway this debate of whether the price will go down or up is a little silly: even assuming the price stays down it will literally take DECADES for the network to "need" to increase the tx/block by 250x to maintain the same level of security. The bitcoin reward is halved every ~4 years, so we only need the tx/block to double every ~4 years to maintain the same level of security. So far Bitcoin as MORE than met this need: the tx/block has more than doubled every year since its creation.

> I didn't say this is necessarily the end of bitcoin

You were saying you did not believe the price drop would stop. Now you are saying it will quite likely stagnate. That's quite a different statement.

> It's just that the raw numbers which we do have show that it's not really doing that well. > [...] > The fact that only hard numbers which we do have show poor adoption indicates that it's the same elsewhere.

Yes we know that for merchants accepting Bitcoin, it represents an incredibly tiny fraction of their total sales. But why do you think this means Bitcoin is not doing well? A brand new payment technology unlike anything else going from zero to representing 0.1% of the sales of 100,000 merchants worldwide is a significant accomplishment in my opinion. I say 0.1% because 0.x% seems to be approximately what the average merchant reports. For example Overstock reported 0.2% of their sale revenues were in bitcoins for 2014.

Also why do you extrapolate your single anecdote (WordPress shutting down Bitcoin sales) to an industry-wide trend? Why do you ignore 3 other anecdotes that contradict your opinion (Overstock consistently doing 0.2% of their sales in bitcoins = $3 million/year so they are far from stopping to accept bitcoin, Newegg reporting their best bitcoin black friday sales in 2014, Gyft reporting the same)? Why do these 4 anecdotes, whether positive or negative, matter at all, when I showed you more indirect metrics (avc.com) that obviously show strong overall adoption? The avc.com metrics may not show actual bitcoin sales figures, but clearly they indicate something.

To answer your question: I think BitPay and Coinbase don't release current numbers of Bitcoin payments processed because this is sensitive financial data for competitors. But surely VCs wouldn't be pouring tens of millions of dollars in them if they showed no growth, don't you think?

Re: Why the practical applications of Bitcoin will be limited

#108

Post by ForHackernews » Thu, Mar 05, 2015, 2:18 AM UTC

lsadam0 wrote: post #94

ForHackernews wrote: post #91

Earlier quoted context omitted.

Maybe you should clue in the rest of the bitcoin community, e.g. http://www.reddit.com/r/Bitcoin/comments/1f2ubh/why_bitcoins... > 3) No fraud or charge-back (from a seller/business PoV). > 13a) Potentially, because of the profit from no fraud and the deflationary nature of Bitcoin. Vendors will realise they can lower their prices for Btc purchases. And when inflation ends, due to no fraud, they will still be able to…

The OP, BitcoinJobe, goes on in the comments of your link to clarify the statement is that there are not fraudulent chargebacks in Bitcoin. He's right. There aren't. You can't make a bitcoin purchase, receive the item, and then get your money back through a charge back. He's right on both points. Fraudulent chargebacks are a legitimate concern for sellers, and I assure you that loss is reflected in the selling price…

Maybe you should read more carefully.

> No fraud OR charge-back

Strongly implies those to be two different things. You write "Fraudulent chargebacks", talking about a single thing, a specific kind (fraudulent) of chargeback. You also neglect to mention that bitcoin eliminates fraudulent chargebacks by just not having chargebacks at all. Which is a bit like celebrating North Korea eliminating voter fraud.

This kind of thing is everywhere in the bitcoin community: Make absurd, grandiose claims ("be your own bank!", "bitcoin is the future of money", "totally decentralized!" [except for the giant central ledger of all transactions]). And then whenever you get called out on it, you'll retreat to some more limited, defensible argument, and claim that's what you were really talking about all along.

There's a name for this kind of rhetoric, it's a "motte-and-bailey" argument: http://philpapers.org/archive/SHATVO-2.pdf

Re: Why the practical applications of Bitcoin will be limited

#109

Post by innguest » Fri, Mar 06, 2015, 4:04 PM UTC

Frondo wrote: post #67

post- wrote: post #35

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. 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…

I like your ideas about the colonial aspects of Bitcoin in the developing world. That is an angle I haven't heard anyone else mention before. It pairs nicely with another critique I don't often see, that Bitcoin is undemocratic; there are economic assumptions baked in that, if it were a government-backed money, people could discuss, vote on, and ultimately change. With bitcoin, there is no way that the people whose l…

That Bitcoin is undemocratic is a good thing. Look around in the world at what democracy has done to currency. Not a single democratic currency has withstood the test of time. It's time for a different approach.

Re: Why the practical applications of Bitcoin will be limited

#110

Post by Frondo » Sat, Mar 07, 2015, 7:57 PM UTC

innguest wrote: post #109

Frondo wrote: post #67

Earlier quoted context omitted.

I like your ideas about the colonial aspects of Bitcoin in the developing world. That is an angle I haven't heard anyone else mention before. It pairs nicely with another critique I don't often see, that Bitcoin is undemocratic; there are economic assumptions baked in that, if it were a government-backed money, people could discuss, vote on, and ultimately change. With bitcoin, there is no way that the people whose l…

That Bitcoin is undemocratic is a good thing. Look around in the world at what democracy has done to currency. Not a single democratic currency has withstood the test of time. It's time for a different approach.

I am unable to agree with the statement, "It is time for an undemocratic approach to money".