MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset • Hacker News Board

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#131

Post by CryptoPunk » Tue, Aug 11, 2020, 5:11 PM UTC

martinko wrote: post #89

CryptoPunk wrote: post #80

AFAICS, Bitcoin has a deeply flawed long-term security model. Its block reward, which constitutes a subsidy for its security budget, halves every four years. Unless the halving of the security subsidy is made up for by additional transaction fees, Bitcoin's security decreases. Given that Bitcoin blocks are full - with only a little space left for further optimizations via SegWit adoption and Schnorr signatures - tran…

Bitcoin's security does not need to keep going up indefinitely. It will reach an equilibrium where tx fees will be paying for the entire security of the network. As the block size is capped, there will be a market for fees. Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

My point is that with a limit of 300,000 or so transactions a day, Bitcoin's average transaction fee would need to be extremely high to match even the current security subsidy, much less one communsurate with a global reserve currency.

I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs.

>Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

I didn't say "remove". I said "raise".

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#132

Post by parasubvert » Tue, Aug 11, 2020, 5:11 PM UTC

nostrademons wrote: post #117

betterunix2 wrote: post #115

Earlier quoted context omitted.

"I doubt the USG will let itself go bankrupt." The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations…

I think that was the grandparent's point. The USG can always issue more currency and inflate away the value of its debt. Doing so is preferable to default (and the fiscal & political crisis that would bring), and so they will. Thus, we're going to get more inflation.

We watched one of the US political parties threaten default at least three times in the past 12 years.

I think creating political/fiscal crises is part of the point.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#133

Post by CryptoPunk » Tue, Aug 11, 2020, 5:15 PM UTC

snack_man wrote: post #96

CryptoPunk wrote: post #80

AFAICS, Bitcoin has a deeply flawed long-term security model. Its block reward, which constitutes a subsidy for its security budget, halves every four years. Unless the halving of the security subsidy is made up for by additional transaction fees, Bitcoin's security decreases. Given that Bitcoin blocks are full - with only a little space left for further optimizations via SegWit adoption and Schnorr signatures - tran…

Maybe CryptoPunks would be a store of value more your style ;-) https://www.larvalabs.com/cryptopunks

Since they rely on Ethereum's healthy and growing fee market, which provides it with a viable long-term security model, yes.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#134

Post by betterunix2 » Tue, Aug 11, 2020, 5:15 PM UTC

nostrademons wrote: post #124

betterunix2 wrote: post #109

Earlier quoted context omitted.

Actually you can buy a fraction of a house: https://en.wikipedia.org/wiki/REIT

Can't really live in a REIT though.

No, but the question was about assets, not housing. A house you own is an asset but your housing arrangement may not be (e.g. if you rent). So for example, a person might rent a place to live in and invest in a REIT to build real estate equity (assuming they specifically want such assets) if they cannot afford to buy an entire house (e.g. if they do not have the money to make a down payment).

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#135

Post by hyko » Tue, Aug 11, 2020, 5:20 PM UTC

xur17 wrote: post #128

hyko wrote: post #108

Earlier quoted context omitted.

https://bitcoin.stackexchange.com/questions/2027/how-does-th... Do you trust whoever happens to own xf2.org more than you trust a central bank? Do you trust the domain name registrar more than you trust a central bank? Why? You decide what code you run, not developers well, sure you can run whatever code you like on your machine...the Bitcoin devs get to decide whether your software counts as a Bitcoin client or not.…

You should read more about how the Bitcoin consensus protocol works.

The consensus protocol doesn’t help in removing either of these trust requirements?

If I own the mechanism of root node discovery, I can mount an effective Sybil attack against a new network participant.

The history of Bitcoin is full of hard and soft forks and changes to the rules. That’s why your original Bitcoin client wouldn’t even let you join the Bitcoin network now. The people in control of the network are in a position of immense power with minimal oversight. So on what basis should I trust them with my life savings? What recourse do I have if they ruin my life?

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#136

Post by betterunix2 » Tue, Aug 11, 2020, 5:21 PM UTC

sudosysgen wrote: post #130

betterunix2 wrote: post #105

Earlier quoted context omitted.

The flip side is somewhat problematic: if the Fed needed to remove money from the economy (e.g. because inflation exceeded the target rate), they would have to take money away from everyone equally. It is easy to forget that the Fed's mission is to stabilize the value of money, not to conform to some concept of fairness. I would also point out that instability in the value of money disproportionately impacts the poor…

Thing is, we already have a mechanism for removing money from the economy that isn't controlled by the Fed - taxation. If there's too much money, you can always increase taxes.

The difference is that taxation is subject to political forces, and politicians may not be able to pursue an unpopular policy that stabilizes the value of money. The Fed is mostly immune to short-term political needs and often pursues unpopular actions to meet its objectives.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#137

Post by gizmo686 » Tue, Aug 11, 2020, 5:24 PM UTC

martinko wrote: post #89

CryptoPunk wrote: post #80

AFAICS, Bitcoin has a deeply flawed long-term security model. Its block reward, which constitutes a subsidy for its security budget, halves every four years. Unless the halving of the security subsidy is made up for by additional transaction fees, Bitcoin's security decreases. Given that Bitcoin blocks are full - with only a little space left for further optimizations via SegWit adoption and Schnorr signatures - tran…

Bitcoin's security does not need to keep going up indefinitely. It will reach an equilibrium where tx fees will be paying for the entire security of the network. As the block size is capped, there will be a market for fees. Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

Assume a block size limit of 4MB.

The minimum transaction size is 166 bytes.

This gives us maximum 25266 transactions/block.

The current block reward is 6.25 https://blockchair.com/tools/halving-countdown

This is worth about $72,000 USD https://duckduckgo.com/?q=6.250+BTC+to+usd&t=canonical&ia=cu...

This means that, to match current security without block rewards, transaction fees would need to rise by at least $2.84/transaction.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#138

Post by xur17 » Tue, Aug 11, 2020, 5:27 PM UTC

hyko wrote: post #135

xur17 wrote: post #128

Earlier quoted context omitted.

You should read more about how the Bitcoin consensus protocol works.

The consensus protocol doesn’t help in removing either of these trust requirements? If I own the mechanism of root node discovery, I can mount an effective Sybil attack against a new network participant. The history of Bitcoin is full of hard and soft forks and changes to the rules. That’s why your original Bitcoin client wouldn’t even let you join the Bitcoin network now. The people in control of the network are in…

> That’s why your original Bitcoin client wouldn’t even let you join the Bitcoin network now.

You can run whatever client you want.

> If I own the mechanism of root node discovery, I can mount an effective Sybil attack against a new network participant.

But you wouldn't be able to replicate a chain of blocks with the same order of magnitude of work behind them. And then, even if you could, all you'd be able to do is change history, with the depth of that history dependent upon how much mining power you had available. You wouldn't be able to spend other people's money or give yourself more.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#139

Post by betterunix2 » Tue, Aug 11, 2020, 5:27 PM UTC

nostrademons wrote: post #117

betterunix2 wrote: post #115

Earlier quoted context omitted.

"I doubt the USG will let itself go bankrupt." The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations…

I think that was the grandparent's point. The USG can always issue more currency and inflate away the value of its debt. Doing so is preferable to default (and the fiscal & political crisis that would bring), and so they will. Thus, we're going to get more inflation.

There was nearly a technical default just last year, and the US has actually defaulted on its debt in the past. Politicians do not always behave rationally.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#140

Post by nextweek2 » Tue, Aug 11, 2020, 5:29 PM UTC

this_user wrote: post #114

f00zz wrote: post #70

Earlier quoted context omitted.

> go through another bubble I don't know. I remember a few years ago when people on reddit would get excited when some cafe in Bratislava or wherever started accepting bitcoin, or when Steam started accepting bitcoin. Now cryptocurrencies seem... boring. I see lots of people talking about "store of value", but actual use of bitcoin for what it was intended seems to be decreasing. And now people who want to gamble can…

All of the previous Bitcoin bubbles were driven by by new, larger group of people discovering it, and driving prices higher. Hence, any new bubble would require such a new group of buyers to appear. The question is whether that group even exists. Because in 2017 Bitcoin, arguably, went as mainstream as it could go with full-on regular MSM coverage, and most people seem to have heard about it by now. So, who is there…

> who is there to buy

Pension funds and other financial institutions. These were either locked out or didn't believe in bitcoin. If you were a Pension fund now you're probably keeping an eye on the space to help your returns.