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Bitcoin Sees Wall Street Warm to Trading Virtual Currency

nytimes.com

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Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#51

Post by cslarson »

hudon wrote: post #9

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing pay…

> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars

Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but unfortunately the kind of throw away comment that gets voted to the top of an hn thread. what a sad place this is!

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#52

Post by mvindahl »

VMG wrote: post #49
mvindahl wrote: post #42

Earlier quoted context omitted.

Further advantages of gold over bitcoin: 1) Has been used for millennia. Bitcoin was invented ten years ago. 2) Accepted as valuable by most of human population. Bitcoin mostly as valuable within internet echo bubbles. 3) Although price fluctuates, it's more stable than that of bitcoin, thus better suited as store of value. 4) Has applications for industrial uses or for jewelry, guaranteeing that your gold retains at…

> 5) Doesn't corrode and doesn't depend upon hardware or storage media to be working. Bitcoin corrodes? You can encode your private keys in Gold if you want to.

Well, the whole thing is computer data, stored on media. Already these days it's hard to find hardware to read the 5.25" floppy disks that I stored my code on in the late 1980s, and that's just three decades. Preserving digital data is a continuous effort.

And yeah, you can encode your private keys in gold, and I kind of think that everyone should do that, to keep future archaeologists puzzled :-P

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#53

Post by lrvick »

doug3465 wrote: post #17
hudon wrote: post #9

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing pay…

Proof of Stake is the answer.

There is even -less- evidence this can actually work at large scale without becoming centralized. By design the rich get gradually richer via staking and once enough nodes/coins are controlled by a single party they can change the rules of the network.

Maybe social dynamics work out to avoid this, but humans have a long history of trending towards various forms of plutocracies.

One of the reasons Ethereum forked was to avoid a single party (the DAO thief) controlling far too large a portion of the total ether which has big consequences in a future with PoS.

Are we going to continue fork networks every time one party gets too rich? We could. Unless of course that party is pretending to be many individuals and we can't tell. Hard to stop this without deanonymization and a loss of censorship resistance. To be fair PoW suffers similarly from mining power all clustering in cheap electricity areas and thus players like Bitmain have a scary amount of centralized control.

I am skeptical of PoW long term without much better globally distributed use of renewalable energy. PoS by dropping this anchor to the physical world seems even crazier.

I am however somewhat optimistic about Bram Cohen's "Proof of space and time" in his "Chia" project which attempts to move the PoW problem from proof of expended electricity to proof of burned disk space, which feels inherently greener and easier to geographically distribute.

Or neither of these PoW alternatives work and the lessons learned from them empower as of yet unknown innovations. Exciting times to be sure.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#54

Post by jaredklewis »

cslarson wrote: post #51
hudon wrote: post #9

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing pay…

> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but…

Some of those projects sound very interesting, but potential and actual productive output are very different things. They have potential. But you can't pretend like BAT, for example, is out there revolutionizing the ad industry, because it isn't yet. I can't even find Brave market share numbers, but I am confident they are miles away from even reaching 1%. It has potential, sure, but that's a long way from the real thing.

Same for the others. Golem is a nice idea with a lot of potential, but as of right now, Azure, AWS, and GCE are where programmers go for rentable computer power. Maybe one day that place will be golem. Maybe not. Right now it is all just potential.

I think part of the parent's point is the potential of crypt-currencies is often touted, but so far little has been shown in actual results. How long until there are actual results?

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#55

Post by tobiaswk »

In all fairness the Bitcoin, BTC, is currently close to unusable and scales very bad. It quickly gets oversaturated with transaction and transaction fees rise quick. I think the conspiracy has come full circle. Those who slowly "threw sand in its engine" has done a great job. Why are transaction fees low today? Because no one, or a lot less, is using BTC. I know some will label me as a conspiracist. I've been following this project since early 2011 and it has derailed badly. The community is a toxic mess. On both sides to some extent. I'm interested in how they will do this trading. Off-chain or on-chain.

Bitcoin Cash, BCH, though is very interesting. It conforms to the original idea (whitepaper) much better in my opnion. No second layer nonsense "solutions". A simple block size limit increase (again) and enablement of Op-Codes (again). All coming 15th of May. The very reason to why Ethereum was created by Vitalik was because Op-Codes usage was too limited on BTC. This changes with BCH; Op-Codes will be back and open for smart contracts. Lots of merchants and people are beginning to use BCH. Because it is fast (0-conf works again) and has close to zero transaction fees. It's the project I began following early 2011.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#56

Post by lrvick »

tobiaswk wrote: post #55

In all fairness the Bitcoin, BTC, is currently close to unusable and scales very bad. It quickly gets oversaturated with transaction and transaction fees rise quick. I think the conspiracy has come full circle. Those who slowly "threw sand in its engine" has done a great job. Why are transaction fees low today? Because no one, or a lot less, is using BTC. I know some will label me as a conspiracist. I've been followi…

Bitcoin fees were cut in half on a technical level by those that chose to adopt segwit which made transactions roughly half as big. Schnoor signatures can further compress transactions to get even more in a block.

If in spite of these innovations blocks end up full, a block size increase is still a tool kept in reserve.

In reality BCH did not make any hard won technical innovations and simply reached for the bigger blocks knob. If BCH did become the globally adopted winner its blocks would fill and create a fee market eventually too driving it to seek the same sorts of transaction size optimizations bitcoin has made. These roads might well converge in a similar place eventually.

I strongly suspect Layer 2 solutions are going to be needed regardless of the knobs fiddled on an expensive but immutable Layer 1 so we might as well all buckle up for that. Plus, atomic swaps in Lightning pave the way for decentralized exchanges which means even better anonymization and censorship resistance. Everyone wins with a stable Layer 2 most major coins are compatible with.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#57

Post by kalms »

thisisit wrote: post #34

I wonder how does the cryptocurrency community react to such news? Because lot of people holding cryptocurrencies tend to talk about how these coins are going to destroy big banks and Wall Street.

I think the community is fine with it, if not outright wishing for it.

Institutional money can add a big boost to crypto, although it in turn provides amble opportunity to control the market. Which they're probably already doing to some extent.

We'll see how it plays out, but I'm pinning my hopes on tokens and networks provided by Ethereum, EOS or similar.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#58

Post by cslarson »

jaredklewis wrote: post #54
cslarson wrote: post #51

Earlier quoted context omitted.

> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but…

Some of those projects sound very interesting, but potential and actual productive output are very different things. They have potential. But you can't pretend like BAT, for example, is out there revolutionizing the ad industry, because it isn't yet. I can't even find Brave market share numbers, but I am confident they are miles away from even reaching 1%. It has potential, sure, but that's a long way from the real t…

Sure, if these projects were already blow away successes and completely disrupted their respective markets we wouldn't (hopefully!) be having this conversation. And I agree that skepticism is warranted here but at least with regard to Ethereum it is way overblown here on hn. Even if these projects haven't fully proven themselves yet what I think they do show is the strength and merit of the platform that has made them possible.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#59

Post by tobiaswk »

lrvick wrote: post #56
tobiaswk wrote: post #55

In all fairness the Bitcoin, BTC, is currently close to unusable and scales very bad. It quickly gets oversaturated with transaction and transaction fees rise quick. I think the conspiracy has come full circle. Those who slowly "threw sand in its engine" has done a great job. Why are transaction fees low today? Because no one, or a lot less, is using BTC. I know some will label me as a conspiracist. I've been followi…

Bitcoin fees were cut in half on a technical level by those that chose to adopt segwit which made transactions roughly half as big. Schnoor signatures can further compress transactions to get even more in a block. If in spite of these innovations blocks end up full, a block size increase is still a tool kept in reserve. In reality BCH did not make any hard won technical innovations and simply reached for the bigger b…

That's my point. BCH did not include some technical innovations like you stated. It simply increased hardcoded block size limit. Simple as that. Even Satoshi himself mentions this in his whitepaper. Other stuff has also changed. The difficulty adjustment (DAA) algorithm has changed to allow are more stable difficulty for miners. Segwit just changed what parts of a transaction counted as size in a block. In reality we're talking about 200KB or thereabouts extra space in blocks. Lightning network is based on a mesh-network. Furthermore it completely changes the bitcoins fundamental clockwork. Suddenly you can't receive payments if you don't hold any coins yourself. Even more detrimental; you can't receive payments if you are not online on the lightning network. It has several other flaws that are very hard to fix; https://medium.com/@jonaldfyookball/mathematical-proof-that-....

I suggest you see this presentation on 1GB blocks (tested on test-net) by Peter Rizun; https://www.youtube.com/watch?v=5SJm2ep3X_M And his talk at "Satoshi's Vision" (here he talks about what is called "weak blocks" and how it can improve scaling and wasted PoW; https://www.youtube.com/watch?v=yXFuNkaYcPQ

It's totally feasible and does not require super computers albeit a Raspberry Pi won't do no more. Scaling to VISA level of transactions is possible. I don't think it's really going to change too much in computing power with bigger blocks. The size of the merkle root won't change just because blocks are larger which means the block header size won't change.

Why do you suspect a second-layer is needed?

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#60

Post by BenoitP »

hudon wrote: post #9

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing pay…

> Bitcoin's transaction throughput is dismally low

A discussion on this cannot take place without a mention of the lightning network.

The vast majority of transaction have a low stake. Most amounts are fairly low, people respect the fact they have parted from some value. Using such a highly price consensus seems like overkill. What you want is to concentrate on the litigious ones, on the higher amounts; while still securing the rest.

This is exactly what is happening in the lightning network smart contract. Bitcoins are taken apart in a channel, and people can do their business as usual. The protocol concentrates the stakes in a single on-chain transaction; with a tremendous pressure in not settling on the last channel state. It sorts of changes the transaction representation space to its dual. From a white-list of all approved transactions -and nothing else- to a black-list of misbehaving business relations -all other consented transactions being allowed-.

Bitcoin's 7 transactions per second is demultiplied by some order of magnitude here. That represents about 3 channels per second. 3 licenses to indefinitely transact up to a certain balance.

The lightning network is about rationalizing the use of this high-priced consensus.

----

As for the electricity consumption, I'm of the opinion that the halvenings will take care of that; In 10 years, the reward will have diminished by about an order of magnitude.

Bitcoin gained too much popularity too quickly if you ask me. I think a super-exponential difficulty adjustment would have been better suited (make it require an exp(x\^2) hash rate instead of exp(x)).

The growth of Bitcoin is capped exponentially, as it is based on human adoption. Only something super-exponential can regulate this properly.

But IMHO, this is only a slight inconvenience. We'll waste electricity but only in the next few years.

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