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Bitcoin surpasses $50K as major companies jump into crypto

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Re: Bitcoin surpasses $50K as major companies jump into crypto

#651

Post by graeme »

bhupy wrote: post #593
opportune wrote: post #576

Earlier quoted context omitted.

Just curious, from the perspective of the borrower, what is the purpose of an overcollateralized loan? If their collateral is just as liquid as their loan, why even take the loan at all?

Super good question, I was perplexed by this myself. Basically what this financial instrument allows the borrower to do is maintain exposure to appreciating crypto assets while still leveraging its value for day to day spending. For example, suppose you owned $1500 worth of BTC. Suppose you’re also bullish on BTC and expect it to appreciate, say 2x in a year. If you liquidated the $1500 to buy a MacBook or something,…

What use case does that have other than crypto currency speculation though? Most loans serve some sort of function in the economy.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#652

Post by ahnick »

evilos wrote: post #637
ahnick wrote: post #448

Earlier quoted context omitted.

If BTC is the only currency and everyone is transacting in BTC, then people are incentivized to hold BTC. Now that everyone is holding BTC, the value of their holdings are increasing alongside everyone else holding BTC. If you go into the store to buy items you will notice that the price in BTC terms will be decreasing b/c more BTC can't be "printed". (Each BTC is worth a lot now and continually increasing, but at a…

That is deflation and is intentionally avoided by central banks because you don't want people to hoard their money. Hoarded money sits there and does nothing while money that is in banks can be lent out, invested, and be useful.

It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves.

If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need or really want those things and will be willing to trade bitcoins in exchange for those goods. Practically, Bitcoin is unlikely to be the dominate currency allowed in countries to participate in transactions without incurring significant taxes, so likely people will store wealth in Bitcoins(or other cryptocurrencies) and then convert to fiat currencies as they need to make their purchases.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#653

Post by noch »

ahnick wrote: post #448
sytelus wrote: post #258

Earlier quoted context omitted.

BTC cannot be stable, even eventually. There is no way to increase the BTC supply so when productivity increases, prices of goods (expressed in BTC) will always go up. Assume that BTC is the only currency and world productivity goes up 6% each year, or 0.5% each month. Then when you go in store to buy apple, you will see price gone up by 0.5% than previous month because there is no way to increase money supply. One o…

If BTC is the only currency and everyone is transacting in BTC, then people are incentivized to hold BTC. Now that everyone is holding BTC, the value of their holdings are increasing alongside everyone else holding BTC. If you go into the store to buy items you will notice that the price in BTC terms will be decreasing b/c more BTC can't be "printed". (Each BTC is worth a lot now and continually increasing, but at a…

> [...] all the way until the lower unit bound, which is a satoshi (0.00000001 BTC), is reached. If we ever reach that point in our lifetime the code will need to be forked to upgrade the protocol to handle further subdivisions.

No fork necessary. We can already use millisatoshis on L2.

https://lightningwiki.net/index.php/Denominations

Re: Bitcoin surpasses $50K as major companies jump into crypto

#654

Post by ohgodplsno »

whoanow wrote: post #624
tsimionescu wrote: post #618

Earlier quoted context omitted.

Bitcoin consumes more electricity than entire countries - more than the Czech Republic for example. It consumes a third (or was it a fifth?) of all the electricity of all data centers in the world. It is by no means insignificant.

If bitcoins price continues to rise, miners will be greatly incentivized to further decrease power costs. I hope this leads to innovation in clean power tech, especially in developing nations.

Right. 60% of the hashrate in China, where 60% of the power comes from coal, to mine a useless coin.

If miners could burn cyanide to mine, they would. They don't give a single shit about clean energy, just cheap energy

Re: Bitcoin surpasses $50K as major companies jump into crypto

#655

Post by dragontamer »

efwfwef wrote: post #590
dragontamer wrote: post #531

Earlier quoted context omitted.

But if it's off chain, why use Bitcoin at all? If you never actually use the blockchain, then you don't really know if those BTC you 'bought' even exist.

The same reason why when you use Venmo you don't think "wait, why use USD at all if it's all a database?" The truth is, the current financial system is just a large number of databases trying to sync with one another, and one of cryptocurrencies' goal is to decrease this amount of databases.

> and one of cryptocurrencies' goal is to decrease this amount of databases.

And replace them with one of the biggest wastes of electricity?

What's the point of "getting rid of databases", when you end up needing them for something as fundamental as an BTC/USD exchange anyway?

Re: Bitcoin surpasses $50K as major companies jump into crypto

#656

Post by Sinbe »

azinman2 wrote: post #453
bhupy wrote: post #281

Earlier quoted context omitted.

I'm also still wrapping my head around this just like you, but I think I understand enough to answer some of your questions. > We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce. I don't think that this is obviously true. Digital transfer of the US Dollar is similarly slow and expensive (see: ACH, Wire, SWIFT). The response you'll hear the most frequently is that BTC (an…

> Digital transfer of the US Dollar is similarly slow and expensive And with ACH, wires, swift, the slowness is a feature not a bug. It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice. But as you said people aren't doing this with BTC -- and if they're not, then this removes one of the use cases that would warran…

There is the reflexivity of bitcoin's network effect. The more institutions adopt bitcoin, the more stable it is, and hence more institutions will want to adopt it.

Bitcoin won't be a unifying currency. It behaves like a commodity, and commodities prices can swing wildly - remember negative crude oil prices last year?

Re: Bitcoin surpasses $50K as major companies jump into crypto

#657

Post by Sinbe »

azinman2 wrote: post #453
bhupy wrote: post #281

Earlier quoted context omitted.

I'm also still wrapping my head around this just like you, but I think I understand enough to answer some of your questions. > We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce. I don't think that this is obviously true. Digital transfer of the US Dollar is similarly slow and expensive (see: ACH, Wire, SWIFT). The response you'll hear the most frequently is that BTC (an…

> Digital transfer of the US Dollar is similarly slow and expensive And with ACH, wires, swift, the slowness is a feature not a bug. It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice. But as you said people aren't doing this with BTC -- and if they're not, then this removes one of the use cases that would warran…

> But you also ignore ACH/wires/credit cards and all the ways most money moves today. What is the fundamental issue there that Bitcoin solves?

Regarding this point, Bitcoin solves the freedom to move capital. People in the U.S. under-appreciate this freedom. I'm from a country with strict capital control, very very difficult to move money outside the country, it's hard even to convert local currency to USD.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#658

Post by MarkMc »

kerng wrote: post #336

Bitcoin has been around for a while now and it has been down talked quite a bit on HN whenever it comes up. It now has a larger market cap as Facebook - so the market sees more value in Bitcoin than Facebook. The sentiment on HN seem still be mostly against it whenever it comes up. I wonder why that is? I'd imagine 10 years from now Bitcoin will still be around and likely much larger than today - I'm less positive ab…

I'm a skeptic, as I would certainly prefer to hold $10,000 of FB shares than $10,000 worth of Bitcoin.

The problem is that Bitcoin is not productive, so it only makes sense to own it if someone will pay more for it in future. But how do I estimate that without any long-term price history? I can see that the demand for gold increased in, say, 7 of the last 10 decades so that would give me some confidence about demand over the next decade.

So to answer your question: the only thing I can see that will change my opinion of Bitcoin is if demand generally increases over many decades.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#659

Post by 1ark »

sethammons wrote: post #147
superbcarrot wrote: post #28

Does anyone else feel like: - they've missed an opportunity to get rich with minimal effort from crypto - still have absolutely no interest in jumping in at this point?

Haha, yes. In 2011, a guy on my team was all about bitcoin and dogecoin and such. I think bitcoin was like 11 cents a coin, or maybe a dollar by that point. I just plain didn't get it. Still barely do. I could have easily picked up a few hundred dollars of coin or, if I was a believer, a grand or two. Had I held onto it, I would be worth hundreds of millions of dollars. However, if I got in at 10 cents, I would have…

Most important part of the story, where is the guy on your team now?!

Re: Bitcoin surpasses $50K as major companies jump into crypto

#660

Post by vmception »

tsimionescu wrote: post #618
unnouinceput wrote: post #497

Earlier quoted context omitted.

Again with the energy point. The energy is insignificant compared with almost anything else. Wasn't some article that the sum of all standby electronics uses more energy than bitcoin and that's only in US? What are you, Apple? That gives no charger for "environmental reasons" while packaging its wireless headphones in a crapload of unnecessary plastics. If you are so energy consciousness then go bark at US military,…

Bitcoin consumes more electricity than entire countries - more than the Czech Republic for example. It consumes a third (or was it a fifth?) of all the electricity of all data centers in the world. It is by no means insignificant.

That's not a counterpoint if those countries also consume an insignificant amount of energy.

Isn't a rebuttal different than a deflection?

Anyway half - 3/4ths of bitcoin mining is using clean energy that wasn't going to be used for anything else, or a sustainability solution for energy that was going to be used as pollution.

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