Crypto Conversation

[Mtn.Devil.91.92.01.10.15]

Just made a Bitcoin donation in support of freedom for the people of Ukraine.

It was easy and fast. Straight from the Trust wallet on my phone to the official wallet of the Ukrainian government, confirmed in less than 5 minutes.

Wallet address is on their official twitter account feed, @Ukraine.

Good on you.

[Wheat/"/"/"]

There is a big rush going on in both Ukraine and Russia to buy Bitcoin in the past few days…that’s not really a big surprise as people struggle to get money and make transactions from banks in both countries, and Bitcoin is non political money.

But what is also notable is there is a greater demand for US dollar backed stable coins, like USDC and tether.

The sooner the US government regulates and licenses more stable coin options for digital transactions, (coins tied 1/1 to the US dollar), the better it will be for the strength of the dollar and greater adoption worldwide.

It’s a shame it’s taking conflict to showcase the use cases of Bitcoin and stable coins.

[-jk]

There is a big rush going on in both Ukraine and Russia to buy Bitcoin in the past few days…that’s not really a big surprise as people struggle to get money and make transactions from banks in both countries, and Bitcoin is non political money.

But what is also notable is there is a greater demand for US dollar backed stable coins, like USDC and tether.

The sooner the US government regulates and licenses more stable coin options for digital transactions, (coins tied 1/1 to the US dollar), the better it will be for the strength of the dollar and greater adoption worldwide.

It’s a shame it’s taking conflict to showcase the use cases of Bitcoin and stable coins.

Well, sure. It's the easiest way to launder money.

-jk

[Wheat/"/"/"]

Well, sure. It's the easiest way to launder money.

-jk

It’s also the easiest way to hold on to and exchange the value you’ve earned through hard work and not have it stolen or confiscated by a third party.

Just in: Crypto donations to Ukraine exceed 37 million dollars in just the past few days.

[Kdogg]

It’s also the easiest way to hold on to and exchange the value you’ve earned through hard work and not have it stolen or confiscated by a third party.

Just in: Crypto donations to Ukraine exceed 37 million dollars in just the past few days.

I'm going to steal an idea that someone more learned that myself said about the internet and apply to crypto: People believe cryptocurrency favors the oppressed rather than the oppressor. It's a naive belief in the emancipatory nature of crypto that rests on a stubborn refusal to acknowledge its downside.

I've never bought any crypto but I do own it from mining on my computers over the years. I've always looked at my holdings as a lottery ticket that may help cover my niece and nephew's college tuition in 12 and 15 years. I'm rooting for it (especially because a Duke education will be just under a $600,000 by then) but will not be surprised if it remains on a fringe asset than moves with the market and easy money.

[Wheat/"/"/"]

People believe cryptocurrency favors the oppressed rather than the oppressor. It's a naive belief in the emancipatory nature of crypto that rests on a stubborn refusal to acknowledge its downside.

I don’t think I’m that naïve, but maybe I am, curious what you see as Bitcoin’s downside?

One note: I believe Bitcoin is in a class of its own and should not be compared/combined with other “cryptocurrencies”.

[Kdogg]

I don’t think I’m that naïve, but maybe I am, curious what you see as Bitcoin’s downside?

One note: I believe Bitcoin is in a class of its own and should not be compared/combined with other “cryptocurrencies”.

Bitcoin has the first mover advantage and a hard limit on supply. Those are what separate it from most other crypto. It’s disadvantages are that it’s not practical as a form of exchange. It’s complicated to use for ordinary people. The price is far from stable. (Buy something today and the price could be double or half in a week.) It can be manipulated by a relatively small group of whales. The price is dependent on faith (but one could agree fiat currencies are too so I call it a push.) It’s still not scalable. It’s still slow even using Lightening. The network can do 7 transactions a second. Visa/MC can do thousands. It’s dependent on miners who are affected by the cost of electricity, hardware, government regulations etc… Fraud is rampant. Value (the owner of Steam which is the biggest PC game store) had to stop accepting it because 50% of the transactions were fraudulent.

People like to compare it to gold but it’s the exact opposite. At worst gold can never go to zero because it has a practical use. Bitcoin can go to zero or $500,00. It’s a risky asset where the price is basically set by sentiment and any given time.

[thedukeman]

Bitcoin has the first mover advantage and a hard limit on supply. Those are what separate it from most other crypto. It’s disadvantages are that it’s not practical as a form of exchange. It’s complicated to use for ordinary people. The price is far from stable. (Buy something today and the price could be double or half in a week.) It can be manipulated by a relatively small group of whales. The price is dependent on faith (but one could agree fiat currencies are too so I call it a push.) It’s still not scalable. It’s still slow even using Lightening. The network can do 7 transactions a second. Visa/MC can do thousands. It’s dependent on miners who are affected by the cost of electricity, hardware, government regulations etc… Fraud is rampant. Value (the owner of Steam which is the biggest PC game store) had to stop accepting it because 50% of the transactions were fraudulent.

People like to compare it to gold but it’s the exact opposite. At worst gold can never go to zero because it has a practical use. Bitcoin can go to zero or $500,00. It’s a risky asset where the price is basically set by sentiment and any given time.

I think I agree with all of this. I'll add that a lot of the disadvantages I attribute to growing pains of a new technology. I'm not in crypto for what it is today, but for what I think it will become in the future. I acknowledge though that I am "speculating". I also agree it isn't gold and I'm glad it isn't. With the money I am putting into crypto, I am hoping for returns greater than 5-10% over the next decade.

[Wheat/"/"/"]

1) Bitcoin has the first mover advantage and a hard limit on supply.
2) Those are what separate it from most other crypto. It’s disadvantages are that it’s not practical as a form of exchange.
3) It’s complicated to use for ordinary people.
4) The price is far from stable. (Buy something today and the price could be double or half in a week.)
5) It can be manipulated by a relatively small group of whales.
6) The price is dependent on faith (but one could agree fiat currencies are too so I call it a push.) It’s still not scalable. It’s still slow even using Lightening. The network can do 7 transactions a second. Visa/MC can do thousands.
7) It’s dependent on miners who are affected by the cost of electricity, hardware, government regulations etc…
8) Fraud is rampant. Value (the owner of Steam which is the biggest PC game store) had to stop accepting it because 50% of the transactions were fraudulent.
9) People like to compare it to gold but it’s the exact opposite. At worst gold can never go to zero because it has a practical use. Bitcoincan go to zero or $500,00. It’s a risky asset where the price is basically set by sentiment and any given time.

Thanks for the reply. I’ll try to address these issues to hopefully clarify some things…

1) True, the Bitcoin network was first and does have an absolute, finite supply of 21 million Bitcoin to be totally available and is unable to be inflated by any government, institutions, or individual. It’s important to understand the three pillars of blockchain.
Due to its Proof of Work consensus, it’s the most secure digital asset and the most decentralized. That’s Bitcoin’s core focus.
Approximately 19 million Bitcoin have already been mined, and are currently in the economy, with approximately 50 million US holders of Bitcoin today.
The remaining 2 million Bitcoin will be mined over the next 100 years.

2) Most other cryptos have higher transaction speed at the base layer by using Proof of Stake consensus, which is much less secure and less decentralized.
I just sent .0015 sats (Apx $50 dollars), to Ukraine, where I expect it to be exchanged for food, medicine or bullets. It took about 2 minutes to be confirmed without using any banking system. That’s a pretty practical use case.

3) It is complicated, now. Getting less so all the time. Human nature is to show negativity on things we don’t understand. I was as guilty as anyone when I first looked at Bitcoin. Education of what Bitcoin is and how it works is an ongoing process.

4) The price is volatile, as is to be expected with a new, disruptive technology. Take a look at the history of disruptive internet companies like Amazon or Apple’s history of volatility, for example.
Approximately 75% of all Bitcoin has not been moved on or off exchanges in the past year. Investors are holding on to this asset and continue to add to their positions. The 25% or so being traded and speculated with, especially with high leverage, is one of the main reasons causing the current volatility. That will be mitigated as mass adoption occurs and the market cap gets larger.

5) Whale price manipulation is an issue now regarding volatility as well. That’s one area that government regulators have to address with exchanges on leverage rules. Again as market cap grows and regulations go into effect, this is expected to be less of an issue. It’s surely not the first market that’s been manipulated by the rich.

6) Bitcoin is absolutely scalable, on the layer 2 Lightning Network. The Bitcoin base layer is not, as it chooses security and decentralization over transaction speed.
Remember, Bitcoin is divisible by 100 million Sats. (Think pennie’s to the dollar). Plenty of Bitcoin/Sats for the world.

7) The miner network is decentralized and worldwide. Anyone can mine Bitcoin. Miners are incentivized to seek out the cheapest, renewable energy sources. Having to do the “Work” of putting energy resources (hash rate), into verifying transactions is what secures the network. (Proof of work). Bitcoin uses .05% of world energy, a rounding error, and getting lower all the time. Over 50% is renewable energy.

8) Bitcoin is not fraudulent. It is an open source protocol and every transaction on the network is available to be scrutinized by anyone who cares to look. Not sure what the issues are with that company you referenced…

9) Bitcoin can be viewed as digital gold, with better abilities to transfer and store value in the digital economy of the world we now live in. It’s also a more scarce asset than gold. Gold is a metal that humans have assigned value to only on faith, and relative scarcity. It’s hard to store and transact with.
Bitcoin is also based on faith, but has absolute scarcity and can be securely stored on a phone, transacted with at the speed of a text.

Needless to say, I’m bullish on Bitcoin as a strong digital asset for the future.

[Kdogg]

Thanks for the reply. I’ll try to address these issues to hopefully clarify some things…

4) The price is volatile, as is to be expected with a new, disruptive technology. Take a look at the history of disruptive internet companies like Amazon or Apple’s history of volatility, for example.
Approximately 75% of all Bitcoin has not been moved on or off exchanges in the past year. Investors are holding on to this asset and continue to add to their positions. The 25% or so being traded and speculated with, especially with high leverage, is one of the main reasons causing the current volatility. That will be mitigated as mass adoption occurs and the market cap gets larger.

7) The miner network is decentralized and worldwide. Anyone can mine Bitcoin. Miners are incentivized to seek out the cheapest, renewable energy sources. Having to do the “Work” of putting energy resources (hash rate), into verifying transactions is what secures the network. (Proof of work). Bitcoin uses .05% of world energy, a rounding error, and getting lower all the time. Over 50% is renewable energy.

8) Bitcoin is not fraudulent. It is an open source protocol and every transaction on the network is available to be scrutinized by anyone who cares to look. Not sure what the issues are with that company you referenced…

9) Bitcoin can be viewed as digital gold, with better abilities to transfer and store value in the digital economy of the world we now live in. It’s also a more scarce asset than gold. Gold is a metal that humans have assigned value to only on faith, and relative scarcity. It’s hard to store and transact with.
Bitcoin is also based on faith, but has absolute scarcity and can be securely stored on a phone, transacted with at the speed of a text.

Thanks for the reply. Let me offer a few counterpoints and some clarification.

4) Comparing Bitcoin to Apple and Amazon is apples to oranges. We are talking about a unit of exchange. A lot of people are holding it because they are underwater.
More Than Half of Bitcoin Investors Are in the Red, Study Says And that's up from two thirds a couple of weeks ago. The people who hype Bitcoin and crypto in general are those with holdings and something to gain. There is a tinge of MLM with the whole space.

7) Governments might not be able to crack down on bitcoin holdings but they sure as heck can crack down on miners if they want. Then can tax then, ban then, block IPs etc. If the network can't write blocks it becomes worthless. People can hail "DECENTRALIZED! DECENTRALIZED! DECENTRALIZED!" all they want but if you cut access to the network your are SOL. IF a government really wants to crack down they can.

8) I didn't say Bitcoin is fraud just pointing out it's number one use case is for fraud. Ransomware, drug deals, human smuggling, other smuggling...the list goes on and on.

9) Paper gold (GLD) is easier and cheaper to trade than Bitcoin. Plus the total amount of mined gold could fit in a 30 foot high box on Centre Court in Wimbledon. If you extract what's in the ground you would add about 8 feet. Personally I don't like gold as an asset.

Like I said earlier, I own crypto but I'm not planning on retiring on it. I started mining because I'm a nerd. It's a lottery ticket for me.

[thedukeman]

Thanks for the reply. Let me offer a few counterpoints and some clarification.

4) Comparing Bitcoin to Apple and Amazon is apples to oranges. We are talking about a unit of exchange. A lot of people are holding it because they are underwater.
More Than Half of Bitcoin Investors Are in the Red, Study Says And that's up from two thirds a couple of weeks ago. The people who hype Bitcoin and crypto in general are those with holdings and something to gain. There is a tinge of MLM with the whole space.

7) Governments might not be able to crack down on bitcoin holdings but they sure as heck can crack down on miners if they want. Then can tax then, ban then, block IPs etc. If the network can't write blocks it becomes worthless. People can hail "DECENTRALIZED! DECENTRALIZED! DECENTRALIZED!" all they want but if you cut access to the network your are SOL. IF a government really wants to crack down they can.

8) I didn't say Bitcoin is fraud just pointing out it's number one use case is for fraud. Ransomware, drug deals, human smuggling, other smuggling...the list goes on and on.

9) Paper gold (GLD) is easier and cheaper to trade than Bitcoin. Plus the total amount of mined gold could fit in a 30 foot high box on Centre Court in Wimbledon. If you extract what's in the ground you would add about 8 feet. Personally I don't like gold as an asset.

Like I said earlier, I own crypto but I'm not planning on retiring on it. I started mining because I'm a nerd. It's a lottery ticket for me.

The first point is kind of cherry picking. On Feb 8th BTC was down almost 60% from its all time high just a few months ago so more people would be down at the time of the article. If it had been written three months ago it would obviously be a lot different. It also conflates "investors" with wallets. On chain data shows BTC that wallets send/receive. That doesn't mean each wallet is an investor or that each transaction is a "buy" or "sell". One exchange may be responsible for thousands of wallets in which it is constantly shuffling crypto around. Analyzing those transactions are investors buying and selling can be misleading. That's the last I'll say though I don't mean to argue. A lot of the things you say I think are smart and have probably influenced my mindset the past year. Same with my man Wheat.

[Skydog]

... Plus the total amount of mined gold could fit in a 30 foot high box on Centre Court in Wimbledon. If you extract what's in the ground you would add about 8 feet. ...

blah blah blah Wow! blah blah blah

(not a critique of content, just an insight into my dog level mind)

[Wheat/"/"/"]

Thanks for the reply. Let me offer a few counterpoints and some clarification.

4) Comparing Bitcoin to Apple and Amazon is apples to oranges. We are talking about a unit of exchange. A lot of people are holding it because they are underwater.
More Than Half of Bitcoin Investors Are in the Red, Study Says And that's up from two thirds a couple of weeks ago. The people who hype Bitcoin and crypto in general are those with holdings and something to gain. There is a tinge of MLM with the whole space.

7) Governments might not be able to crack down on bitcoin holdings but they sure as heck can crack down on miners if they want. Then can tax then, ban then, block IPs etc. If the network can't write blocks it becomes worthless. People can hail "DECENTRALIZED! DECENTRALIZED! DECENTRALIZED!" all they want but if you cut access to the network your are SOL. IF a government really wants to crack down they can.

8) I didn't say Bitcoin is fraud just pointing out it's number one use case is for fraud. Ransomware, drug deals, human smuggling, other smuggling...the list goes on and on.

9) Paper gold (GLD) is easier and cheaper to trade than Bitcoin. Plus the total amount of mined gold could fit in a 30 foot high box on Centre Court in Wimbledon. If you extract what's in the ground you would add about 8 feet. Personally I don't like gold as an asset.

Like I said earlier, I own crypto but I'm not planning on retiring on it. I started mining because I'm a nerd. It's a lottery ticket for me.

Ok, I’ll counter your counter, again.


4) I don’t think you see Bitcoin quite like I do. People hold Bitcoin for personal financial freedom and control of their money. It’s way more than just a “unit of exchange”. It is that, of course, but it’s also a relatively new network of technology with many disruptive applications, which is why I think understanding the volatility associated with its early phase can be compared to a company like Amazon in its early years.
Also, I think your opinion that a lot of people are holding on to Bitcoin only because they are underwater is incorrect. Some may very well be, but here is a detailed technical analysis from glassnode, the leading on chain analytics company, explaining why that doesn’t seem to be the case…



7) China did exactly as you suggest could happen, they banned Bitcoin mining last summer and the miners just moved. (Although there is an underground mining network still there).China’s actions actually strengthened the Bitcoin network,. It took a few months, but hash rate recovered and now is at an all time high.
Dictators/authoritarian governments can ban Bitcoin, but in a Democratic society like the US, we have a judicial system that I’m sure the 50 million plus holders of Bitcoin would use to challenge any such action.
Realistically, when the IRS ruled Bitcoin as digital property and put capital gains tax on it, the ship sailed for it to ever be banned here.

8) It’s just not true, Bitcoin #1 use case is not for fraud. Due to Bitcoins open source blockchain which allows for anyone to track any transaction, criminal use has drastically decreased since it’s early, Wild West days. Cash dollars and the current banking system are used much more in criminal enterprise than Bitcoin.
I think the biggest use case is for the store of value it provides, which allows for easy transactions and personal security of your money/value by the individual, no dependence on financial institutions or any other third party.
Another big use case is for remittances, worldwide. Bitcoin has almost totally replaced Western Union remittances in El Salvador, for example, a 400 million dollar disruption annually. Now instead of an El Salvadorian immigrant sending money back home with WU and paying up to 15% in fees, she/he can send Bitcoin directly to a family members phone instantaneously, and it can be easily converted in one of El Salvador’s many Digital Coin Machines into dollars, with basically no fees.
Stacks is also building many use cases for Bitcoin, like NFT’s, decentralized financial applications(DeFi) and smart contracts…

9) Have to disagree here too. Paper gold is not easier and cheaper to trade than Bitcoin. And paper gold is not as secure.
I’ll issue you a challenge, I’ll send you 5 dollars worth of Bitcoin to your phone wallet, you send me 5 dollars of paper gold to my mailing address, and we’ll compare ease and expense

I hope your lottery ticket hits, that would be good for both of us.

[Phredd3]

Realistically, when the IRS ruled Bitcoin as digital property and put capital gains tax on it, the ship sailed for it to ever be banned here.

Contrary to popular belief, the IRS does not make law. Many of their tax rulings have the force and effect of law, but those aren't binding on other agencies for other purposes, and they certainly aren't binding on Congress. I wouldn't put too much weight on a tax ruling. Do I think it is particularly likely that the U.S. bans Bitcoin? Absolutely not. But the IRS ruling is not evidence of that.

[Wheat/"/"/"]

Contrary to popular belief, the IRS does not make law. Many of their tax rulings have the force and effect of law, but those aren't binding on other agencies for other purposes, and they certainly aren't binding on Congress. I wouldn't put too much weight on a tax ruling. Do I think it is particularly likely that the U.S. bans Bitcoin? Absolutely not. But the IRS ruling is not evidence of that.

I agree, just pointing out that the IRS ruling makes it highly unlikely that Bitcoin will be banned in the US.

That was a legitimate concern just a few years ago.

[Kdogg]

I’ll issue you a challenge, I’ll send you 5 dollars worth of Bitcoin to your phone wallet, you send me 5 dollars of paper gold to my mailing address, and we’ll compare ease and expense

I hope your lottery ticket hits, that would be good for both of us.

Gifting an ETF (be it gold, stocks, etc) is virtually the same as sending Bitcoin. In one you provide a wallet address in the other a brokerage account number. The USPS is not involved.

Also I don’t keep a wallet on my phone. I don’t move it (ever) so it’s a hardware wallet. First paper than I started using an electronic one. Crypto can come in but needs the physical wallet to get out. Phones and internet connected computers can be hacked and if your private keys are compromised good by crypto and there is no FDIC to come to the rescue.

[Skydog]

Both the El Salvador remittances and the bitcoin aid going directly to Ukraine are great examples of why a peer to peer currency that bypasses the middlemen is such a great idea. Unfortunately bitcoin has two major problems that keep it from being useful as a mainstream currency: price volatility and the total reliance on a key based security system.

Obviously currency that can, and often does, lose a third or half its value in a matter of weeks is a speculative investment, not a safe wealth storage mechanism. And commerce with bitcoin prices changing by the hour is obviously possible but not practical for widespread everyday use.

The second major problem is Bitcoin’s completely key based security system. In theory it has great appeal because no person or entity, government or crooks, can access my wealth without the crypto key that is in my possession. Buy in practice it has massive downsides. A family fortune is lost forever if the crypto key is lost, or if a person with the sole knowledge of the location of the key dies. There is no coming back from that event, no back up security system that would allow the restoration of that wealth to the rightful owner. Those crypto coins are lost for all time. That is obviously NOT the case with traditional bank accounts.

And if you keep your crypto on an exchange, that internet-connected exchange will electronically store the keys somewhere, and we’ve already seen those key files being hacked and 100’s of millions of dollars have been stolen. So the banks themselves aren’t safe.

Until the price volatility and crypto security issues are solved bitcoin will remain a speculative investment, not a safe reliable form of commerce or wealth storage.

And in fact bitcoin itself may not be salvageable- it may require a different crypto architecture entirely to fix these issues. Stablecoins address the volatility issue but I’m still not sure how the “all or nothing crypto key” security issue will be solved.

[Wheat/"/"/"]

Phones and internet connected computers can be hacked and if your private keys are compromised good by crypto and there is no FDIC to come to the rescue.

Agree. Only small amounts of Bitcoin on my phone.

My private keys are secure and my assets are offline.

If anyone wants to own any Crypto, they have to take security as the #1 priority.

[Wheat/"/"/"]

….The second major problem is Bitcoin’s completely key based security system. In theory it has great appeal because no person or entity, government or crooks, can access my wealth without the crypto key that is in my possession. Buy in practice it has massive downsides. A family fortune is lost forever if the crypto key is lost, or if a person with the sole knowledge of the location of the key dies. There is no coming back from that event, no back up security system that would allow the restoration of that wealth to the rightful owner. Those crypto coins are lost for all time. That is obviously NOT the case with traditional bank accounts.

As mass adoption takes hold and market cap rises, volatility will decline.

I can’t see the option of secure, self control of my money as a downside, that’s a huge upside, but you are on track, it is a great responsibility.

Soon, we’ll see US banks and spot market ETF’s that will make it easy for the average person to own Bitcoin without individual custody responsibilities.

In other countries, with less stable financial systems, governments, the ability to self custody and transact Bitcoin is greatly appreciated. Regardless of volatility.

I’m old, but I was willing to study it and accept the responsibility. Younger people seem to catch on a lot quicker and are comfortable with the technology, but it’s not for everyone at this point.

[-jk]

Crypto making fraud easier. Who could have predicted it?

https://www.theregister.com/2022/03/...eo_disappears/

In September, the regulator claimed BitConnect defrauded folks out of billions of dollars by running a Ponzi-like scheme that promised financial returns of up to 40 per cent per month all thanks to its automated crypto-trading bot.

Instead, people's digital funds were allegedly secretly pocketed by Kumbhani and his associate Glenn Arcaro, who last year pleaded guilty to conspiring to cheat Bitconnect investors. Arcaro faces up to 20 years behind bars. Kumbhani, however, is still at large.

-jk