Crypto Conversation

[McGrupp]

Great thread! I haven't read it all - just the first page and the last couple pages. I hope all those folks talking about bitcoin in 2013 picked up at least a few and held on to them!

As for my view, I think Wheat probably has my proxy in the pro-bitcoin camp. I think there are compelling answers to all the objections I'm seeing stated here (and those dating back to 2013, for that matter). Regarding the security of various layers of the software stack, this issue exists with respect to any monetary system. My US dollar based bank account can be hacked, but we carry on. As long as the base layer is ultra-secure, just as gold is secure against the efforts of alchemists, bitcoin serves as a foundation upon which a financial system can be built which includes application-specific security tradeoffs.

I do have some objections/concerns about bitcoin's viability. I have a short/medium term concern about coordinated state action to ban bitcoin. However, I frankly see this as quite likely, perhaps inevitable, and just another milestone in bitcoin's adoption. Banning won't work. Lately I've actually started thinking it's possible they won't try. Bitcoin's game theory continually reveals itself to be even more clever than we thought. China's ban on miners is an example. The network simply routed itself around China. It's remarkable to see such efficiency absent central coordination.

Longer term, I fret about whether the issuance of new coins will suffice to incent miners in the future, as it halves down to zero. That's really the only remaining issue that keeps me up at night. I wonder if there will be an epic controversy someday about the need to impose some measure of inflation in the supply.

Where Wheat and I may disagree is with respect to Ethereum. I'm very optimistic about smart contract functionality and decentralized internet applications (loosely described these days as "web3") but I do not think it necessarily follows that the smart contract network token will have lasting or growing value. I think a better analogy for these is arcade tokens, airline miles, or stamps. Something that has value, but is not "money." I also find it difficult to predict which of the many smart contract platforms, if any, will be dominant in the future.

There seems to be no close competitor to bitcoin for its use case (base money).

I am not optimistic for the long term viability of any cryptocurrency besides bitcoin, and I think a large majority of them are outright frauds. Be careful out there.

[Kdogg]

Security has to be the #1 concern with your digital assets. It’s still the early days and many defi apps are pushing the envelope on deciding between security and scalability, making them vulnerable to attacks like this.

The fight is between security and convenience. The most secure methods are the most inconvenient to the point normal people would not use them. On the flip side, the most convenient method (keeping it on an exchange) is the least secure. And people will always choose the avenue of least resistance.

[-jk]

There's always someone gaming the system, regardless of who controls the system:

https://arxiv.org/abs/2203.15930
https://arxiv.org/pdf/2203.15930.pdf

"Cryptocurrency miners have great latitude in deciding which transactions they accept, including their own, and the order in which they accept them. Ethereum miners in particular use this flexibility to collect MEV-Miner Extractable Value-by structuring transactions to extract additional revenue...
[W]e also identify four blocks that contain enough MEV profits to make time-bandit forking attacks economically viable for large miners, undermining the security and stability of Ethereum as a whole."

-jk

[mr. synellinden]

The NYT has a Latecomer's Guide to Crypto.

[Jeffrey]

There seems to be no close competitor to bitcoin for its use case (base money).

I am not optimistic for the long term viability of any cryptocurrency besides bitcoin, and I think a large majority of them are outright frauds. Be careful out there.

I agree about the long term fate of the current non-bitcoin crypto. Why aren’t you concerned that very large, multinational financial institutions and/or nations issue their own cryptocurrency and destroy bitcoin?

[JNort]

I agree about the long term fate of the current non-bitcoin crypto. Why aren’t you concerned that very large, multinational financial institutions and/or nations issue their own cryptocurrency and destroy bitcoin?

This is literally my only worry. Crypto is gonna happen, when is unsure. I’ve never understood most of the complaints (security, illegal activities, etc…) they all exist but even worse when it comes to cash and cards. I don’t consider losing your keys/passwords a risk. You’d have to truly be irresponsible or plain stupid to lose/forget that. No sympathy from me for those people.

Give me the unbiased ledger over the current banking system.

[Acymetric]

This is literally my only worry. Crypto is gonna happen, when is unsure. I’ve never understood most of the complaints (security, illegal activities, etc…) they all exist but even worse when it comes to cash and cards. I don’t consider losing your keys/passwords a risk. You’d have to truly be irresponsible or plain stupid to lose/forget that. No sympathy from me for those people.

Give me the unbiased ledger over the current banking system.

I think the bold is a particularly weak attempt to handwave away some issues for crypto that aren't present for traditional currency.

[Kdogg]

This is literally my only worry. Crypto is gonna happen, when is unsure. I’ve never understood most of the complaints (security, illegal activities, etc…) they all exist but even worse when it comes to cash and cards. I don’t consider losing your keys/passwords a risk. You’d have to truly be irresponsible or plain stupid to lose/forget that. No sympathy from me for those people.

Give me the unbiased ledger over the current banking system.

Around 20% of all Bitcoin are lost forever. That number can only increase. Most are lost wallet password or private keys but some are transactions sent to a bad address. Sometimes things just happen that are beyond a person’s control.

[Wheat/"/"/"]

I agree about the long term fate of the current non-bitcoin crypto. Why aren’t you concerned that very large, multinational financial institutions and/or nations issue their own cryptocurrency and destroy bitcoin?

I’ll chime in on that. Two words are the biggest reason…..Network effects…but also the requirement of expending energy to power the network’s unmatched security is a huge hill to climb for a competitor.

Bitcoin’s first mover advantage, already leading to mass adoption ahead of competitors,(like Litecoin), and the highly energy intensive, but extremely secure, “proof of work” verification process, makes it almost impossible for another challenger to catch up now with an equally scarce and secure digital asset.

Think of it this way to understand the power of network effects. Facebook won the social platform race. Their network is now over three billion users. Parlor wants to challenge Facebook. So do a number of others in the social platform space. Can we really see much of a chance of that happening?

Bitcoin has won the “digital gold” network race.

[Kdogg]

Think of it this way to understand the power of network effects. Facebook won the social platform race. Their network is now over three billion users. Parlor wants to challenge Facebook. So do a number of others in the social platform space. Can we really see much of a chance of that happening?

Bitcoin has won the “digital gold” network race.

But MySpace had the first mover advantage and critical mass in social media before Facebook. It was taking The Facebook’s lunch. Facebook had to take a hard pivot and opened up its service to developers and turn into a platform. And usage and engagement in Facebook are down. It’s being chipped away by TikTok and it’s own Instagram. Then Apple’s privacy tweaks were a hatchet to Facebook’s targeting ad business (it’s bread and butter).

First movers in the tech space rarely win. IBM, Lotus, Word Perfect, Diamond, Xeros, 3dfx, Atari. The graveyard is wide and deep.

[Wheat/"/"/"]

But MySpace had the first mover advantage and critical mass in social media before Facebook. It was taking The Facebook’s lunch. Facebook had to take a hard pivot and opened up its service to developers and turn into a platform. And usage and engagement in Facebook are down. It’s being chipped away by TikTok and it’s own Instagram. Then Apple’s privacy tweaks were a hatchet to Facebook’s targeting ad business (it’s bread and butter).

First movers in the tech space rarely win. IBM, Lotus, Word Perfect, Diamond, Xeros, 3dfx, Atari. The graveyard is wide and deep.

Yea, the analogy with Facebook is not a great one with regard to Bitcoin, my bad for not being more clear, they are nothing alike. Mainly because there is no proof of work required for that platform,so it’s a bad analogy.

I was just trying to point out the Network effects that Facebook and Bitcoin have reached has made them the 800 lb gorilla of the social platform and digital asset world.

Bitcoin has a huge network effect advantage over all other proof of work competitors.

[Jeffrey]

Bitcoin has a huge network effect advantage over all other proof of work competitors.

Currently true, but the USA, China, JP Morgan, Goldman Sachs, etc. also have huge advantages over Bitcoin.

[Wheat/"/"/"]

Currently true, but the USA, China, JP Morgan, Goldman Sachs, etc. also have huge advantages over Bitcoin.

Nobody really has an advantage over Bitcoin, because there’s nothing else like it.

Bitcoin is hard to fit into a box and to explain, but I’ll try again.

It’s a scarce, digital asset where you can store the value you’ve created through your work. …think earning your currency (dollars) by working hard, then investing by buying gold/Bitcoin. You hold the gold/Bitcoin you purchase with those dollars, not in a safe, but on a computers open digital ledger book.
Your value, the “gold metal” you bought, is now represented in code as Bitcoin on a huge, secure, decentralized computer network.
And that Bitcoin is absolutely scarce, unlike gold, there’s a finite amount ever to be available.

Bitcoin can also be described as programable digital property. Think owning a beachfront house that appreciates in value due to the scarcity of waterfront property. Looking at Bitcoin as that house, you can own all, or a piece of that house and store that value on your phone, exchanging that value as easily as sending a text if you want to. No third parties trust necessary.

China is introducing a Central bank digital coin now. The US is currently studying it, trying to figure out how to digitize the dollar and not violate our constitutional rights. It’s gonna be tough. There are huge privacy and property rights implications with a U.S. central bank digital coin for regulators to try and figure out.

China has banned Bitcoin due to their inability to control it.

CBDC’s have great dangers due to a centralized states ability to control your money in that form. China is an authoritarian government, they built and track their CBDC for surveillance and will dictate how you can spend it. A communist leaders perception of what’s good for the state will dictate what you do with your Chinese CBDC. They will shoot you in the head if you protest.

Fortunately, we have freedoms as individuals in the US and a constitution. The freedom to store the value we earn and control it ourselves, is every Americans right.

None of the banks you mention have a digital asset like Bitcoin. In fact they are racing to use Bitcoin in their banking services.

[Jeffrey]

And that Bitcoin is absolutely scarce, unlike gold, there’s a finite amount ever to be available.

Thus, expanding economies and populations will have to find alternatives.

China is introducing a Central bank digital coin now.

China is merely the first and will one day be the largest economic power.

None of the banks you mention have a digital asset like Bitcoin. In fact they are racing to use Bitcoin in their banking services.

IMO, Goldman is merely trying to find the best way to exploit Bitcoin participants. History shows Goldman will quickly fold their Bitcoin hand and try again.

[Wheat/"/"/"]

Thus, expanding economies and populations will have to find alternatives.

Unlikely, the free market will decide what the price people will pay to own Bitcoin. As economies grow, so will the value of Bitcoin.

China is merely the first and will one day be the largest economic power.

First for a CBDC, and not by free choice of their citizens. It’s not a given that their economy out paces the US anytime soon. The US economy is about 23 trillion dollars, while the Chinese economy is about 18 trillion. A free, fair monetary system backed by a non inflationary digital reserve asset in western economies will crush a centralized surveillance monetary system promoted by the Chinese, imo.


IMO, Goldman is merely trying to find the best way to exploit Bitcoin participants. History shows Goldman will quickly fold their Bitcoin hand and try again.

Goldman will try to profit trading and loaning out Bitcoin. And history does show they will take advantage of consumers if they can.
In a free society, where we have the ability to ontrol our own money, we can always walk and chose other banking service providers.

[Skydog]

So far Im scoring it:
Wheat 7(degree of difficulty) x 8.3 (execution) = 58.1
Jeffrey 6.5 x 8.8 = 57.2

It’s going to the wire folks!

[Jeffrey]

Wheat, thank you, very much, I wanted to revisit my initial Bitcoin views and make sure I was not missing a major reason to buy Bitcoin. My original opinion of Bitcoin has not changed.

If you have not, you should read Ron Paul’s End the Fed. You will probably love it.

I strongly believe Bernanke, Paulson, and Geithner made very prudent decisions during the Great Recession. I strongly prefer the US Government be able to control the money supply, open the discount window, etc. during the worst economic times.

[Wheat/"/"/"]

Wheat, thank you, very much, I wanted to revisit my initial Bitcoin views and make sure I was not missing a major reason to buy Bitcoin. My original opinion of Bitcoin has not changed.

If you have not, you should read Ron Paul’s End the Fed. You will probably love it.

I strongly believe Bernanke, Paulson, and Geithner made very prudent decisions during the Great Recession. I strongly prefer the US Government be able to control the money supply, open the discount window, etc. during the worst economic times.

Hey, to each his own. I’ll check out the book, thx. You might want to checkout the Bitcoin Standard, and the Fiat Standard.

I have one last question. Why would you want anyone to control the money you earn but yourself?
(Especially when it’s been proven that central bankers and politicians weaken the purchasing power of your money by arbitrarily printing more out of thin air when they get in a bind that they caused, not you.)

Note that I’m not advocating not paying fair taxes, or supporting a democratically elected government. I’m advocating for the separation of state and the money you earn. It’s yours then, not theirs.

My opinion is that the guys you mentioned that “fixed the problem” we’re part of the financial leadership that got us into the problem in the first place.

Bitcoin fixes that.

[Jeffrey]

Hey, to each his own. I’ll check out the book, thx. You might want to checkout the Bitcoin Standard, and the Fiat Standard.

I have one last question. Why would you want anyone to control the money you earn but yourself?
(Especially when it’s been proven that central bankers and politicians weaken the purchasing power of your money by arbitrarily printing more out of thin air when they get in a bind that they caused, not you.)

Note that I’m not advocating not paying fair taxes, or supporting a democratically elected government. I’m advocating for the separation of state and the money you earn. It’s yours then, not theirs.

My opinion is that the guys you mentioned that “fixed the problem” we’re part of the financial leadership that got us into the problem in the first place.

Bitcoin fixes that.

My response to your question would be much longer than anyone here would probably want to read.

Why don’t you watch this and then we can discuss (if you desire afterwards)?

https://m.youtube.com/watch?v=QozGSS7QY_U

[Jeffrey]

Note that I’m not advocating not paying fair taxes, or supporting a democratically elected government. I’m advocating for the separation of state and the money you earn. It’s yours then, not theirs.

My opinion is that the guys you mentioned that “fixed the problem” we’re part of the financial leadership that got us into the problem in the first place.

Note that I have true disdain for multiple US Government Agencies who enable their staff to spend millions on bogus legal proceedings, instead of merely admitting their staff made a mistake.

Here’s one, right up your alley, that had to be taken all the way to the US Supreme Court to get justice. How many US citizens can defend themselves against a $5 million US Government Agency case?

https://m.youtube.com/watch?v=phP0LHMaUNw