> not rare
Interesting. Don't really know how crytos work, but isn't rarity is guaranteed by the BitCoin algorithm itself?
Interesting. Don't really know how crytos work, but isn't rarity is guaranteed by the BitCoin algorithm itself?
Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
According to https://bitcoinexchangerate.org/fees, getting a single transaction committed within the next hour costs just under $50.
I've heard plenty of ideas to make the Bitcoin network a little cheaper or a little faster. Occasionally both! I've yet to hear a good theory for how the Bitcoin network can ever get both 500x cheaper and 500x faster.
The network effect is extremely strong in the cryptocurrency space. Everything in the cryptocurrency space supports bitcoin, and fractions of everything support anything else. Payment processors, exchanges, hardware wallets, software wallets, secure storage and backup systems, etc... All of it is focused on bitcoin first, and adds others later (if ever).
If you want to buy or sell bitcoin, you've got tons of repudible options, you want to buy or sell monero? You've got 1/3 of the options, and most of them are small and shady or don't deal with fiat currencies in any way.
If that's not a network effect, I don't know what is.
It took a while for 28.8K modems to catch up with bandwidth needs, and that's part of the reason people thought the internet sucked and was a joke compared to all its promises. I think even today people snort about pets.com as the poster child of the dot-com boom. Then their Amazon Pantry order arrives, which they consume without irony.
I can't read tea leaves better than anyone else, but I do agree with Hal Finney's Bitcoin-or-bust observation. If another cryptocurrency besides Bitcoin takes hold, it's likely that all cryptocurrencies will fail. This is because the scarcity argument proves false -- yes, any individual currency is perfectly scarce, but technological improvements in newer currencies will effectively inflate the entire ecosystem and devalue existing currencies.
That's the weak version of the prediction. The stronger version is that those already in the ecosystem (and thus who have an interest in preserving existing wealth) will see the weak version of the prediction, conclude it's undesirable, and try to prevent it from coming true. Thus they will integrate technological improvements into Bitcoin rather than supporting a separate chain.
The question is whether there is enough momentum already behind Bitcoin to support the strong version of the Finney theory. I think there is; Bitcoin supporters will eventually address its technological weaknesses, and future improvements in cryptocurrency will be implemented in terms of Bitcoin rather than by forking the ecosystem.
You might disagree, and maybe you're right. Maybe Bitcoin is just the modem. Maybe it's the internet. I'm betting it's the internet.
I continue to view Bitcoin Cash as a prototype for different features that validates the need for Bitcoin to address that market segment, either by fixing the block size problem outright, or by the lightning network. I don't see a world where both BTC and BCH coexist long-term.
I can't explain why Instagram coexists with Facebook. It does feel like one is a superset of the other. Maybe Instagram's simplicity and ease of use is simply inconsistent with Facebook's engulfing experience, and they truly are two distinct features of a larger whole. If that's the case, then I'm looking at BTC/BCH the wrong way, and they're also part of a larger whole, and both will survive. So my original facetious point that Facebook is cloneable (which of course it isn't, because its value is in network effects, not its source code) would actually be somewhat true, except that it's different products serving the same overall network, just overlapping but distinct parts of it.
>Someone could clone the features and create facebook2.com, and everyone would flock to it.
This is flat out false. if it was actually that easy don't you think we would have seen it happen already? There are numerous social media platforms that have tried to dethrone Facebook and none of them have succeeded.
in addition, Facebook practically prints money through advertising, which very clearly has value (multiple billions of dollars a year).
I don't really use Facebook anymore and I don't work there but to think it's value is $0 is insane. I'm not sure how you can conflate a multi-billion dollar company with proven profit streams and the current hype in the current crypto market
"Would you like to continue printing free money?" sounds like an easy sell to me.
The reasons are that bitcoin's value is derived from its scarcity and decentralised properties. If you completely break that philosophy, it's sorta-kinda just a digital ledger controlled by a small group of powerful companies like any other system you could think of.
So you'd momentarily print money that'd soon lose much of its value. And you'd be doing it on specialised mining equipment which are purpose-built by all the big mining companies, that can just has a single algorithm that bitcoin uses (and is useless for mining many other coins), which then also all lose their value.
Again, it could happen, but the incentive structure certainly isn't designed for this to occur naturally. Even a small printing of money would be immediately noticed.
Rather, the rarity to me stems from the fact that indeed, anyone can run a blockchain. It's just software on 1 or more computers. I can run 100 blockchain clones on my computer with trillions of tokens. And bitcoin tokens themselves can be split to ridiculous numbers, as you can send 0.000001 bitcoin. That fraction of a bitocin is a token that can carry information and put it on the blockchain, and you can agree that this information represents any asset. As such, there's no scarcity of databases (blockchains) or tokens (bitcoin fractions), and thereby it isn't 'rare'. Of course, most blockchains have no security strength because there's not enough value to incentivise a large group of independent miners like with bitcoin. But the idea that you can clone/improve bitcoin, run your own and create a healthy market is reality, and it means that ultimately there's no real rarity for bitcoin usecases that couldn't happen on another chain that's supported by users.
"But transaction fees!" Okay, but if transaction fees go way up, that will encourage people to move away from BTC anyway or find some other way to reduce their exposure to transaction fees.
Once mining draws to a close, miners will consolidate. Just like in every other industry after a bust.
Cryptocurrencies are still, of course, very interesting and powerful.
My expectation is we'll end up with "to avoid a hard cliff between a network reliant on mining and one reliant on transaction fees (and the inevitable instability of the transition), and to ensure a robust mining ecosystem, we're going to extend mining, at a reduced rate, for just a few more months..."
And there's an apparent benefit for end-users, too - if you want Bitcoin to be a practical payments mechanism (as opposed to store of value), transaction fees have to be kept comparable to credit cards. But the electricity used by the network still has to be paid for. What could be more tempting than magicing a few more bitcoin out of thin air to pay the miners?
But anyone can create a blockchain exactly like that of Bitcoin and call it Bitcoin-B, Bitcoin-C etc, etc.
Also Bitcoin is just one blockchain. Even with the same algorithm I can create an infinity of other bitcoin blockchains. Why would one have more value than the others? It's like if you generated an RSA key and then said, this RSA key is special, it has lots of value, you can't replicate it because you don't have the private key. No one else can recreate this key, it is enforced by cryptography. Well yes. But it's just a key. I can create a million others with an average laptop.
I feel like I'm crazy here, how is the ability to make a new "thing" make something else less valuable? A toyota isn't worth less because I can make a new car company next week, Facebook isn't worth less because I could make a clone of it tomorrow, A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow...
What am I missing? Why would the ability to make something new affect the rarity of an unrelated "thing"? Why isn't the value determined by what that "thing" does, how it does it, the number of people that believe in it's ability to do the thing it says it will do, and more? Why do you think it matters that someone can create a new currency?
The only differences between bitcoin and bitcoin2 after a fork are the miners. If the number of miners is sufficiently large to be confident in transactions, original bitcoins and bitcoin2s are just as good at being used for whatever. This is even worse if bitcoin2 has some new desirable properties that bitcoin does not have.
Just because I can make a "Flollar" doesn't mean that it's going to take a bite out of USD. I have nothing to backup my flollar, no users, no army, nothing. It's the same way with cryptocurrencies. Just because you can fork bitcoin doesn't mean you'll take a chunk of it's value. You still need to provide all of the other things that make bitcoin valuable that's not in the codebase (decentralization, userbase, vendors/exchanges, software that works with it, time with real usage to show that it's secure (or at least that your changes are secure), and just trust that it will stand the test of time). And even if you do that, bitcoin can and will evolve over time. If you start to eat bitcoin's lunch, there is no reason why they can't just fold your changes into bitcoin proper. If it's in everyone's best interest to have the feature, then consensus will be easy to achieve and the network can be upgraded. In a way, it's similar to forks of an open source project. In the vast majority of cases, a fork of a codebase doesn't reduce the number of users of a project. In some cases it does, but it normally doesn't happen overnight, and takes years and years to have people transition over (take openoffice vs libreoffice for example).
All that being said, I do think that bitcoin is in a bad place right now, and they are dangerously close to allowing another currency to jump up as the main contender, but I don't believe that any of the top 10 or so have actually solved the scaling problem that bitcoin currently has without getting rid of the biggest benefits of a cryptocurrency.
No, you couldn't, not without literally tons of raw material, heavy machinery and infrastructure to mint the coins, laborers to run the operation, time to process the raw materials, and a practical mechanism to circulate the coins. These are serious barriers to the creation of physical money, unlike cryptocurrency which can be instantly and effortlessly minted in unlimited quantities by a single individual and easily distributed over the internet. There is no comparison.
> A toyota isn't worth less because I can make a new car company next week
This analogy makes no sense. A Toyota is valuable because it has an inherent utility in its ability to provide its owner with an effective method of transportation, crypo-tokens (as opposed to the network itself) have no inherent utility because they are not actually a thing and do not exist independently of the ledger that qualifies their distribution. Certainly, if any single individual could generate an unlimited supply of "effective transportation" instantly at near zero cost, the value of toyota's would very quickly decline.
> Facebook isn't worth less because I could make a clone of it tomorrow
First of all, no you couldn't. You could create a much crappier version of Facebook with an unmaintainable code-base that doesn't scale and supports a minuscule fraction of Facebook's feature set, and even that would cost you time, money, and effort. Even if you could just git clone Facebook's code, you still wouldn't be able to get it running and keep it running without a team of senior dev, ops, and network engineers, plus an annual server bill in the hundreds of thousands at the absolute minimum.
> A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow...
The point is that you can't just "create a new company" tomorrow that is in any way comparable to a successful business, otherwise everyone would do it... not to say that some don't try, but the ash heap of history is littered with the remains of companies that thought they could replicate a successful company's business model only to find out that its actually not that simple.
That's my point exactly! Just because you can replicate the "class" of thing, doesn't mean you can replicate the thing...
Just like how a company stock isn't just a piece of paper that anyone can photocopy, a cryptocurrency isn't just the code that runs it. It's the users, the track record of security, the amount of vendors and exchanges that use it, the amount of centralization/decentralization to it's development team, the amount and maturity of implementations of the software, and any number of other intangible things.
Simply making a new cryptocurrency is exactly the same as making a new company, or a new facebook, or a new toyota, or a new anything. It doesn't make you a direct competitor any more than my "klathmonbook.com" is a direct competitor to facebook just because I replicated some (or even all) of the functionality.
>the ash heap of history is littered with the remains of companies that thought they could replicate a successful company's business model only to find out that its actually not that simple.
So is the pile of scamcoins and poorly thought out implementations that have already collapsed within months of their creation. Give the space some more time, and I bet you'll see a lot more of them fail, because just like how creating a company isn't just clicking a button, creating a successful cryptocurrency isn't a simple thing either. But I still don't think that it means that all cryptocurrencies are worthless because anyone can enter the space.
No, it isn't at all similar, because business are specialized entities with specific properties that cannot be easily replicated, unlike a crypto-token ledger which can be instantly and effortlessly replicated with identical qualities and capabilities at near zero cost.
> So is the pile of scamcoins and poorly thought out implementations that have already collapsed within months of their creation
The critical distinction that you're not seeing is the fact that it costs nothing to create a scamcoin unlike a business which can cost the creator everything if it fails. You're also ignoring the fact that a business has to effectively serve the market for it to even be comparable to a competitor, you can't just incorporate a business, buy a bunch of ads and start pulling in money, you need to actually do something that generates wealth, unlike crypto-token ledgers which require nothing except for people to run the code.
I can create a business with a hundred dollars and a trip to the local government building, but that doesn't mean i'll be successful, or that i'm a competitor to facebook. Just like how anyone can fork a cryptocurrency, that doesn't make them successful or a competitor to bitcoin.
And I disagree about how creating a business can cost the creator everything, isn't limiting liability one of the biggest reasons to start a company? So that you don't lose everything if it doesn't work.
But I think you need to really look at what it takes to build a cryptocurrency, let alone a successful one. You seem to be ignoring my point that a currency isn't just the code, but the network, the users, the trust, the amount of hardware and software written for it, the number of implementations, the amount of acceptance at vendors, the number of reputable exchanges, and the amount of decentralization. Replicating all of that isn't going to be any easier than getting everyone to switch from facebook to "klathmonbook" would be.
The fact that there are hundreds of cryptocurrencies created all the damn time that aren't overtaking bitcoin proves my point. If you replace the word "business" with "cryptocurrency" in your last paragraph, it still holds true. A good cryptocurrency needs to provide a benefit, and in bitcoin's case (at least to me) that benefit is decentralization, "push based" payments, the ability to be your own bank, a network of users and vendors that trust and use it, and not needing to trust anyone to transact with them using it.
Because "success" for a crypto-token requires near zero effort from the entity deploying the ledger, all that is necessary is to rebrand forked code and pump enough hype into it so that people start buying it. The billion dollar ICO phenomenon is a concrete example of exactly what I'm referring to and that's just one blockchain with a second layer of abstraction on top. If Donald Trump forked litecoin tomorrow and told all his followers to buy the best cryptocurrency ever and that bitcoin was a fake-news token supported by the Obamas, Trump-Coin would be within the top 5 crypto-tokens literally over night.
> I can create a business with a hundred dollars and a trip to the local government building
And if Trump went on TV and pumped that business every day for a year, it would be a certain failure because a "business" is not a clerical detail that you can effortlessly replicate by filing paperwork with the government, it's an organization that embodies the implementation of a concrete business process, it requires that the business owner actually do something.
> the network, the users, the trust, the amount of hardware and software written for it, the number of implementations, the amount of acceptance at vendors, the number of reputable exchanges, and the amount of decentralization
Right... but there is nothing marrying any of that to any specific implementation of a compatible blockchain, this was particularly apparent with the BTC vs BCH fork where companies didn't even know whether or not they should recognize the new ledger that was instantly created out of thin air... but ultimately they decided they would recognize it and suddenly there is "double" the total amount of bitcoin that existed previously. These kind of things can't happen with a business because you can't instantly fork a functioning business with 5 minutes and a PR.
The success of a crypto requires much more than just forking and publishing, it's not just hype based except for the scams and fly-by-night operations.
And there aren't "double" the Bitcoin any more than a photocopy of dollar bill doubles the amount of money in circulation.
There is a new cryptocurrency called Bitcoin Cash, but that is not the same as Bitcoin. Just because they have similar names doesn't make then the same, just because they come from the same codebase doesn't make them the same.
Unless you also think that creating a successful browser is just hitting fork and publish, or creating a successful operating system is just hitting fork and publish, or creating a new Facebook is just copying the functionality.
If it's really that easy, then please take over Bitcoin yourself, as there are literally hundreds of billions of dollars to be made here, surely if it's that easy you can handle it?