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Comment by koliber | Hacker News Reader

While I am in no position to predict the future of bitcoins, all new markets have these problems. At an early point in their history, stocks also had low liquidity and crappy technology. Both of these conditions will improve as an asset becomes more popular. It is a chicken-and-egg problem.

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I think your sentence has too much of a tone of inevitability. "... will improve as an asset ..." should surely be "will improve if an asset ..." or perhaps "... in order for ...".

There's plenty of new markets which failed to take off, and died after a few years of use. Confederate dollars aren't quite the useful currency they once were, as an obvious example.

Otherwise it cuts too close to survivorship bias: is there a popular asset where the market has "low liquidity and crappy technology"?

> is there a popular asset where the market has "low liquidity and crappy technology"?

Yes, real estate.

Point taken. Speaking of liquidity, water rights are likely another, at least in the southwest where the relevant laws date back to Spanish colonization.

You are right. I should have added "will continue to improve, unless they implode.".

There's also the question of where the money will come from to improve the technology. One of the benefits of BTC is the low transaction cost. But it might be that those transaction costs are exactly what's needed to fund exchange development.

I think you've hit the nail on the head here - scaling up a real exchange is incredibly difficult and the kind of talent you need to hire probably has a price tag hugely in excess of the revenue of all BTC exchanges combined. These guys are probably struggling to even understand the problems they're experiencing, so it should come as no surprise that they're having technical difficulties.

I bet they're having even more legal difficulties though, as just running a regular share exchange requires a team of top notch lawyers to keep abreast of the huge volume of exchange laws. I doubt poor MtGox even has 1 full time qualified lawyer and they're dealing with entirely new legal ground.

There are plenty of talented people who believe in BTC enough that they would work to get in on the ground floor of an exchange. Who do you think are designing custom ASICs for mining?

As far as I know, the guys making custom ASICs for mining are selling them to miners for real dollars. I don't think that helps your point much.

Why do you think that?

The top sellers of mining hardware that I could find on Google (Butterfly Labs, Advanced Miners, Cointerra) all accept Bitcoin for payment.

Are you referring to some group upstream of the hardware sellers? I'm curious where you're getting this information from...

Do they "accept bitcoin" in the way that many big services do, where they get their payment out of bitcoin and into cash as soon as possible?

Maybe, what's your point?

http://www.cringely.com/2013/09/30/doubts-bitcoin/

^ points out some nice parallels between the "Bitcoin rush" and the California gold rush. One of the points he makes is that it wasn't the miners, by and large, who ended up rich. It was the people who sold equipment and supplies to the miners. The namesake of Stanford University was one of them, interestingly.

Whatever happens, the market will set the price. Perhaps the current transaction costs are too low to enable high-quality scalable exchanges with the necessary tools (whatever they may be). However, if such exchanges are advantageous, the transaction cost will rise.

I don't think its valid to call the buying and selling of Bitcoin a "new market." Bitcoin itself brings new idea, but the exchanges around trading them don't really solve any new problems in the way Bitcoin did. Its all old hat, and it just requires proper execution, not innovation.

You are talking about the future of bitcoin, he is talking about the present.

There may eventually be a time where trading in bitcoins is productive, but for now it is a bit risky.

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