> What exactly does bitcoin offer the world today?
Aside from perhaps gold, bitcoin is the most successful currency in the world not associated with a central bank and state.
It's the most liquid asset that is not issued by a central bank. At any point you can issue a transaction to anyone else in the world, without the possibility of a third party intervention. I've had issues pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked.
I don't really follow bitcoin, but last I checked over 75% of block confirmations came from the top 3-5 mining pools. That seems a hell of a lot more centralized than the traditional finance system.
> That seems a hell of a lot more centralized than the traditional finance system
Most countries/systems have one central bank, even if we assume there are only 2 mining pools and they "control the network", wouldn't a central bank still be more centralized?
Besides, the mining pools don't "own" the network, anyone can participate, which kind of makes the whole "more centralized than a central bank" argument kind of weak.
Right, but bitcoin is global, not just for one country. And while anyone can participate in theory, in practice the big mining pools always get their first. And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit. Without those mining pools confirming transactions you can't even spend your bitcoin. As a functional currency, I just can't see how this is any better, like in any way. Probably why it hasn't actually become a functional currency and is just a traded commodity that everyone is hoping like hell won't crash and burn one day.
Forking the blockchain is impractical. You need enough compute power to maintain both forks for some period of time, which means you've effectively halved your compute power. And all that gives you is the power to double spend, after which one fork's transactions are "revoked". This is not a huge problem; regular financial transactions also get revoked (e.g., chargeback). The amount of compute needed to protect transactions for, e.g., half a day (which is much much shorter than the potential chargeback interval) is basically impossible.
> do all sorts of other shit
There's not much shit they can do, without breaking the fundamental cryptographic primitives that make it work. They can't steal money. They can double spend, as above, or they can delay transactions with a probability proportional to their ownership of compute, integrated over a period of time. If they own 80% of the compute, and they really really don't want you to perform a transaction, then they can block it for 10 minutes with 80% chance, 20 minutes with 64% chance, 30 minutes with 51%, an hour with 26%.
Compare that with Visa which has blocked transactions it doesn't like (e.g., porn) for years.
And even this blocking is economically disincentivized. If you want to get a transaction through and the "mafia" don't want it, you can offer a higher transaction fee. Either the "mafia" will have to accept your transaction, or give up the enticing fee to someone else. Transaction processing is a free market.
And compute dominance is something that needs to be maintained indefinitely. Obtaining compute dominance does not guarantee future dominance (unlike with proof of stake systems, which is IMO one reason why proof of work is superior).
> And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit.
This is a common misunderstanding. Miners do not have power in the system. Anyone can fork Bitcoin, but when people want payment in Bitcoin, they won't accept ForkedBitcoin regardless of the number of miners shilling it. Meanwhile mining money will be left on the table for anyone who wants to enter mining of the original Bitcoin and at greater mining profit.
The traditional finance system is that a single central bank, owned by a cartel of rich banks- chase, jpm, etc-- issue the currency, charge us to use it and get first dibs on the benefits of monetary inflation -- google "cantillon effect".
The now much more diverse mining space is much better than completely centralized in one entity current system.
And bitcoin community has a way of working to fix weaknesses wherever they find it... there is active campaigns to diversify mining, as you pointed out those are pools-- and pools are being made obsolete. behind those pools are thousands or tens of thousands of mining operators, of all sizes, as it's viable at industrial as well as individual scale-- many use it to heat their house for less than the alternative, the earnings don't have to cover the full cost to be beneficial to people.
Googling "Cantillon Effect" gives suprisingly few results. Out of the top five results, two are Bitcoin-related, one is Reddit, and one is the Wikipedia page of Richard Cantillon himself.
The top comment on /r/AskEconomics is:
"The cantillon effect doesn't really exist in any significant capacity. Central banks nowadays announce their actions well ahead of time, that means before the actual expansion of the money supply, people know this expansion will happen, and markets price in that expansion. So there really isn't much benefiting from being "early".
Beyond that there really isn't much empirical evidence on the cantillon effect to exist in any significant capacity."
Since I know little about this topic I'd appreciate HN's view.
Cantillon's essay is not terribly difficult of a read and the "Cantillon Effect" has to be the least interesting part of it. It and Smiths Wealth of Nations are both free on the web and well worth the read.
OP mixed the "central bank" as an unique one (it doesn’t exists, although MFI could be representative for the west) and the multiple national ones (FED for the US). They arguments doesn’t hold as the national ones creates money and the are much more numerous and diverse in interest around the world than the ~5 bitcoin pools mentioned ahead.
The FED is quite powerful and US strongly influence many other banks but that’s by situation, not by design.
evem tho unique starts with a vowel, we say a unique, not an unique, I guess because it's pronounced like "younique", long u. Short u would still be an tho. As in, "An understanding"
the "does" in "doesn't" absorbs subject-verb the conjugation, does is now the verb that needs to agree with the subject, it. Exists returns to it's infinitive (unconjugated) form, exist.
"They arguments doesn’t hold" typo they ought to be the, those or their, not sure what you meant. Since arguments is plural you want don't, not doesn't, alternately "the argument [singular] doesn't hold"
'national ones creates money' subject verb agreement again, either one creates or ones create
"and the are" s/the/they
"bitcoin pools mentioned ahead": ahead doesn't quite apply to comment threads, like on a road you have cars in front (ahead) and in back (behind), but with comments it's above and below, because you scroll up and down, not forward and backward. You could also say aforementioned referring to something mentioned earlier.
Nonsense. While thousands of commercial banks are formally shareholders of the 12 (not one) Federal Reserve Banks,
> the "ownership" of the Reserve Banks by the commercial banks is symbolic; they do not exercise the proprietary control associated with the concept of ownership nor share, beyond the statutory dividend, in Reserve Bank "profits." … Bank ownership and election at the base are therefore devoid of substantive significance, despite the superficial appearance of private bank control that the formal arrangement creates.
Calling it a currency is a huge stretch. It’s an extremely successful token/“asset” but it’s about as much as a currency as gold is these days if not less (based on what most people use it for).
I wouldn't call it successful as a currency given its state at the moment either.
I would say that much of the reason for that is because of the perception of the currency that is widely held. It's not much good because people think it's not much good. I bought a few things online years ago with Bitcoin and it worked pretty much the way it should, but most of those places that accepted it stopped . Mostly they stopped due to the public perception.
I do wonder if it has a chance to become useful once it is old enough to not be considered interesting, and the idea of holding something while it increases in value dies.
Even if places accept bitcoin they almost universally price their goods in $/€/£/.. meaning that bitcoin is only a transfer mechanism. So it’s not really a “currency” in that situation either.
I mean if somebody accepts precious metals, jewels etc. as payment in lieu of actual money that doesn’t mean those things suddenly become a currency.
When I said "most successful" I didn't mean it was a complete success, just that this is the best we've done without a state. Currencies are hard, history is full of them failing. Maybe when an asset is liquid enough, it becomes like a currency.
That's the case where I think it will pick up. If the reason for its lack of use is perception based, then instances where its utility outweighs perception will gain ground.
There are numerous places and times around the world that you can look at the situation that occurred and see that Bitcoin would have been a boon had it been established at that time.
Future instances will exist like that, and perhaps that's a good enough role for it to exist on it's own. It can be the candle that provides light when the power goes out.
The irony of course that it doesn't work if the power goes out, but that's another degree of infrastructure damage entirely. It might even be sufficient to ensure the power doesn't go out during some crisis.
Bitcoin in particular can remain operational in extremely degraded conditions.
Its relatively long average block interval (10 minutes) and strictly limited maximum block size limit the total bandwidth requirement for a full node to a few kilobits per second, and you can easily run that on a laptop that consumes a few watts, easily supplied from a relatively inconspicuous solar panel or handheld gasoline generator run at a 1% duty cycle. Blockstream supplies a satellite feed of the blockchain that requires no internet connection, just a groundstation that costs less than a laptop and uses slightly more power.
Outbound bandwidth requirements from the place where the power has gone out are many orders of magnitude smaller. A Bitcoin transaction is a few hundred bytes, so outbound bandwidth requirements for transmitting one transaction at a time are a few bits per second without adding significant delay, and because the transaction is valid indefinitely in the absence of double-spending, potentially down to a small fraction of a bit per second if further delays of hours or days can be tolerated.
Now, it's true that power needs to stay on somewhere for the miners to keep running, and the miners need to be able to transmit their mined blocks to the rest of the network fast enough to avoid many orphaned forks, which requires bursts of somewhat higher bandwidth. But keeping the power on somewhere is much more likely than keeping it on everywhere.
I don't understand LN2 well enough to do this kind of analysis on it, but I'd expect it to be less tolerant of such extreme infrastructure degradation.
> would have been a boon had it been established at that time.
USD and/or EUR depending on the continent would have been used instead in such countries which have failing monetary systems.
Problem is that governments in those countries (like Argentina) often impose capital controls making it hard to acquire foreign currency. Bitcoin is almost always only a solution to that specific problem (i.e. government restrictions not currency instability).
- It can absolutely blocked by third parties (either the exchange you use or the mining cartels can).
- in practice its liquidity is tied to the liquidity of the ”stablecoins” (USDT and the likes) and as such it's not “the most liquid” since the liquidity of those stablecoins is higher.
I don't use an exchange, and the mining pools (which are not cartels) cannot block a transaction, only delay it until a different pool mines a block, typically ten minutes later. I don't think this sort of intervention by a pool has ever been observed.
The stablecoins you mention are arguably more liquid than Bitcoin, but, except for DAI, they're issued by central-bank-like institutions such as Binance and Coinbase. You're right that they're not officially central banks, but that just means you get all the drawbacks of central banks without the advantages.
Without an exchange your bitcoin is not a liquid asset, it's even less liquid than most commodity for which there are digital exchange marketplace. You can sell it over the counter, but that makes it an asset comparable to real estate in terms of liquidity.
The fact that the pools haven't intervene until now doesn't change the fact that they can definitely do it, and would if pressured by governments. Economic sanctions using the US dollar weren't a thing until they were.
And you only need to have leverage against 50% of the mining power to make that happen, which is pretty straightforward given how centralized the power structure of bitcoin is (although less centralized than for most crypto, for which the developer has full control).
The other day I walked up to a newsstand and asked the newsguy if he wanted to buy US$100 of Bitcoin. He said sure, checked the price, did some calculations on his cellphone, and proposed an amount including a commission for him. I agreed, scanned his QR code on my phone, and posted my transaction to the network. I walked to a nearby shopping mall to pee, and then saw that the transaction was confirmed. I walked back to the newsstand. He handed me a US$100 bill.
I didn't sign anything, make any appointments, buy any insurance, walk into any offices, present any identification, or even tell the guy my name. The total time involved was about 20 minutes, but only because I wasn't using Lightning. I had a similarly informal and short, but more argumentative, experience with the previous transaction, at a winery whose owner loudly insisted that he hadn't received the money... until he realized he was checking the wrong phone.
You are so full of shit comparing this to a real estate transaction that I am at a loss for words. You're about as full of shit as the winery guy. He, too, was blathering all sorts of nonsense at me about Bitcoin that showed he didn't have the faintest idea what he was talking about.
The scenario you're talking about is a 51% attack where big mining pools collude to ensure that nobody else can ever mine a block (because it might allow the laundering of tainted coins). That would be a global and extremely obvious disaster for the Bitcoin network, and it would be remedied by whatever measures were necessary to end the attack, possibly including a hard fork or strategic bombing.
Remember that the world's investor class now has 2 trillion dollars tied up in Bitcoin, and they do not want to see it collapse, and such a successful attack would greatly undercut investor confidence in the value of the asset. The Bitcoin crowd has enough pull that they extracted a pardon for Ross Ulbricht and got a friendly SEC head this year. Even before that, when one or another pool would grow to the point where it might be able to mount a 51% attack, it would get hit by DDoS attacks to bring it down.
You're comparing that to a bank declining a credit card transaction because you're in another city.
Governments have been pressuring Bitcoin miners for over 15 years; it's outright illegal in many countries. The hashrate dropped by more than half when the PRC outlawed Bitcoin mining. The effect on the functioning of the network has been pretty much undetectable.
Seems like an extremely inconvenient process and it’s unlikely you’d easily find that many people to agree to this unless without a significant premium (>5-10%).
I can't imagine what process of transferring cash could be less inconvenient than someone handing me a small piece of paper? And the commission was less than 5%.
The fact that it wasn't a lot is precisely why this is a good example of Bitcoin being more liquid than real estate. You can't sell US$100 of real estate, not even here in Argentina.
Really? You can’t imagine any process which would take 40x less time than 20 minutes?
Sure bitcoin is more liquid than real estate. That’s rather obvious and not a particularly high bar. It’s not particularly liquid compared to actual money or many other financial instruments though.
You seem to be selectively quoting me in a way calculated to give the false impression that I said something obviously false instead of what I actually did say, which was obviously true. What motivates this extremely discourteous behavior?
Rebutting the grandparent's claim that Bitcoin was no more liquid than real estate was one of the main objectives of my comment. I am glad that you agree that their claim is obviously false, but I think it's unfortunate that you didn't respond to their comment to say so.
I agree that Bitcoin is less liquid than dollars, which is why I was making the exchange, actually. For other financial instruments, it depends on who you are, and whether you have an account with a stockbroker. You can't open an Interactive Brokers trading account with US$100, and it's going to be challenging if you are in Venezuela. You are going to have a hard time finding newsstands that will accept your SPY shares, but they are more liquid than Bitcoin in the sense that, given that IB account, you pay much less to convert them into dollars even if you have to cross the spread, and if you're willing to wait 20 minutes, you have an excellent chance of earning the spread instead of paying it.
But none of that compares for convenience with a guy handing me a US$100 bill.
I notice you haven't answered my question. What motivated you to treat me in this extremely discourteous way?
We're talking about this quote:
> Without an exchange your bitcoin is not a liquid asset, it's even less liquid than most commodity for which there are digital exchange marketplace. You can sell it over the counter, but that makes it an asset comparable to real estate in terms of liquidity.
There is nothing in the tone of this utterance that suggests that it's joking, sarcastic, or hyperbolic; it's a series of apparently serious, sincere, literal claims which simply happen to be completely unrelated to reality.
I don't agree with your implicit assertion that selectively quoting me in a way calculated to give a false impression that I said something obviously false is comparable in its level of discourtesy to me telling you that you are full of shit.
> The other day I walked up to a newsstand and asked the newsguy if he wanted to buy US$100
We are talking about the liquidity of an asset, $100 is change money.
Now try doing the same for $100k or $500k, without an exchange your options are very limited and the process is going to be very tedious (obviously you're not going to leave the guy to pee after moving a full bitcoin to their wallet without very strong guarantees that you will end up with the money in the end), and comparable to selling real estate. So of course it's not exactly equivalent to real estate because it's fungible and very small amount of bitcoin have some higher liquidity, it's still a very illiquid asset without an exchange compared to pretty much any other financial assets.
> The scenario you're talking about is a 51% attack where big mining pools collude to ensure that nobody else can ever mine a block
No, you just need to signal you'd mine on top of any block containing the transaction you want to block, and then no further block will ever be mined with the said transaction as other miner will follow suit. You just don't understand bitcoin except superficially and it shows.
> Governments have been pressuring Bitcoin miners for over 15 years; it's outright illegal in many countries
It doesn't matter if shithole countries with no leverage pretend to pressure bitcoin miners (yes it's all about pretending, as long as you don't see targeted assassinations in foreign country, you know the country doesn't really care). In the meantime, bitcoin and other crypto have been subsidized by governments in the Western world for years (through all the fiscal vehicles subsidizing start-up investment). You can be sure that the day a mining pool becomes the target of US sanctions (or has its staff abducted by some intelligence service) the landscape changes dramatically (it won't happen though, as they would cave without a fight).
> Remember that the world's investor class now has 2 trillion dollars tied up in Bitcoin
And they are absolutely uninterested in the ideological aspect of bitcoin, the ability for the US government to censor transactions is the least of their concerns.
I appreciate you engaging in good faith and explaining what you meant, since wqaatwt thought you were engaging in "obvious hyperbole" https://news.ycombinator.com/item?id=44475519 and I was suspecting you of trolling.
It won't surprise you to learn that I haven't had the opportunity to sell US$100k of Bitcoin, but I expect it would be closely comparable to US$100k of US$100 bills, except that I can't zap those across to fixedfloat.com to change to a different cryptocoin or a friend on another continent in 30 seconds. Maybe it wouldn't be prudent to entrust all US$100k to fixedfloat.com in one transaction; maybe you'd want to use a series of smaller transactions of different sizes to reduce the counterparty risk.
But this doesn't seem like an issue of Bitcoin being particularly illiquid. Rather, it seems like exchanges make commodities more liquid, an assertion I don't think is controversial. But most other assets, such as real estate, shares, and even precious metals, are vastly less liquid than Bitcoin in the absence of an exchange. Finding someone on the street willing to buy Bitcoin is enormously easier than finding someone on the street willing to buy your MSFT shares.
I appreciate you explaining your speculations about 51% attacks in more detail. I think the course of action you're outlining would still be very likely to cause chain forks as big exchanges decided whether or not they were going to accept blocks from the compromised mining pools. The world's investor class many be absolutely uninterested in the ideological aspect of bitcoin, but they're very interested in mitigating political risks that threaten permanent loss of their capital.
I do not think your description of the People's Republic of China is a "shithole countr[y] with no leverage" or that it was "pretend[ing] to pressure bitcoin miners". The majority of Bitcoin mining was happening there, the majority of the world's coal was and is burned there, the vast majority of the world's solar panels are made there, the vast majority of the world's other electronics are manufactured there, and virtually all Bitcoin mining hardware is still designed there. But when they prohibited mining, most of the world's Bitcoin mining activity stopped within a few weeks.
See people like you are the reason why I wouldn't even want to ever invest in bitcoin because atleast you, are so full of yourself that you called someone full of shit just because he said that bitcoin is highly illiquid which is true.
Your personal experience may be different and we are willing to hear it but don't treat it as the final truth. I am pretty sure that it was damn awkward asking.
Here I am in my country where I don't even ask for UPI payments to cash because its sometimes awkward and this guy is loading bitcoin of all things and saying its liquid lmaoo and like if it wasn't awkward.
Saying truth cut you so bad that you had to bad mouth the other person for the sake of it. Grow up at this point, man. This is highly against everything the ethos of hacker-news stands for.
I hope your social anxiety problems improve, but I can assure you I don't share them, as you have assumed I do. It sounds like you also might not understand what the word "liquidity" means in a financial context.
What "cuts" me is not people uttering uncomfortable truths but people confidently spewing total bullshit with evidently no concern for its truth-value or even verisimilitude. It's even worse when it seems to be motivated by partisan struggle, as in this case. Both confident bullshit and partisan struggle are enormously corrosive to the collective epistemic endeavor.
The difference between a currency and store of value is not an exact line, but however vague that line is it is somewhat clear on which side Bitcoin is, and it is not the currency side.
> It's the most liquid asset that is not issued by a central bank. At any point you can issue a transaction to anyone else in the world, without the possibility of a third party intervention. I've had issues pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked.
Issuing a transaction may be easy, but I don't think that's meaningful when people get hit with issues similar to "pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked" on the on and off-ramps.
I have never figured out "lightning network", their "solution" for payments. (bitcoin payments are so impractical that they have a different, separate system to use for actual payments, that works completely differently.) Seems very convoluted. I need to pay a huge fee just to make a channel so I can receive anything? And there is something about liquidity? I implemented bitcoin stuff and still cannot figure lightning out.
bitcoin is mainly for buying it and looking at a chart.
> bitcoin is mainly for buying it and looking at a chart
That’s what my broker and many others do. They buy a pool of crypto and resell to investors. You don’t get a wallet, you can’t transfer your crypto at all. It just sits there until you sell it. The most distilled Hodl practice ever.
You can't get rich with gold. And haven't been able to for a long long time. It usually preserves wealth due to its long term real rate of return of around zero. But as BTC is new enough, the early owners have indeed become very rich.
I'm trying to figure out what the significant storage costs for bitcoin are. It's a bit higher than a Robin Hood stock because it costs fees when buying/selling, but it's significantly lower than gold/silver which really require some investment in physical security or a vaulting service.
It's the miners who are hemorrhaging hard currency.
It's currently costing $8-10 billion per year to keep the BTC blockchain alive, but blockchain fees are paid when transacting, not when HODLing, so it's not a storage cost.
Global scale using 1% of world electricity that can do 7 transactions per second, because the thousands and thousands of nodes don't trust each other and all do the same work.
I am trying to buy a property, and I've been moving money around to prepare for a down payment. It's July 4th weekend. I initiated some moves in the afternoon of July 3. But an ACH transaction in the U.S. takes "1-3 business days." First of all, why "1-3" and not "1" or "3" or "2"? Secondly, why business days? I get paged at night and on the weekend if something breaks at work, but the banking laws or customs say that computers only move my money 9-5 during holidays? Computers are taking non-human-holidays?
I don't get it. If bitcoin won't disrupt this, something else should.
I have been trading it weekly/monthly really simply, and it's a few K a month of profit. So I think it's useless at the moment other than as a scheme to gamble. I think there's a bit of a trust issue.
This is a US issue. In the EU you can do an instant bank transfer below a certain amount at any time, for free (after they mandated the fees away recently), and many other countries have systems that allow instant bank transfers. You don’t need a completely different way of dealing with money to get improvements to the current system.
Fair point. I don't know how many years we were behind the rest of the civilized world in terms of having chips on our credit/debit cards. And we still have the magnetic strip.
Well, we also use "feet" and "cups" instead of base 10 measurement system.
>I have been trading it weekly/monthly really simply, and it's a few K a month of profit.
What sort of tactics or strategy do you use to trade it for a consistent profit? I assume you're referring to bitcoin here.
Also, the banking hours thing is absurd, and way too common not only with banks but also some online payments processors, like, for example, the utter dumpster fire, parasitic garbage company that is Paypal. Dealing with that one alone (and with banks in certain contexts) alone makes one fully sympathize with so much of what crypto is supposed to (and to a pretty decent degree does) offer.
When Bitcoin started, a banc transaction was still like 3 days, 5 if there was a weekend in between. Also global transaction. Still a lot of countrys have different and strange systems.
The value is in the network itself. Lots of people think that its the digital tokens or coins that have value, but its the system as a whole.
The value is also in the “need”. Corporate treasuries need a way to store wealth that doesn't inflate over time, gold inflates 2% per year, bitcoin 0% - so it fills an institutional need
Does Bitcoin still fit this need with the volatility Bitcoin sees? Do corporations really want to put their stored value it something so unpredictable?
Whats been shown is that if you hold bitcoin for 4 years or longer the investment has performed very well and significantly outperformed the S&P. Companies buying billions worth of bitcoin are thinking strategically about it, they arent retail investors who panic sell after a few months
This! I was around looking for alternative "currencies" before Bitcoin even existed. But they were flawed,because they (such as Libertycoin) were shady centralized systems. Each of them were shut down by the US government. Bitcoin would have been the answer, but I lost interest before it became a thing (or it was already a thing and I somehow never come across it, because I never saw it as an accepted option.) This would have appealed to my geek nature. But I think I would have still lost interest in it after finding that Bitcoin also wasn't the answer due to difficulty in spending it. I likely would have cashed out at like $5 per coin to buy a bunch of pizzas.
A fixed supply, digital bearer asset. It’s nobody’s debt. Not that many of those. And US debt, even though it’s still the predominant reserve asset, things are slowly changing. And yeah, btc is still not a proper currency.
exactly this. these people dont understand that their own speculatory practices are what makes this a terrible store of value. its unstable, they even have to rely on literal stable-coins but they still dont see the problem
for the sake of argument, is there any way to introduce monetary policy into crypto currency so as to correct for unwanted inflation/deflation? without compromising on its decentralization promise
> for the sake of argument, is there any way to introduce monetary policy into crypto currency so as to correct for unwanted inflation/deflation
yeah and you don't even need to change bitcoin - just use a stablecoin over-collateralized by BTC built on the bticoin network. In essence these systems work with $1 of the stablecoin backed by $N dollars (N > 1.6) of the the backing asset (BTC). Then they use a smart contract system of price oracles, liquidations & interest rate curves to balance supply, demand and risk parameters. It's pretty much an over-collateralized lending protocol that issues its own asset that is pegged to $1
This has worked well for the past 11 years with MakerDAO on Ethereum and it's stablecoin DAI. I think at its peak the DAI stablecoin had around $7 billion in circulation and was about 5-10% the size of USDT, now it's about half that. However, high treasury interest rates and low interest in decentralized stablecoins have made more "traditional" stablecoins like USDT, USDC vastly more profitable and successful. In recent times even DAI has been trying to become more like USDC and USDT with treasuries held in intermediaries
How is your currency real if it has to rely on a centralized currency like USD to be functional? It feels like a failure of decentralized currency if it has to be a parasite on a decentralized currency. Surely the success metric for decentralized currencies has to be that they replace centralized currency right? That was bitcoins purpose, if it doesnt do that, then whats the point?
Speculation, get rich quick schemes and scams. They will exist no matter what. At least the barrier to entry to get scammed is higher with crypto than just online payments
Indeed. The Economist estimates the modern scam industry to be as large as the illicit drug trade by now, around $500 bn annually in revenue. Enabled in large part by crypto (pig butchering, ransomware, rug pulls were not a huge thing before crypto).
Funny thing is, we don't know how many keys are lost. They say it's deflationary, and I say it's deflating to zero through key attrition. And people pay for burning electricity meanwhile. Weird game.
We know it's not a large fraction, or anyway wasn't a large fraction a year ago, because the fraction of all mined Bitcoin that hasn't moved in the last year is only about 25%.
Edit: If I understand correctly around 15% of coins has not moved in even ten years. So more than 20% of all the mined coins up to mid 2015 have not moved since.
Maybe I remembered it wrong, or maybe I was just out of date. Thanks for the correction! Still, that's basically pointing at key attrition being a fairly minor phenomenon.
Yes; we're talking about 20% or so over 16 years, which is 1.25% per year, four times lower than the 5% per year inflation you're saying people complain about. And the anecdotal data suggests that that key attrition was concentrated in the early years, not just before there were Bitcoin ETFs, not just before there were exchanges, but before even the Bitcoin pizza.
But the big issue from my point of view is not the actual key attrition rate but the uncertainty of the money supply, because from my point of view, these are the important questions about key attrition:
- If Bitcoin goes to zero, what order of magnitude of money will the investor class lose? 200 trillion dollars, 20 trillion, 2 trillion, 200 billion, 20 billion, or 2 billion?
- How much money and power has Bitcoin transferred to its early adopters: 2 trillion, 200 billion, 20 billion, 2 billion, or 200 million?
- How much impact could awakening dormant coins have on the market? If Satoshi, or for that matter Hal Finney's heir or another early participant, started liquidating his early coins, would that be a tenth of the usual daily trading volume? Ten times? A hundred times?
Questions like these are why lolc brought up key attrition in response to ducksinhats saying, "It offers stability and a mathematical escape from very fallible humans controlling monetary systems."
A key attrition rate of 99% or 90% to date would result in very different answers to these questions. But 20% or 50% to date is fairly minor in this context.
Even if it was known and it did tend to zero I don't see the issue, Bitcoin is divisible, almost infinitely if you count L2s system (e.g. Lightning Network operates on a millistaoshi base unit instead of satoshi). Inaccessible bitcoins mean that the accessible ones are more rare so in a way it benefits other holders this way.
They also serve the network as a form of security bounty, let's say tomorrow we discover a way to break encryption "soon" pepople will be provided with a path to safer addresses but these old addresses, the ones for which a public key is known, act as an incentive to look for such security flaws.
Nobody prevents you from spending and replacing bitcoins, besides maybe the governments that insist on taxing smaller transactions as if it wasn't a currency.
You should ask them why they've generated about 58 million millionaires and 2,700 billionaires worldwide. That's some actual "hoarding" you should be concerned about, instead of concern trolling about Bitcoin.
If you own a deflationary asset/currency which is guaranteed to appreciate as long as the economy is growing (well it wouldn’t if btc became a global currency but that’s another matter) there is no reason for you to invest into anything unless it offers a disproportionately high return (or buy goods/services now if you can delay buying them)
It would just reduce risk tolerance for investors and increase the real cost of borrowing significantly. That’s how deflationary currencies work (we know that based on several hundreds years worth of empirical evidence).
Not to mention you can't have a robust credit market built on top of a deflationary currency.
Imagine you take out a 30 year mortgage in 2025 with 12 periodic payments of .01 BTC a year.
Imagine offering a 10 year bond that will make quarterly payments of .01 BTC. What is the price of this bond? It is just a meaningless question practically.
I don’t think it really does offer that escape, now that there’s so much institutional investment in it. It’s essentially tied to the decisions of 5 or 6 monetary policy committees, in the same way APPL is, because the risk free rate from the Fed or ECB is still the most significant factor in capital flows.
> I can tell you down to the day how many bitcoin there will be decades from now.
As this story itself demonstrates, you clearly can't, and it already has the potiential to affect markets: "18.04 million bitcoin sits in dormant accounts. Sizable inactive accounts that wake up after years of dormancy draw investor attention because of the potential market impact if those coins are sold."
It's impossible for you to know if the accounts are dormant intentionally or because the owner has died or lost access - and in the latter case the coins are effectively lost or destroyed in every practical sense. So you can't even say how many usable bitcoins exist at this very moment, and it is even more impossible for you to tell exactly how many accounts will be lost in the future.
If the goal is to hoard a currency itself instead of use it as the exchange between real investments then this makes perfect sense, but those people shouldn't be upset when we tell them we don't directly accept their "currency".
This sentiment models a correction to a complaint I first heard with people who tell us everything fell apart since we ended the gold standard. They ignore that we raised all boats rapidly when we didn't pin everything to governments ability to fight gold hoarders for small amounts of gold entering the market. Even gold hoarders are better off in terms of what the market has created to exchange for their gold because that exchange ceased to be limiting on market expansion.
One could say the US economy was exponential both before and after the currency change, but as with Moore's Law, it gets harder to remain exponential if as few as one limiting factor is emerging.
> I can tell you down to the day how many bitcoin there will be decades from now
So what? if you say "scarcity", that by itself has no value. plenty of things are scarce, but are not valuable, no one wants it.
And anyway, bitcoin is not even scarce. there are thousands of other coins now, anyone can create one, these will / are diluting the $$$ going into btc
That’s the opposite of stability unless you have an entirely static economy with no growth.
Adopting an extremely deflationary asset as a “currency” is one way to get the no growth part I suppose. It certainly wouldn’t be stable.
We’ve (well some, anyway..) learnt that lesson with the gold standard and permanent boom and bust cycles prior to the 1930s. It was anything but stable in the short/medium term.
Explaining bitcoin to someone who has no interest in it is like trying to explain to your mother in law that she should remove windows and switch to linux. From their perspective it just seems unneccesarry and overcomplicated.
Unnecessary and overcomplicated? Compared to what? Have you ever taken out a mortgage? Ever tried to send funds overseas? Ever wondered how entire cities are built by the people who run the money?
Does your mother in law know what fractional reserve banking is? A bank run? Can they explain what happened in the 2008 financial crisis? No? They why would they need to know how Bitcoin works beyond just "trust me, it does"?
Bitcoin is the only immutable peer to peer system ever created (barring advances in quantum computing, and even then the protocol can be updated). In a world headed toward web 3.0, generative AI content & virtual reality, I think there is tremendous value in a trustless and immutable peer to peer system. In fact, I think we NEED it, and should as a society happily bear the power consumption that underpins the security of the network.
Controversial, I know. However, already we cannot trust that a digital picture is genuine. There is currently no solution to this problem. In the near future, I imagine that the raw data of your camera will be associated with a token on a blockchain (not bitcoin, but a dedicated high-capacity blockchain). Such a system would allow us to determine that a picture was indeed taken with a physical device, and thus that the events depicted have a bearing in the real world.
My bet is that we are headed toward a future where blockchain is ubiquitous. Where everything of value is underpinned by a specialized blockchain. When you order groceries, the origin of the produce and raw ingredients are all embedded in blockchain. In virtual reality, every digital product has a specialized blockchain. Every kind of transaction; compute, assets, AI, will all be underpinned by trustless peer to peer systems.
All these specialized blockchains trade security for throughput. My bet is that Bitcoin will act as a security guarantor in our future digital society, where the state of every blockchain is periodically validated on the Bitcoin network. Thus, I bet that every transaction in the future will have an associated Bitcoin cost. Thats why I own a small amount of Bitcoin.
Not to mention the fact that you can hold Bitcoin trustlessly, and you can transfer it to someone else trustlessly, but then you have to trust that they send to you in return what they promised.
See Goharshady, Amir Kafshdar: Irrationality, Extortion, or Trusted Third-Parties: Why It Is Impossible to Buy and Sell Physical Goods Securely on the Blockchain. arXiv:2110.09857, arXiv, 19 Oct. 2021. arXiv.org, http://arxiv.org/abs/2110.09857.
It’s not clear to me that most of those use cases will be served better by a blockchain rather than a regular centralized service… but also examples like the camera don’t really work, because someone could still use the camera to photograph a generated image (for example), or hack the camera itself.
On top of that, up until this point in time, Bitcoin has been the opposite of secure. The entire history of it is filled with people constantly losing money and being scammed with no real recourse.
> Bitcoin is the only immutable peer to peer system ever created
What about the other thousands of other public blockchains, many of which are extremely similar (DOGE, BCH, LTC, ...)?
> In a world headed toward web 3.0, generative AI content & virtual reality
... Metaverse anytime now.
> there is tremendous value in a trustless and immutable peer to peer system.
Personally, I think there is much more value in trusted systems.
> In fact, I think we NEED it
... because the world didn't work at all prior to 2009?
> and should as a society happily bear the power consumption
In contrast, I think if we were to eliminate Bitcoin and other crypto, we'd save 1% of electricity with very few negative side effects, but a significant reduction in crime, frauds, and scams.
> already we cannot trust that a digital picture is genuine.
Solutions to this problem might well involve digital signatures and hardware enclaves in cameras (installed by trusted centralized camera producers which could publish the public keys of each sold camera once), but I don't see how public blockchains would add any value. The signature of the picture embedded in the picture speaks for itself.
> My bet is that we are headed toward a future where blockchain is ubiquitous.
Gott forbid.
> When you order groceries, the origin of the produce and raw ingredients are all embedded in blockchain.
Apart from the fact that I don't see the benefit of that, the oracle problem makes this impossible, I fear.
Let me clarify that I dont think any of what I described is a given. I think its one of the more likely outcomes of our future. I think its prudent to own a small amount of Bitcoin (or basket of cryptocurrencies) in order to hedge against that future or someting close to it.
> What about the other thousands of other public blockchains, many of which are extremely similar (DOGE, BCH, LTC, ...)?
They are simply not as secure and could be attacked by well funded actors. Perhaps in time another blockchain will win out.
>... Metaverse anytime now.
Just curious. Do we disagree about where this (technological progress) is headed, or is it the timeline? I think its quite likely that we will spend more and more time in vitual or augmented reality. For good or ill.
> Personally, I think there is much more value in trusted systems.
I prefer the absence of a central authority. Perhaps im cynical.
> ... because the world didn't work at all prior to 2009?
We dont need crypto right now either. I simply think that the only good outcome of our digital future is a trustless one, and I think blockchain will play a central role there.
> Solutions to this problem might well involve digital signatures and hardware enclaves in cameras (installed by trusted centralized camera producers which could publish the public keys of each sold camera once), but I don't see how public blockchains would add any value. The signature of the picture embedded in the picture speaks for itself.
The value of blockchain is in the absence of a trusted centralized camera producer that can be pressured.
> Apart from the fact that I don't see the benefit of that, the oracle problem makes this impossible, I fear.
The oracle problem is solved in the same way the camera problem is solved. By digital signatures of real world interactions of the machines in the production chain.
I think the world will lean into trustless systems over trusted systems, lets see. That is not to say that I dont think the world would continue to function on trusted systems, I just think it makes dystopian outcomes more likely.
Perhaps another way to think of it, is what would it take to be less disillusioned?
What was about it that made you think it might be a good thing? Have those aspects gone now or is the problem that there are new factors that put you off it?
Most importantly, what could be done to get you back onboard with the idea? I'm not really a fan of "Bad thing is bad" and like to think in terms of "This thing has a bad aspect, what could be done to fix it"
To my mind, I was not expecting Bitcoin to increase in value this quickly. Few people probably were. On the other hand if the end point of Bitcoin was to replace money, then I can see how it would have a high value at that endpoint. That presupposes that it reaches that endpoint. The perceived value (barring the mood based fluctuations of speculation) depends on the proportion of people who believe in that outcome and when they think it will occur.
When Bitcoin came out I thought that it was indeed like email for money, and that it would take a similar amount of time for it to be used by people in general. I figured it would be 20 or 30 years before the average person had even heard about it. Turns out I was quite wrong there.
I don't think Bitcoin is particularly impressive as an investment today, the risk when it comes to retaining value is some unknowable but probably quite high. The risk of holding and retaining your balance adds another layer to that. For the value of the mining reward to stay level with an external currency there has to be around a 20% increase per year to keep up with the halving. Exceeding that rate is what lead to the increase in energy expenditure. While it has increased more than that so far, the one rule of exponential growth is that it cannot continue forever.
It might have a few doublings left in it, but it is slowing down and with a risk level where you could probably find a lower risk way to double your money in a similar timeframe. Maybe it hits a million, but when? If it takes long enough you're better off with an index fund.
Bitcoin sits around $100,000 today, that's way higher than its current utility. I feel like the value should represent the aggregate impression of where Bitcoin will be in the long term. I mostly think this is true and bubbles represent the flow and ebb of the faith that has no logical support. I used to think that nobody could sustain the delusion of value when it is not apparent for many years on end. House prices have led me to think that maybe people can pretend that their thing is worth more than it actually is for many years without faltering.
I guess the world is in a funny place now. For even an index fund to be long term stable, some counties have to continue to exist, and people are beginning to have doubts about even that.
> What exactly does bitcoin offer the world today?
I fully agree that Bitcoin did not become what it was originally built for (a currency system for the internet), and as a matter of fact, for very valid reasons:
- custody is really hard, and damn near impossible for most people, including people who like to think of themselves techies and who all end up getting caught with their pants down when exchanges get hacked because they forgot the number one tenet of Bitcoin. Please repeat the mantra after me: Not Your Keys, Not Your coins.
- the 10mn confirm thing is a pain for small, casual transactions
- scalability (it won't and was never designed do what eg VISA can do in terms of TX/second)
- most people are downright horrified when they realize the non-reversibility aspect
- most people don't understand what money actually is and hot it works in the first place, so seeing the advantage of BTC is damn near impossible
- etc...
HOWEVER: that absolutely does not mean that Bitcoin isn't amazing and useful.
Bitcoin has simply become something else entirely, a kind of financial instrument that had no equivalent up until now and which has turned out to be profoundly useful to a very large class of people (go ask USA - one of the country with the worse divorce laws on the planet - men in the middle of divorce proceeding for their opinion on the topic of assets that can't be confiscated).
Oh and yes, I already hear the shouts from the back of the room: skirting the law!drug dealers! criminals! cyber-ransoms! Won't you think of the children!. One single word to counter this argument: there is thing called the USD which is used for the exact same thing as all the above "use cases" (and worse, like toppling foreign governments) and has never been considered evil for some reason.
I do understand and feel for folks who looked forward o Bitcoin as a replacement for the dollar, lubricating internet commerce and why they are disappointed. I was one of them and it took me a long time to understand what Bitcoin actually was.
However, if you fall in the category of the disillusioned, please consider: something else will come around to solve the problem of internet currency. It won't be Bitcoin. It maybe layer two stuff, who knows.
But on the other hand, Bitcoin has become something extremely useful (and even without trying to analyze the why, the price is an inescapably clear proof of that).
Its singular properties as a financial instrument make it something that no other thing in tradfi can boast having:
- demonstrable finite supply, and therefore a rather predictable outcome on a long term timeline.
- first mover advantage (aka network effect). Other cryptos might be better and get better all the time technically, might better for the environment, but at this point, displacing BTC in terms of mindset and allocated capital ... good luck
- demonstrated long term hedge against inflation (it's been 15 years, and if you can afford to ignore volatility at the one year scale, it's undeniable). On that topic, I can't NOT post this link:
- transactions are impossible to censor, be it by corps or sovereign entities (for me personally, the number one attractive trait, a basic unbreakable defensive guarantor of individual freedom). This goes from simply giving you a ton of actual leverage in e.g. a divorce, to being able to work your way around tyrannical governments (see the Canadian truckers who got all their bank accounts frozen for daring to disagree with the thugs in charge).
- operates 24/7 trustlessly and outside any jurisdiction
- quasi-instantaneous transmission of value across borders, geographies, distances, etc ...
- pseudonymity and privacy. While not perfect in this regard, you neighbor could be a freaking multi-billionaire and you wouldn't have the first clue.
- you can physically disappear and travel with *ALL* of your wealth at an instant notice.
- it cannot be confiscated short of physically torturing the relevant information out of you. And even then, you can protect yourself by not knowing the full secret to accessing your BTC. And this assume people know you have them.
- etc ... the list is long
TL;DR: Bitcoin won't replace Paypal, and that's actually a good thing. It has become an entirely different beast, probably as, if not more, useful than what it was designed for originally, specifically when it comes to being a tool that protects individual freedom against the excesses of the group.
All of the "you can anonymously and safely hold tons of wealth that can't be taken from you" points you make fall apart when the following two are true:
- For the majority of financial transactions you might want to make, fiat is still what you need, because realistically very little IRL uses any L2 solution. Thus, you need a fiat off-ramp... Like an exchange.
- Exchanges mandate you identify yourself to them - KYC/AML and all. Governments might not be able to know which wallet is yours, but they sure as hell can and have secure those off-ramps this way.
I've seen plenty of pro-BTC arguments on a technical level about privacy, resilience, independence from central banks, etc. but fundamentally I've never seen anyone able to come up with something that can out "your opponent is the government and no technical project can overcome a legal obstacle".
You can move $2 billion worth of capital PERMISSIONLESS with a click of a button, the only thing you need is the private key, are you being disingenuous on purpose or what?
The only answer that makes sense to me is this: BitCoin is a scam started by the oil industry as a way to tie currency to exponentially hungry power consumption.
Maybe that guy who was digging up a landfill to find his old HDD finally found it!
Seriously though, what are the odds that someone has been quietly spending 10s/100s of millions in cloud compute to brute force the keys for old wallets?
He lost his court battle to force the local government running the dump to allow him to dig the last I heard. So I doubt it, he wasn't even allowed to really try.
Good chance those coins are 100% traceable. They were lost in the days before good privacy tools like mixers, and the database of the biggest exchange MtGox was fully leaked so everyone knows the real name, email, bank details, and date of birth of the owner of every old coin.
Very pleased I disposed of all mine long ago, and the Blockchain shows that so nobody tries to kidnap me for the keys.
I went back to the (french) articles making that claim in headlines and it turns out to be false, thanks.
He lost his appeal in his case against the city authority to search the landfill, so he can't ever search for it.
It's a bit buried in his feed in between the announcements about tokenizing part of these legally inaccessible coins.
Yeah - assuming this was not the rightful owner (which it might well be), my gut is that perhaps someone found an implementation flaw/quirk in some old wallet code/keygen/RNG that effectively reduced the keysize down to something more manageable for brute-forcing. In ye olden days Bitcoin was still something of a curio for geeks and nerds and not the industry it is now, so it would not be unreasonable IMO for there to be some slightly-less-than-perfect implementations floating around from hobbyists or open source etc - the stakes were lower then.
If there was say a vulnerability in a specific wallet version it would be quite possible to narrow down search space to only the wallets/addresses around that point in time etc as well, making it easier to target your brute-forcing efforts.
It will be interesting to see if any other dormant wallets from around the same era wake up too.
One of my students believes Elon Musk and Peter Thiel created Bitcoin. Here's the summary of the 5 page doc he presented:
In 2000, according to Peter Thiel, he met with the E-Gold team in Anguilla.
Around 2001, Elon and Peter were at PayPal, and they had plans to build a similar digital currency.
In 2002, PayPal was sold, and that pretty much ended the digital currency plan. Instead, PayPal let users link their bank accounts and cards to make payments. This created a bigger dependency on banks.
By 2004, there were over a million E‑Gold accounts. Banks weren’t happy about it. Meanwhile, Elon and Peter understood exactly how much potential this new kind of digital currency had.
In 2007, the banks took the founders of E-Gold to court for running an unlicensed money‑transmitting business. That same year, the E-Gold engineers were out of work.
Bitcoin was invented in 2008, the same year Elon was broke and busy trying to save both SpaceX and Tesla from going bankrupt.
His theory is that Elon and Peter hired the smartest engineers from the E-Gold team and asked them to build blockchain so they could create their own version of E-Gold. The team worked on Bitcoin from 2007 to 2010 under the alias of Nakamoto.
I do not think that Elon would not claim he is the inventor by now.
The team theory makes this entirely unbelievable. Something like this can only be pulled of by 1-2 person's whith exceptional self-restraint.
Peter Thiel said in one of his podcast he believes it was the E-Gold team who created Bitcoin under the alias of Nakamoto. He also confirmed he knew the team. But no one knows the names of the engineers or who financed them.
All we know is that Elon and Peter revolutionised the finance industry with PayPal.
Video where he said he knew the team? In the main video, he just speculates that some people at the conference made bitcoin. Never provided even a claim to having evidence.
"Peter Thiel met with the e-gold team in February 2000 on the Caribbean island of Anguilla to discuss making PayPal interoperable with e-gold. The goal was to challenge central banks by creating a system where PayPal and e-gold could work together. Thiel believed this collaboration could spark a revolution against traditional financial institutions."
Actions speak louder than words.
- Thiel met with digital currency pioneers in 2000.
- Thiel chose not to partner with E-Gold because he needed to stay compliant and bank-friendly.
- A few years later, Bitcoin quietly appears, solving the exact problems E-Gold ran into.
- No names. No funding trail. No way for banks to know who the enemy is. Just Bitcoin wallets full of money.
It doesn't sound like a bunch of idealistic cypherpunks building tech to save the world. It sounds like a few smart, well-connected people who understood how money moves, got frustrated with the banking system and their fees, and built a way to create wealth and move value without paying commissions.
The cypherpunks laid the groundwork for the encryption banks, governments, and corporations now depend on. They were never interested in dodging taxes or avoiding bank fees.
Perhaps plausible until you mention that they hired a team to build it.
There's no way, even if it was a single-digit number of people team that they would remain silent. If it was just Elon/Thiel I could perhaps believe it.
Also keep in mind that there were some very desperate years for Elon where his companies were extremely close to bankruptcy, wouldn't he have tapped into that bitcoin if he had access to it?
> wouldn't he have tapped into that bitcoin if he had access to it?
That's not how business works. You borrow, then borrow some more, and focus on having a long term plan to cover the interest, so you don't upset the banks or end up broke again.
Doesn't Elon sell Bitcoin whenever he needs a few hundred million these days?
The fact that we don't understand how someone could've come up with something like PayPal or Bitcoin might be exactly why Elon and Peter are the richest people on the planet.
> There's no way, even if it was a single-digit number of people team that they would remain silent.
JPMorgan moves $10 trillion a day. Would you sleep at night knowing you publicly admitted being involved in a project whose only mission is to bring them down?
> Around 2001, Elon and Peter were at PayPal, and they had plans to build a similar digital currency.
> In 2002, PayPal was sold, and that pretty much ended the digital currency plan. Instead, PayPal let users link their bank accounts and cards to make payments. This created a bigger dependency on banks.
This doesn't hold up to scrutiny.
Except PayPal wasn't invented by Elon or Peter. It was Elon's company's plan to build the digital bank but they were failing quite spectacularly at it.
They merged with Confinity who'd already built PayPal, had a working prototype, etc.
Elon lasted four months as CEO of PayPal, trying to convert it from Java to ASP until the Board didn't ask him to resign, but fired him, the morning he left on his honeymoon after getting married.
PayPal is a complete red herring there. Elon had no participation in ideas on digital currency there.
I've got a Confinity Paypal tshirt from a job fair I went to in 2000 or 2001 from back when they envisioned people using palm pilots to transfer money. I always think it's hilarious that people give Elon any credit for doing anything at the company.
So you are contradicting what Luke Nosek, the co-founder of PayPal, said?
Luke: "Many people don’t know this, but the initial mission of PayPal was to create a global currency that was independent of interference by these, you know, corrupt cartels of banks and governments that were debasing their currencies.”
Why should we believe you and not the person who created PayPal?
Elon was working on a digital bank, not a global currency. His company was failing miserably.
Confinity, who made PayPal, and had a first version working, merged with them.
Elon gets no credit for a 'global currency' idea (nor do I think he and Thiel invented Bitcoin[1]), because Confinity was already working on that idea when they merged and became PayPal properly, in the four months before he was ousted.
My argument was that Elon wasn't all about the global currency.
[1] And Elon definitely didn't invent BitCoin. His ego would never permit him to have kept that a secret for a month, let alone a decade plus.
The PayPal mafia (Musk, Nossk, Thiel, Levchin, Sacks, and the rest) spent years working closely, obsessing over banks, money, payments, and how to move value on the internet, questioning everything: What is money? Who controls it? How do you make it more efficient, global, and digital?
JPMorgan moves $10 trillion a day, according to Jamie Dimon.
So there's the unwritten rule: you never upset the banks because that's the last thing you'll ever do.
So why would the richest person on earth do that? He's not crazy.
Back in the real world, plenty of people publicly associated with running major cryptocurrencies (and Craig Wright!) are walking around talking about how they invented the cryptocurrency and how it revolutionises banking, and plenty of people inventing infrastructure for promoting Bitcoin are doing deals with banks, whilst Elon is the sort of guy who goes to extreme lengths to piss off both political parties in the country that he and his businesses and his lucrative government contracts are based in, including ranting into the void about the most powerful and most sensitive man in the Western world is in the Epstein files when they had a fallout...
> So there's the unwritten rule: you never upset the banks because that's the last thing you'll ever do.
What are they going to do? Whack him mafia style and make it look like an accident? Here’s a more realistic rule: “If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem”.
Just applying Occams Razor here, this whole story makes more sense if the E-Gold engineers just bootstrapped this project without Musk/Thiel involvement.
E-Golds most talented 1-2 engineers weren’t poor people, and could definitely afford a 5 year career break.
Fun personal fact - the only reason I didn't invest more in Bitcoin (which would have definitely been enough to be FU money) was because I had some E-Gold when it was shut down.
Worse fun personal fact. I was planning to buy 5000 bitcoins on a Friday after work. A coworker convinced me and it made sense. Bitcoin was less than 2 a coin at that point.
Then I go down the elevator in my building and there is a huge crowd of people. It ended up being 50 cent the rapper and a few other famous people.
It was so surreal and unexpected I completely forgot about Bitcoin for a few months. And by then I could stand the fact it had tripled (or something) and I had missed it.
Would have been hundreds of millions. Could have lost the hdd or had sold later but I'd always hold some.
Lol so now I blame 50 cent that I didn't buy Bitcoin
One of the doge creators sold all his early doge for a used car. He'd hit the jackpot, a $5k return on something he rolled out in under a day's work, for fun.
He didn't make the wrong decision. All his coin was worth 5 bucks, then 5900. What would you do?
If this at least involved Len Sassaman somehow, I'd find it at least worthy of digging in to this. Pass. Musk and Thiel being true cypherpunks? Come on. Musk hasn't had a single idea on his own, Thiel is way too busy coming up with ways to enslave everyone. No way they had anything to do with creating Bitcoin.
People always forget about the great Wei Dai, who like Nakamoto is already sort of pseudonymous, he also created Bmoney which is allot like Bitcoin. He is also the creator of the Crypto++ cryptography library for C++ (bitcoin is written in C++)
From all the OG Cypherpunks he ticks allot of the boxes.
Except for the secrecy of Colossus, Crypto AG, the 9/11 hijackings, Bill Cosby drugging and raping dozens of women, Peter Thiel funding lawsuits against Gawker, the Manhattan Project, the CIA-funded coup against Mossadegh, Stuxnet, the Five Families, most of what the NSA does, the Stealth Bomber, and so on.
Almost all of those remained secret longer than the 17 years we're talking about here, and due to selection bias, I am forced to omit the much more successfully kept secrets, because I don't know about them yet.
The selection bias, is discounting the endless conspiracies exposed daily.
People go to jail, are caught out, fired, relationships break up, governments fall, because conspiracies of even a few people fall apart. It's a regular thing.
You're mentioning some things, of which some were known during the time. The FBI had reports of the 9/11 hijackers, Bill Cosby was known by many but the women were paid off with cash or jobs (until they rightfully went public), and things such as the CIA and the Manhattan project are laced with highly patriotic people, and the death penalty or life in jail, along with people sequestered and watched by immense security.
Secrets are very difficult to keep.
The things you think of were enormously unusual in that they were kept.
Very plausibly the identity of Satoshi is already known to more people than Cosby's rapes or the 9/11 hijacking plans, before everybody knew about them. The hijacking plans weren't even well-known inside the FBI! And it's also very plausible that the people involved in Bitcoin were either strongly idealistic, facing death penalties for disclosure (for example, if they work for the Mossad), or both.
I agree with your weakened claim that secrets are very difficult to keep, but much of modern society is built on institutions that are very good at keeping them: armies, intelligence agencies, and even companies with trade secrets.
I agree that Satoshi was probably just one or two people, and the difficulty in keeping secrets with more than a few people is one of my reasons for that. But you said it was impossible, not difficult, which is much too extreme to be justifiable.
(I think it's about 50% likely that it's one of a couple of dozen people I've met personally, but I wouldn't be able to convince anyone else. So you might be talking to one of the people in the position of Bill Cosby's friends before the news came out.)
I agree with your weakened claim that secrets are very difficult to keep
I think the mindspace here is what I was taught. A shared secret is no longer that. That the more people which know, the more impossible it will be.
As humans, we must conceptualize different sides of the problem, differently. As a person attempting to maintain secrecy, the impossible nature must be kept in mind at all times.
This is doubly true with some personality types, which think everything is a game. I've often wondered if some people feel mental pain, when held to their word.
So framing is important.
But from the other side, one can point to exceptions to the rule.
I can't say that to my student. What kind of teacher would I be? He might not have found out who Satoshi Nakamoto is, but he learned how to think, use research tools, ask good questions, and communicate the outcome of his investigation.
Some dude had the wallets on a usb drive. Maybe he mined in the very early days, never really thought of it, and ended up aged and not cognitively aware, his memory wonky.
Recently, he just passed on.
His offspring cleaned out his garage or whatever, found a usb stick, looked on it for photos, and found this.
Being seriously serious, if it was even statistically unreasonable to accomplish this once in this amount of time, it would be apocalyptic. A whole lot more than bitcoin would crumble.
I've personally always been a fan of the idea that the only reason it exists in the first place is to be a 2-trillion-pound canary for sha256
>I would say the odds are zero because that's the likelihood of being able to brute-force anything in the key space.
you are correct at first pass, but it's a fact wallets have been cracked many times, perhaps at least 100s of millions of dollars. The "keyspace" for the cracked wallet is a subset of the nominal keyspace - the much smaller space covered by either a flawed random number generator (RNG), or the whole brainwallet fiasco, or a RNG where a seed is crackable (e.g. milliseconds since 1970 or unix epoch - some cracks, whitehat, have used this method). That's all what we know in the whitehat space, surely other tricks exist in the blackhat space
BTC private key space is 256 bit. Let's say a billion wallets, that's 30 bits, so you need to check 226 bits to hit one wallet.
A H100 does about 1000 TFLOPS at the very most, that's 10^15 or 50 bits per second (generously assuming we can check on key per FLOP).
6B days of that will give you an additional 50 bits (6 = 8 = 3 bits, B = 1000^3 = 30 bits, day = 10^5 seconds = 17 bits).
Now we're talking 100 bits. But as discussed above, you need to check 220 bits to hit a key. There's still quite a gap.
For comparison, the entire Bitcoin network (using 1% of world electricity) does about 1000 EH/s at the moment, that's 10^21 or 70 bits per second (so, roughly equivalent to a million of H100, using the rough overestimating sketch above).
They could also do a private party transaction to sell the coins outside of an exchange, in order to hide the sale and also hide the price of the tokens sold.
This is common practice in the stock market, called "dark pools" [0]
> Dark pools came about primarily to facilitate block trading by institutional investors who did not wish to impact the markets with their large orders and obtain adverse prices for their trades.
Outside, as in off the blockchain? That would mean that after the transaction, both sides would know the key to the wallet and there would be a race about who lights up a transaction first.
A large wallet that’s been dormant for years suddenly becoming active will tend to pressure the price lower from the implied increase in liquid supply and fear that the wallet will continue to distribute coins.
It’s not just the printing of transaction price that can affect the market.
While ~$8B is huge news, due to the potential that all ~$188B might be in play, when most investors probably expected it was not prior to this - or at least the probability was low enough to barely factor, it's unlikely to crash BTC.
Further, moving BTC is one thing. Showing signs of liquidation is another.
That much should be able to get liquidated intelligently without moving the market.
Not true at all! Everyone knows there are holes in the crypto algorithms and implementations which agencies use to achieve any objective they may have. On top of that there are also holes across the software and hardware stacks of various implementations. Just because they run all the researchers and fund a lot of it does not mean there are no holes.
Especially now with AI, I wouldn't be surprised if an amateur kicked a bunch of tires and got lucky.
Just because they are not published, does not mean they are not using them, someone else found them and are using them. Or they just have the keys from back in the day.
Can't wait to follow this story as it unfolds. The other risk is Quantum... That is going to be real fun when it starts making leaps above Moores Law.
There needs to be a industry wide effort NOW! That researches and generates keys in unconventional ways, different than the ways they are being generated now. Because Quantum is a beast. Those keys will need to be Quantum proof, which means that even if the agent knows the algorithm that is used to generate the keys they cannot duplicate the keys that were generated the first instance it was run. Or you can start doing Hashing across fingerprint, eye and dna data. That is coming my folks!
Can you look me in the eye and state that you understand Bitcoin and the math and the cryptography behind it?
Even if you do, there could in theory still be a way to narrow down the key space or find some other shortcut to a wallet key, even if nobody has figured it out yet.
I understand the math and crypto behind it to a degree. I don't profess expert knowledge however. But I know enough to know the GP is wrong and I'm happy to point that out. If I thought there was any value in correcting GP claim by claim I would do so. But in reality it will just end up in me wasting my time trying to educate someone who doesn't want to be educated, and if they did they could go and research the math and cryptography for themselves.
As someone once said, I can explain it to you, but I can't understand it for you.
Those people were wasting their money. They could be running those GPUs from now until the end of the universe and still have approximately 0% chance of finding a single used key.
Right. Those were the ones I talked to, just by random chance. It means that there are a lot of them.
This implicates a few things - (1) people win the lottery every day and (2) it's highly unlikely that the best techniques are publicly known.
Perhaps there's something that requires $1,000,000 in investment to yield a 1:100 chance of finding a particular targeted wallet using some clever shortcuts.
The other explanation is very implausible: a human sits on wallets without splitting up the funds or derisking exposure, has wallets with a billion dollars sitting it in.
Now I only have a few million, but even I have something like 6 brokerages and 12 banks. Even when I was a btc holder, I didn't keep over $100k in a single wallet.
The snatching theory requires no new revolutionary math, no substantial breakthroughs, just some clever people with a lot of resources and a goal.
Either explanation is speculative. I think the "lucky researchers at some University" theory is more likely then the "let's wait 14 years until this $1,000 becomes $1,000,000,000."
Especially because (1) we're not exactly at some high water mark and (2) if this was just a person with a wallet trying to do something like pay for life's uncertainties, you can do basically 100% of that with like 4btc.
However if you successfully snatched the wallet, you're on a clock before someone else gets it. This is exactly the kind of movement you'd be doing
Also if some old bitcoiner comes out and says "hey that was me", we're still up in the air. If I had snatched a billion dollar wallet, the first thing I'd do is payoff an old btc'er to claim its there's to prevent market panic.
This isn’t like lottery odds. The space of keys here is vast. Like unimaginably so. 2^256 is a lot of keys.
If someone had a faster method for breaking elliptic curve keys, fast enough to have a realistic chance on GPUs, the repercussions for that would be waaaaaay larger than merely stealing some bitcoin. This is the same math upon which nearly all digital security in common use today is based. It’d be full-on cryptopocalypse.
It's US$2 billion. I can't imagine a better way of monetizing such an exploit than to convert it into cash by using Bitcoin.
The US govt can't pay you US$2 billion without it showing up as a line item in the federal budget. That's like 20% of the NSA's funding. You'd have to get authorization from the President and hold some emergency session of Congress. Other governments would pay less.
Hacking the normal banking system is also challenging. If you steal US$2 billion someone is going to notice and simply undo the transaction because banking doesn't believe in "code as law".
Changing global politics (e.g. allowing the complete decryption of diplomatic messages) has a value and magnitude of impact that is not easily measured in dollar terms.
I’ve spent the last 15 years working in cryptography. I’m now running a startup making quantum computers. I know my customers :)
Switching to one-time-pads is easier said than done. Upgrading to PQC will be complicated and difficult, and there is a lot of recorded historical messages.
You're looking at it wrong. There doesn't need to be a generalizable, embarrassingly parallel, computationally lower class, key reduction.
Just this specific implementation with these specific wallets maybe using a version of the btc code with a small recently discovered bug that existed say for 3 months in 2011
You can have something extremely localized and get this result. And this is exactly the behavior people have long game theoried would happen under such a scenario.
You're implicitly making the claim that just because you can't find something widely discussed in literature than any optimization of any kind is impossible and nobody would ever dare to keep an advantage in stealing bitcoin wallets secret.
Stuxnet is way less plausible than this yet that happened.
People have been trying to do this for a decade and have in aggregate thrown probably north of $100 million into it through separate efforts. The idea of someone finally succeeding is kind of expected.
Again the only claim I'm making here is that this is not only a non-zero chance, but, in my mind, an over 90%.
the most likely weakness is in the ECC implementation. i don't understand the math (who does?) but what the debate over https://safecurves.cr.yp.to/ tells me is that very few people know what a "weak curve" is but people agree that they exist. this has always made me sketch on ECC in general, especially since it is also used in Tor. Another possibility is compromising the RNG used for creating the pvt sig? which since these are early addresses they would have been from a very early version of the software, and might have used a shitty RNG. If this is a crack it could definitely be state level actors (who has the US pissed off lately? who have they not?). Whether it is state/private the goal would be to extract as much real money as possible before creating a panic, so will be interesting to see where the money goes.
FYI the “safe curves” charts are garbage self-promotion for his own crypto algorithms. I generally respect DJB, but he didn’t even try to be unbiased with that analysis.
Just speculating here, but isn't it quite possible someone wasn't intentionally sitting on it for 14 years and instead just couldn't access it? For example, if they've been sitting in prison this whole time. Something like that seems (statistically anyway) more plausible to me than getting lucky on guessing a key.
As Bitcoin increases in value, the reward for breaking into wallets grows. Satoshi’s is the ultimate target here, followed by wallets used to burn currencies. Some of these look like they’d only be brute forceable and that takes more time and energy than we think is plausible, but I suspect people will find the system isn’t as secure as expected in some weird and wacky ways as this bounty grows.
Although, I wonder if emptying the wallet is actually harder than breaking in, in some ways. Let’s say you get into Satoshi’s wallet (or they still have access), how do you move anything without spooking the entire market?
Bitcoin is designed with clever incentives to prevent this kind of thing. If you can afford to bruteforce wallets the incentive would be to just mine bictoin which is more probable and it also help secure the network. If you can bruteforce wallets bitcoin is effectively worthless. Or you could even use all of that compute to mine something else for example Monero.
What? Satoshi's last publicly known email was on April, 2011 to Gavin [0], stating the following:
"I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them."
Also, let's not forget, it took BTC ~1.5 years to gain any amount of traction at all. Nakamoto was in for a long run and his sudden disappearance is always going to be mysterious
Whoever got these wallets better sell them and get a good security company on rotation quickly before anyone find out who they are. Seems like wrench attacks been been happening a lot more the last year.
I don't really get these; there's not a ton of difference between using a wrench to threaten someone with a bunch of Bitcoin vs using a wrench to threaten someone with a bunch of any other liquid asset that could be used to buy bitcoins.
If I had 8 billion in cash in my bank account and put in a transfer order, they'd block it, call me, make me come into a branch, make sure there weren't any burly guys with wrenches escorting me in, and maybe call the FBI if anything seemed off.
And if it was still legit after that, there would be days or weeks of waiting for the transfer to actually happen, during which time I could call and cancel.
Recently there was a local case of someone extorting people by leaving threats in the mailboxes to not burn people’s houses down in exchange for $1k in bitcoin.
But who would keep $8B in bitcoin without some protections in place to ensure that it can’t be easily transferred away, given the associated upside/downside? That’s... roughly as foolish as keeping $8B in actual cash/gold/gems (notwithstanding the logistical problems with the size/weight) under your mattress.
> And if it was still legit after that, there would be days or weeks of waiting for the transfer to actually happen
or you get a better bank to begin with
most banks that call their slow processes "security purposes" are actually just putting up barriers to maintain liquidity. the banks that go bust are the ones that got clientele based on making it convenient to transfer
This is the other edge of that double edged sword of "no regulations". It's a lot easier to steal bitcoin with no consequence because there isn't an entire financial system backed by people with guns to help you if you are wronged.
> there isn't an entire financial system backed by people with guns to help you if you are wronged
It's not the "financial system" that comes and hunts criminals with guns, but police, acting based on what laws they seen has been broken. And stealing $3 billion is as illegal if it was Bitcoins, as if it was Euro or USD.
As a matter of fact, the police return fewer stolen USD to rightful owners than the "financial system" (ie regulated banks, credit card companies, etc). If you report an identity theft (a theft of your USD via your CC or bank info) to the police, nothing will happen, even if they find the guy. The party that is going to return your money (if anyone) is your CC or your bank.
The "financial system" is even more central a player when you consider the universe of potential crimes. Why don't drug dealers put their illegal and ill-begotten money in the bank? It's because the bank is obligated to ask a million questions, and occasionally, to freeze accounts. Why don't North Korean hackers request payment by bank transfer of USD? Because those payments can be put on hold or reversed by the financial system, which is a tool of the "police" in a way that Bitcoin never can be or will be.
The "financial system" is literally a technical system which has been effectively deputized by the "police", and as a matter of technical reality the "financial system" enforces the laws in ways that bitcoin (and exchanges, custodians, etc) are designed to prevent. Financial systems sometimes return stolen money and enforce laws with the involvement of literal police, but mostly not.
Some may not like the laws, and they can argue for why bitcoin is great. But if you like the laws, you should grapple with the fact that Bitcoin was designed to robustly foil the laws. On purpose! This property is called "permissionless" or "censorship-proof" by people that like it.
The point isn't about a change of legality. It's about a change of enforceability! In the normal regulated financial system _every_ entity you can interact with is known to someone who is a) good at keeping paper traces and b) extremely motivated to provide them, given appropriate motivation, i.e. a properly formed request by authorised parties. And that limits the number of times you can do anything scammy to "few" before you need to switch identities
So in your scenario: The 3 billion will reappear at some point and they will raise flags. And at that point there is a convenient rendezvous point between law enforcement and the perpetrators. And we can all quibble about whether the authorisation is appropriate or not (not all "requests" are requests and most won't even need anything close to a court order). But it's damn convenient to follow the money
There are essentially no criminals that are stealing crypto where the police will have jurisdiction. It's main use case outside of speculation is committing international fraud and theft with no consequences.
Why would you even use a central exchange? It makes no sense. The person holding an absurd amount of coins would not be stupid to throw it all away like that
Not quite that simple, that’s vulnerable to an Eve-Alice-Eve attack. If $1B in BTC moves around in short succession the TXs can be linked easily. You need a mixer that splits up the amount to be paid out, and even then it needs to be done piecemeal.
There are companies (Chainalysis) that track blockchains and ‘grade’ wallets according to who they’ve transacted with. If enough of a wallet’s funds are from a mixer it may be scored a grade lower than the exchange’s KYC rules allow to do business with.
Sure you can. If you do it over a few months, it will get absorbed by market because there are buyers (as of today). Though this is kind of unprecedented, so markets could find this kind of event bearish and front run your sells which tanks the price. But I can't imagine I'd care if I held for 14 years. There is also USDT which is much bigger than USDC.
Also if you approach Coinbase/Kraken/$exchange and tell them you have X million to offload, they'll probably let you do it off-market, so no one (except for the ledger, obviously) would really notice.
Compared to the “Magnificent Seven”, Bitcoin’s volatility has put it in the middle, while it’s performance puts it at or near the top depending on the time window.
I find it odd that someone would make a comparison between bitcoin and other financial assets, as if bitcoin was just another financial asset and its theoretical price wasn't zero... which is a pretty big market anomaly. Normally, when you find a market anomaly, you try to explain it. But these analysts, they pretend that there's no anomaly. They just don't talk about it, in the hopes that nobody will notice.
It could be compared to other assets in the asset class of assets that have no intrinsic value (e.g. other crypto-currencies). I think that would make sense.
If the Bitcoin Sovereign Wealth Fund scam that was announced after Trump's election is launched, there will be a price bottom that is financed by public funds.
I'm not sure what has come of it. Trump is doing well with his own coins:
You would have to arrange a bunch of off market transactions, Probably spread over several different exchanges. Doable, but I reckon you would end up with closer to 6 billion
Yes. And note that Coinbase for example charges retail around 1.5% or so on average, but only a few basis points to institutional clients last time I ran the numbers. Surprise.
Most interesting to me is that people are worried about a $2B transaction moving the market.
How does that compare to the market depth of actual currencies or commodities? BTC, being objectively worthless, must be much more sensitive to people wanting to sell I'd expect.
Other currencies get their value because the governments that provide them make people pay taxes. If you want to pay the tax the US government charges you, you're going to need some USD - so there's guaranteed demand, and hence intrinsic worth.
There's also other debt that the US government provides in USD - which provides value as well, in the form of bonds.
BTC has no such driver of wealth. Except perhaps money laundering/transfers without AML provisions.
Yeah bitcoin is (at best[0]) a kind of consensual hallucination, worth something because people believe it is. Fiat is someone with a Navy telling you it's worth money, it's very different.
[0] in practice there's a difference between the idea of a distributed digital currency and the ponzi schemes they give rise to I'm real life. Bitcoin is some greater fool thing, it's not a medium of exchange.
People value a way to store money securely in a place that can’t be physically robbed, that can be sent internationally with low fees quickly.
You don’t need anything else.
For years the haters on here would screech “but it’s volatile” - not really anymore. I wonder what they’ll decide to hate it for now, rather than changing priors.
According to your theory, all the thousands of shitcoins are valuable. But they're not.
There must be further reasons, then, that the price of Bitcoin is so high. And they're purely sentiment, I'd argue. If that changes, there's little to prevent the price from going down very far very fast. Unlike fiat.
It's brand name value. The same reason there's one basic OS, one internet search, one social network, one VOD site. People can tolerate few names for things and tend towards the default as a safe choice.
This doesn't explain why the currencies of different countries behave differently.
In my view, money is a technology. People use a technology if they find it to be useful. I know this sounds circular, but bear with me. A "major" currency is designed to be useful as a medium of exchange, temporary store of value, and tool of government economic policy. For it to serve these purposes, a government has to moderate its own behavior to some extent.
Thus my view is that the value of a major currency is based, not on the expectation of paying taxes in the future, but on more general expectations of the future behavior of the government.
With that said, paying taxes is good use for money that's a short term store of value, because you rarely need to hold onto your tax money for more than a year before paying it.
>Other currencies get their value because the governments that provide them make people pay taxes
That's demonstrably false, because countries like Zimbabwe and Venezuela experienced hyperinflation (the complete devaluation of a currency) in spite of the fact that their governments were still forcing people to pay taxes with those currencies. So clearly that alone is not enough to provide intrinsic worth to a currency.
Countries like Zimbabwe and Venezuela printed those currencies in vast quantities to pay bills instead of raising [most of] that money through taxes. Taxes owed in previous quarters were worthless compared with the new trillion dollar notes Zimbabwe's central bank issues to pay government officials, and most private transactions were black market so they weren't seeing them returned in taxes. Zimbabwe and Venezuela are the defining example of how a currency which isn't backed by mountains of debt and taxes is reliant entirely on speculators' confidence...
The reason for that devaluation is that trust was eroded. GP's premise is correct, that fiat has value because of governments, but the reasoning here is not fully correct. The value is in the trust that the government and the institutions will continue to function properly.
The expected discounted value of all bitcoin's future cash flows is zero. This is because the only cash flow that a bitcoin investor can expect from an investment in bitcoins is the revenue from selling the bitcoins in the market... and the market value of something that has no use case and is held for speculative purposes only (i.e. has no intrinsic value) will tend to zero in the long run.
A fiat currency that is issued by the government has no intrinsic value either, but there's one crucial difference compared to a cryptocurrency: in the case of a government-issued fiat currency the central bank will intervene the market, by making use of its prerogative to conduct monetary policy, to ensure price of the currency doesn't drop to zero.
My house also doesnt generate cash flow/interest by itself, must have an intrinsic value of zero. Surprisingly it can be used as collateral for a loan as long as other people assign a (however disputable) value to it.
So, of course you could be right when all (not just you) other people decide that BTC has a value of zero. Meanwhile i use my BTCs as collateral.
Value is more of a social judgment, not a law of nature. Hence the misconception?
Houses do generate income, called "rent". Either you rent out your property and get paid an explicit rent, or you live in the house in which case you get
paid in kind. So, bad example!
Like bitcoin, gold is too a "bubble asset", but unlike bitcoin, gold is a physical object with use value and limited availability.
The thing about gold is that its price appears to to be negatively correlated with the economic cycle. Because of this some people argue that it makes sense to include it in a portfolio of stocks and bonds, so that the volatility of the portfolio is reduced, although personally I would advise against it.
A fiat currency is indeed just an accounting unit, but it has some floor against falling to zero, as it can legally extinguish any debt, and is needed to pay taxes.
Even so, sometimes they fall to basically zero. What chance does crypto have when sentiment turns against it?
Generally speaking it has been successful, more so than the gold standard. It's true that sometimes states fail, but that's not something a monetary system can prevent from happening, or insure against.
Sorry to say, but you're deluded. A blockchain is made of "information". Information has no coercive power. A blockchain can't enforce laws. It can't stop illegitimate violence. It can't perform any of the functions of a state. Not even remotely.
Leaving the gold standard has been so successful, as evidenced by the inflation crisis leading to rising cost of living and housing shortages in every western country.
Inflation and a rise in the cost of living are different things. Inflation means an increase in the (nominal) price level, whereas the cost of living is measured in real prices, specifically real wages.
Inflation is an increase in the money supply, which is why it's called inflation - the money supply inflates. I know a lot of government economists like to define it as rising prices because then there is no word for increasing the money supply which is very convenient for them and the governments they work for.
No, it's not just government economists. It's the standard definition in economics. But that's beside the point... the BIG mistake you're making is confusing an increase in nominal prices (inflation, or whatever you want to call it) with an increase in real prices (a rise in the cost of living).
Your definition of "worthiness" is entirely flawed. It seems to be base on some random economics textbook definition of "value".
I am getting tired of repeating the exact same thing on HN, but TL;DR:
. there is no such thing as intrinsic value, it is a fundamentally flawed concept.
. the only reliable tenet in economics (as in: having always be observed to work) is the law of supply and demand, which "value" derives from: if demand>supply, value appears. End of story.
. why there is demand in the first place is a many-colored and complex affair, which economist recurrently (and predictably) fail to analyze and forecast.
Asset pricing theory is a well established field within economics. Of course it comes down, in the end, to the law of supply and demand, but that doesn't mean that we have to stop here. The law of supply and demand doesn't explain why there's a supply and a demand in the first place.
It's not backed by a government, and while some may say that's a good thing, I think it is not.
Without institutional backing, crypto is just a number in a database that people agree is worth something—for now.
If that collective belief evaporates, there’s no court, no army, no tax base, and no GDP to catch it. Contrast this with fiat currency, which—while not backed by gold—is backed by coercive power and taxation.
Let’s start from something even more fundamental. How do you bootstrap trust? Suppose two pseudonymous entities online want to exchange money for services. Such a system will likely need a reputation system to establish the trustworthiness of entities. That system needs to be tolerant to Sybil attacks (i.e., forging multiple identities), while also ensuring the service provider isn’t exploited by a buyer who refuses to pay after receiving the work.
But this exposes a deeper issue: trust cannot be bootstrapped from scratch. It needs either:
A shared history (which pseudonyms lack),
An external authority (which decentralization avoids), or
A system of credible, enforceable consequences (which requires identity or stake).
Without these, any trust system collapses into a prisoner’s dilemma. Each actor is incentivized to defect (cheat) unless:
There’s a future cost to cheating (reputation loss that matters),
There’s a benefit to cooperation over time (e.g. recurring jobs),
Or there's a credible mechanism to enforce fairness (e.g. escrow and arbitration).
But even escrow only works when dispute resolution is possible and trusted. And dispute resolution requires either a neutral arbitrator (who must have their own identity and incentives) or hard-coded, binary rules, which rarely capture the complexity of creative or service work.
More fundamentally, trust-based systems are built on recursive assumptions:
You trust X because X has a good rep.
X has a good rep because others say so.
You trust those others because…?
Eventually, without a root of trust—whether a state, a court, a verified identity, or long-standing social capital—the entire structure becomes circular. There’s no ground truth. Just reputation built on sand.
And so, the real limitation isn’t crypto per se—it’s that trustless systems don’t exist. At best, we shift trust: from institutions to code, from names to keys, from legal consequences to probabilistic deterrents. But the requirement for trust itself never goes away.
In a pseudonymous setting, the cost of betrayal is minimal. A buyer can stiff a seller and vanish. A seller can deliver garbage or nothing. Reputation can be reset at will unless there’s an expensive cost to identity creation or a strongly linked personal history—which violates pseudonymity.
Thus, bootstrapping trust in such environments is not just technically hard—it is philosophically incoherent without compromising at least one of the pillars: privacy, decentralization, or enforceability.
It follows that if you can’t bootstrap trust, you can’t bootstrap anything that depends on it—including money. Money, at its core, is a social contract, a belief system upheld by collective trust. We accept currency in exchange for goods or services because we trust that others will accept it from us in turn. That belief is reinforced by institutional structures: central banks, governments, legal systems, and ultimately, enforcement mechanisms.
But the moment that trust breaks down, the system unravels. If people no longer trust that their money will hold value tomorrow, they will try to offload it as fast as possible, converting it into hard goods, foreign currency, or anything perceived as more stable. This behavior accelerates inflation—sometimes catastrophically.
We’ve seen this repeatedly in history:
In Weimar Germany, the collapse of political and institutional trust after WWI led to hyperinflation, with prices doubling every few days.
In Zimbabwe, trust in government policy collapsed alongside the economy, and the currency became worthless.
In Venezuela, rampant inflation was fueled not just by bad economic policy but by the public’s loss of faith in any institutional ability to right the course.
The underlying mechanism is always the same: money ceases to function as a store of value when the population no longer trusts the system that issues and manages it. Once the shared illusion cracks, even fiat currency—backed by laws, taxes, and armies—can become just colored paper.
Now contrast that with crypto. Cryptocurrencies claim to solve this by removing central authorities and placing trust in mathematics and distributed consensus. But this is not true trustlessness—it's merely replacing institutional trust with collective belief in code and game theory. And the cracks are showing: when confidence drops, as in market crashes or protocol failures, value disappears just as quickly—if not faster—than in fiat regimes.
So the uncomfortable truth is this:
Money only works if you believe it will still work tomorrow.
Without enforceable trust, money becomes unstable. Without shared trust, money becomes meaningless.
And that brings us back to the core issue: you cannot build a functioning economy without some root of trust. Whether that root is institutional, social, or cryptographic, it must be anchored, persistent, and costly to betray. If it’s not, the system becomes inherently fragile.
The reason I used pseudonymous here is exactly because we assumed govs are bad. If govs are good, then crypto degenerates to just a slower system for transactions.
> Money only works if you believe it will still work tomorrow.
Yeah. When crypto goes down, it'll be epic.
> If govs are good, then crypto degenerates to just a slower system for transactions.
That's how I see crypto: an inefficient and ill-regulated substitute for money, though suitable for crime. If governments turn bad, stable money is just one tiny part of the problem.
Bitcoin (capital B) is valuable. An individual BTC is not, but that's true of any currency. We can argue until the cows come home about how valuable these things really are. Speculation in these markets makes it too difficult to judge. People will bet on these things not because they are delivering lots of value to us right now or in the future, but just because they think they'll still be around in the future. That gives monopolists like the ones above the advantage, regardless of value delivered.
An old friend of mine died 11 years ago from an overdose, and I am almost certain he used darknet markets to buy other drugs.
It's very likely there is a wallet forever lost with many Bitcoin in it from his passing. No way his family would have known anything about it (Bitcoin/dark markets)or cared much anyway circa 2014. I'll admit I have pondered ways to check this, but it's too far fetched.
I can't help but wonder if the wave of fentanyl that made optiate addict deaths skyrocket, left a huge wake of forever lost Bitcoin. I know there was a lot of overlap between addicts and darknet market users.
Most addicts would likely not hold Bitcoin in wallet, but spend it on getting their next fix as soon as they buy it. It's not like you're thinking long-term, invest in Bitcoin so you can buy more drugs down the line. There would be leftover change but not big amounts.
You'd be surprised how many of these addicts would be buying for multiple other less tech savvy addicts and essentially becoming small time dealers themselves to fund their own habit. If they got locked up or ODd at the right time there could've been a few thousand usd in btc in a wallet at a time when each btc was worth less than 10usd.
He wouldn't heroin from darknet markets and I doubt many addicts do, they need that on tap locally. But he, and many others like him, just like drugs in general and have a heroin addiction they picked up. So the darknet is more for getting lsd, MDMA, mushrooms, or whatever else.
I really wonder if Satoshi’s fortune is gone forever. Maybe the CIA found his real identity and uncovered his keys. Dumping that much BTC on the market would crash the market and probably even tank other financial markets.
Why would they throw a dozen South American coups, import tonnes of crack to the inner cities, conduct illegal human experimentation or attempt the assassination of multiple democratically elected world leaders?
Honestly no idea, they seem a little fash-y for any logical reasoning that i can comprehend.
Maybe they had another insurgency to fund and didn't want it going through the vast ^official^ books?
did the rumor that Satoshi was Paul Leroux go anywhere? since he is now in the hands of the intelligence services for a while this could be a good explanation for Satoshi not being able to access its coins.
I remember getting a slick new GPU card and learned about Bitcoin mining with my idle gpu power to collect these Bitcoin worth cents, like collecting soda cans for recycling type of $ and thought it wad a terrible waste of my idle processing power compared to harnessing my idle gpu for the noble cause folding proteins at foldingathome.org
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I think many others, including me, have also the same experience of mining a few and then either forgetting or deleting them because they thought it'd never turn out to be worth anything.
This is definitely something I remind myself of for any investment I sell and later on explodes. For bitcoin there were way too many highs that I definitely would have sold at.
Same. I mined 32 BTC circa ~2010-2011. Then I did a clean install and forgot I had everything saved on the HDD and nothing written down. I remember them being worth about $1 a pop at the time and thought "fuck it", but I never bothered minting any more.
Personally I think that this can be considered on the "bug" side of Bitcoin's finite number coins: if, over time, they are lost, then there's a smaller quantity† of currency that is useable to actually do stuff with.
This can make the 'rate of deflation' that occurs worse:
It is under-appreciated that inflation actually is desirable in a working economy.
Look at it this way. If your money (in money form) is worth less tomorrow than today, you are incentivised to spend it, thus fueling economic activity of all sorts (from going out and buying a drink to buying a car, traveling, investing). If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth; the rich get richer and hoard the money. I do not believe any of today’s economies can be healthy and competitive (or even functional) with a deflationary currency.
This argument falls apart when you consider technology though. And even daily essentials. No one would not buy food and water because they can get more in future. They need it now.
The same goes for technology. We all know next year’s iPhone will be better than this year but we still buy them…because we need them now.
I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value. It means money flows into anything and everything like zombie companies, over consumption, property. Those on the poorest end are just trapped because as soon as they get any money it starts depreciating.
> We all know next year’s iPhone will be better than this year but we still buy them
Next year’s iPhone will not only be better, but also (even with the same price tag) cost more, inflation-adjusted. That factors into the decision to buy now.
> I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value.
It is a problem when it is at extreme, like in unstable countries where money can be a liability to unhealthy degree. However, I’d argue it should be a liability to a smaller degree.
What you highlight is the ever-present conflict between personal benefit and societal benefit. Obviously for an individual it is more preferable that the value of their money increases; I would never argue that. However, for society as a whole it is more preferable if the value of money decreases at a stable rate.
Perhaps this is why all major economies settled on the idea that an amount inflation is crucial to have.
I do not buy into the idea that “everyone did it then it must have been a good idea”.
We’ve already seen the negative side of fiat currencies in how they eventually collapse (Zimbabwe, Venezuela, Argentina) and even in more developed countries wages have not kept up with inflation. Money is trending to zero People are trending to destitution.
We saw it recently in the UK - where public sector workers were not given pay rises because the government argued it would fuel inflation. So how does that even make sense.
Let’s continue this discussion when you show me a successful economy with a deflationary currency.
The only reason you can provide examples of failed states with inflationary currencies is because all currencies are inflationary. This is not a coincidence, perhaps because deflation does not correlate with things going well. For some famous examples of deflations, read on The Great Depression in US and Lost Decades in Japan.
The mechanism does not distinguish between “bad economic activity” and “good economic activity”. I.e., the same mechanism applies to positive progress (carbon dioxide sequestration, more expensive technology and techniques reducing environmental impact, etc.), it just requires proper incentive alignment and accounting for bad faith actors via regulation.
A deflationary system with limited supply makes kings and ultimately defeats itself, as your money is decreasingly evidence of your effort and work and increasingly evidence of you having held to it for a while. (It is also a quality of the current system, but less so, and it should be even less so, not more so.)
The US currencies were either literal precious metals, or gold-backed and/or silver-backed, throughout the 19th century until the Great Depression, except for a couple of brief suspensions. Consequently the average rate of inflation was zero. That was the period that it went from a fractious group of rebel colonies to the center of world economic development. So, while I'm sympathetic to the idea that a fiat currency with a predictable inflation rate might stimulate the economy, I think you are making an unjustifiably strong case for it.
Britain coming off the gold standard made the pound more competitive. Prior to that, when pound was backed by metals, they increasingly suffered high unemployment, runs on gold and everything.
In the US it was nothing good either after a few years since WWI: manufacturing fell, unemployment rose[0], etc. I guess it did not help that Britain ended the gold standard which helped their exports, and US adopted protectionist policy which tanked its trade. I don’t need to retell this all but basically the depression ended with the US abandoning the gold standard and entering controlled inflation.
Perhaps the reason for these rosy takes on deflationary currencies in the US is that not many people are still alive who lived through the depression…
By the way, the US did suspend the gold standard during WWI. Why, you ask? Well, it so happened that some debt was due, plus people from across the pond were selling stocks in US companies, and so what happens at that point (when you don’t have much monetary control) is ships full of US gold floating off into the misty ocean.
Correct me if I am wrong, of course.
[0] “Did you know that every 1% the unemployment goes up, 40 000 people die?” — The Big Short.
As far as I know, you're right about those historical facts, but both of us can see only a small part of the picture. There are hundreds or thousands of countries in the world over eight thousand years since money was invented, and we've discussed a 225-year period in two of them. That doesn't seem like good justification for strong generalizations.
>> If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth
When you invest in bonds, they are worth more tomorrow than they are today. So you would have the same incentive to put off spending as long as you could as you would owning a deflationary currency. If that is bad for the economy when you're holding a deflationary currency, it should be bad for the economy when you're holding an appreciating asset.
I don’t think bonds are currency. You buy bonds, you spend money, now your money is doing something in the economy as opposed to if you just held on to it.
> When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more.
Which can limit economic growth. When money was based the amount of gold available, there were long periods of economic stagnation because of liquidity issues:
The stagnation only ended when new sources of shiny rocks were found (California; New World).
I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems. Yes, credit creation can be "too easy" and become a problem, but making it "too hard" (or physically/mathematically impossible) is even more dumb.
> I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems.
That’s quite a mischaracterization. We can at least agree that Bitcoin’s supply is set up to increase at a pre-set rate over time. The math problems are the means to enforce that rate. Not the controlling factor.
> During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation.
I don't know of many things that are viewed positively that have been given a label with "depression" in it.
> Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame.[32] However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent,[33] per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.[34]
> The dramatic shift in prices mauled nominal wages – in the United States, nominal wages declined by one-quarter during the 1870s,[14] and as much as one-half in some places, such as Pennsylvania.[35] Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s.[36] The collapse of cotton prices devastated the already war-ravaged economy of the southern United States.[17]
> Thousands of American businesses failed, defaulting on more than a billion dollars of debt.[35] One in four laborers in New York were out of work in the winter of 1873–1874[35] and, nationally, a million became unemployed.[35]
If Congress had not demonetized silver in 1873, the metal’s decreasing value would have curbed the deflation of the time. I believe that this was one of the US Government’s greatest mistakes ever, because the reaction to the economic crisis in the 1870’s had a profound effect on the failure of Reconstruction. Friedman wrote a paper on this, called “The Crime of 1873.”
I don’t think that’s much of an issue for usage. Since a bitcoin can be divided in to 100,000,000 satoshis. There would only need to be a handful of coins left accessible for the system to be usable.
Being deflationary I agree is a problem, but not the idea that there aren’t enough usable coins left.
Everyone always repeats the "deflationary bad" mantra, but I wonder if it really would be. Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
> Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
In broad strokes, this is perhaps the most important question of environmental sustainability which stems from monetary policy.
Second most important is the matter of how much energy is spent on security (eg, in the case of bitcoin, the horrifying amounts of power spent on SHA256 hashing, and in the case of USD, the perhaps even more horrifying energy consumption of the global petrodollar empire).
We spend so much deliberation on this second question that we often ignore the first: what monetary policies will make us chill out on the whole importing-plastic-shit-we-don't-need-from-the-other-side-of-the-earth thing?
The concern is that capitalism allocates resources to the production of socially valuable goods because corporations can raise money to buy the means of production of those goods before producing them by selling shares in their future profits to investors who are willing to accept some risk of bankruptcy in exchange for those future profits, which result from consumers' rational judgment that the goods are sufficiently valuable to them to be worth buying at a price higher than the cost of goods sold.
None of the links in this chain is perfect†, but one of the weaker ones is where investors are willing to accept risk. A guaranteed deflationary currency is a risk-free way to get a return on your investment, so companies have to offer a higher rate of return, narrowing the set of goods that can justify such investment.
But the same criticism can be leveled at Treasury bonds and (to many people's minds) real estate, so I'm skeptical of it, and anyway "risk-free" is not a good description of Bitcoin.
______
† Consumers knowingly buy socially harmful goods such as cigarettes, they unintentionally buy worthless goods because producers lie to them, investors are largely speculators driven by herd mentality rather than rational assessors of future returns, corporations cheat investors due to principal–agent problems, and externalized costs and benefits such as pollution aren't measured at all. Still, it's a damn sight better at organizing economic production than the Great Leap Forward, the Southern slave plantations, or the medieval guilds.
There is plenty of empirical evidence from the 1800 to 1930s showing how a deflationary currency affects the economy. Amongst other things getting stuck in permanent boom and bust cycles wasn’t that great.
> But the same criticism can be leveled at Treasury bonds
Not to the same extent. Bond returns are usually barely above inflation. e.g. back in the second half of the 1800s you’d get 4% interest plus 1.5-2% average yearly deflation (since the economy was growing due to technological progress/etc. yet money was relatively very scarce).
Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. In order to claim that "this is fine" you would need to refute the claim that deflation is bad.
> Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability.
Deflation is built into Bitcoin by design and is one of its most notable features regarding its coin growth schedule. This pros and cons of that approach have been discussed ad infinitum in the crypto community.
I wonder when did cypherpunks started to discuss this kind of mechanisms for digital currency. Was it obvious from day one or an idea that came later in the design phases.
Cypherpunks were discussing digital gold and Austrian economics in the 1990s. I wouldn't say there was any kind of consensus but the ideas were out there.
The finite nature of btc, low transaction volume, and increasing cost of mining made deflation a given. The original designers simply did not solve this problem. BTC’s dominance in the crypto community suggests that this trait was advantageous for BTCs growth as existing holders are incentivized to add additional use cases/transaction volume.
Not only were they already discussing it when I joined the list in 01992, cryptocurrency was a major, if implicit, part of Tim May's crypto-anarchist manifesto which I think he presented at Hackers in 01988: https://groups.csail.mit.edu/mac/classes/6.805/articles/cryp...
He wasn't specifically calling it out as having a fixed money supply or even fungible tokens, though. And it wasn't until Satoshi figured out how to do without a central issuer like Xanadu, Digicash, or e-gold that we realized it was possible. At the time that Satoshi cut the knot, we were all convinced it was impossible because of Zooko's Triangle.
Chaum founded DigiCash in 01989, incidentally, based on a paper he wrote in 01982 presenting a cryptocurrency design for untraceable payments, but backed with dollars by a central issuer, like Tether.
However, there was always a strong association between cypherpunks and right-libertarian free-market ideology, which is where you find gold bugs and Austrian economists. You may remember that one of the minor plot points in Atlas Shrugged was that Galt's Gulch went back to specie money (tiny pennies stamped from gold) because its value wasn't dependent on government fiat.
There were early attempts at inflationary cryptocurrencies too but they didn't catch on; all other things being equal, people prefer to hold currencies that gain value over time, not lose value.
Given the context, "this is fine" is obviously an ironic reference to the cartoon dog sitting on a chair at the dining room table with a mug of coffee in a burning house meme.
Normally I would say you're right, but I read the context opposite to you; I read the "fine" as a straight/literal statement: the author of "this is fine" is disputing the author's parent's statement that "this can be considered [a bug]".
I love how people bring up deflationary spiral as a "peril" while the prerequisite for it is the universal and smashing success of Bitcoin.
The only "problem" Bitcoin poses for economies is for governments to fine-tune their local economies via currency production and related controls. In that sense, we should watch how events unfold in Turkey.
* among major "regular" economies, Turkey has the highest % of people holding crypto (≈20%). Second only to special zones UAE and Singapore (31%, 24%).
* Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%.
* Turkey does not have mandate for pricing goods in local currency: you can pay in dollars or euros, along the local lira.
* When you enter Istanbul airport, Every. Single. Gate. is marked with BTCTurk ad, inside and outside - the major crypto exchange in the country.
* Istanbul city market is full of traders who use USDT on Tron.
The experiment of social game "Bitcoin" boils down to this: will the people self-organize the functioning economy with monetary freedom, while the gov loses its grip on it; or will the economy collapse without government's regulation and protective management?
This is just a convenient way to access stable western currency. Having been to Russia and Argentina during their worst inflation years before crypto, they solved their issues by asking for US paper dollars. Crypto is just saving them currency exchange fees.
And there's no way Turkiye is behind the value of BTC. It's still driven by speculators.
It's a success today, we haven't gotten to when they stop issuing any more, and mining is funded by transaction fees. I suspect there are going to be some problems then.
> Like what? As far as I can tell, it will solidify its store of value.
Which is the bug:
> No currency should be able to buy the same basket of goods over very long timespans through hoarding. If you want to retain the purchasing power of your money, it should participate in society via investment.
That’s a “hot take” that people take as an axiom. What if it isn’t? What is the precise definition of “participating in society”? What level of earning and spending is considered morally good and who’s to decide that? (Meta questions arise when discussing conflicts of interest of the deciders.)
> Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%.
Because the authoritarian government took over the previously independent central bank and lowered interest rates. Higher inflation was predicted by mainstream economists, and they were right.
It’s a solid store of value. One can borrow against that held BTC, and as it appreciates over time, the loan-to-value ratio improves, without having to do anything. Also avoids capital gains taxes since you're not spending it.
Bitcoin is the world's number one store of value for converting young, impressionable men's wages into thin air and moving those dollars to other people instead.
It's a compelling rival to multi-level marketing for women in that both prospects entice low-socioeconomic standing peoples into thinking they are building value instead of consuming it.
Deflation is what you want for investment assets. Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value.
> Deflation is a good thing when you are parking value.
And is deflation a good or bad thing for the livelihood and well-being of human beings?
How many people in the US has a mortgage or some kind of debt (student, medical)? Inflation makes the burden of debt easier, deflation makes it worse.
And the Top (0.)1% already has an easy enough time with parking/generating value. Deflation would only help them more (and make things hard for everyone under them).
Saving isn’t economically productive, on a societal level. Spending is. Investing is.
Deflation inherently disincentivizes doing anything with the currency other than sitting on it. Want to buy something? You’d be better off waiting and buying it tomorrow because it will be worth less in your deflationary currency at that point. No one has an incentive to lend their money to others to use it more productively, so no growth occurs. No one buys anything, producers can’t sell anything, and no one can get capital to start any business ventures. The sole, viable way to accumulate wealth is to take the currency and stuff it under the mattress.
This results in a society much like Europe described in a Jane Austen novel, where wealth is simply inherited and the upper class doesn’t actually serve an economic function. They just exist to perpetuate their wealth and dole out subsistence wages to those who work their estates and have absolutely no chance of improving their station.
It’s an inherently broken system and a perfect example of Chesterton’s fence by tech types assuming they know better than everyone else.
> Inflation punishes savers and rewards debtors, i.e. it disincentivises the more economically productive behaviour.
Quite the opposite.
Deflation encourages hoarding of cash because it just sits there and increases in value. "If you want to retain the purchasing power of your money, it should participate in society via investment." — Nick Maggiulli
Isn't saving (i.e. sitting on assets) less economically productive than spending? Inflation rewards productivity by making productive use of money the only way to avoid loss over time?
Someone who is involved in crptocurrency explain this to me. If I was this person, could I just sell these bitcoins today and get something like $2B in cash? Or is it more complicated than that?
Think about it: for you to collect your $2b someone has to be willing to give it to you and believe they will get it back in the future by buying your bitcoin. Who would do that?
Then you just magically deposit $2b into your bank account? Riiiight. That’ll set off epic levels of warning lights and in the US the feds would be up your ass instantly.
I bet it’s a freaking nightmare to sell off that much btc.
On a side note, if quantum algorithms break elliptic curve cryptography, then wouldn’t Satoshi’s wallets and others be flooding the market with coin transfers?
The BTC network will need to require all addresses with large Bitcoin UTXOs to send them to new wallets, that are quantum-resistant, by a certain date, or lose the ability to move that money.
Shor's algorithm, originally designed for integer factorization, can also be adapted to solve the discrete logarithm problem in polynomial time on a quantum computer. There is also the less efficient Grover's algorithm can also be used for unstructured search problems on a quantum computer.
The day Satoshi finally decides to move some btc around, I wonder how many automatic emails, api calls, etc will be performed because of so many people setting up alerts.
Price is dumping today, i wonder how much of a role this is playing. those coins will be hitting an exchange likely. This has always been the problem with bitcoin.. the implicit assumption is that many coins are lost , but if the early adopters start cashing out, prices will fall fast. Institutional buying and retail is still small relative to the early adopters. There are many people , miners who are quietly siting on huge fortunes.
Hm, I can't recall when The Sleeping Beauty was making billions of dark money. This is some perverted fairy tale. The sleeping beauty is our current world, that allow all the scams, launderings, murderings to happen.
Easy to kick yourself in retrospect but if we could see the future we'd all be millionaires. AAPL was $0.28 in 2002 (adjusted for splits, something like $12 at the time).
It is still a scam. Its just that critical mass of delusional people bought into it like Gamestop or Tesla stock. Even super obvious scams like Nikola take years to register price wise.
I was also around when bitcoin just started out. Many people wanted it to be a global revolution in finance.
But instead it turned into a game of "hodl" to get rich.
Scams were openly perpetrated in the forums.
I became completely disillusioned. What exactly does bitcoin offer the world today?
> What exactly does bitcoin offer the world today?
Aside from perhaps gold, bitcoin is the most successful currency in the world not associated with a central bank and state.
It's the most liquid asset that is not issued by a central bank. At any point you can issue a transaction to anyone else in the world, without the possibility of a third party intervention. I've had issues pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked.
I don't really follow bitcoin, but last I checked over 75% of block confirmations came from the top 3-5 mining pools. That seems a hell of a lot more centralized than the traditional finance system.
> That seems a hell of a lot more centralized than the traditional finance system
Most countries/systems have one central bank, even if we assume there are only 2 mining pools and they "control the network", wouldn't a central bank still be more centralized?
Besides, the mining pools don't "own" the network, anyone can participate, which kind of makes the whole "more centralized than a central bank" argument kind of weak.
Right, but bitcoin is global, not just for one country. And while anyone can participate in theory, in practice the big mining pools always get their first. And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit. Without those mining pools confirming transactions you can't even spend your bitcoin. As a functional currency, I just can't see how this is any better, like in any way. Probably why it hasn't actually become a functional currency and is just a traded commodity that everyone is hoping like hell won't crash and burn one day.
Forking the blockchain is impractical. You need enough compute power to maintain both forks for some period of time, which means you've effectively halved your compute power. And all that gives you is the power to double spend, after which one fork's transactions are "revoked". This is not a huge problem; regular financial transactions also get revoked (e.g., chargeback). The amount of compute needed to protect transactions for, e.g., half a day (which is much much shorter than the potential chargeback interval) is basically impossible.
> do all sorts of other shit
There's not much shit they can do, without breaking the fundamental cryptographic primitives that make it work. They can't steal money. They can double spend, as above, or they can delay transactions with a probability proportional to their ownership of compute, integrated over a period of time. If they own 80% of the compute, and they really really don't want you to perform a transaction, then they can block it for 10 minutes with 80% chance, 20 minutes with 64% chance, 30 minutes with 51%, an hour with 26%.
Compare that with Visa which has blocked transactions it doesn't like (e.g., porn) for years.
And even this blocking is economically disincentivized. If you want to get a transaction through and the "mafia" don't want it, you can offer a higher transaction fee. Either the "mafia" will have to accept your transaction, or give up the enticing fee to someone else. Transaction processing is a free market.
And compute dominance is something that needs to be maintained indefinitely. Obtaining compute dominance does not guarantee future dominance (unlike with proof of stake systems, which is IMO one reason why proof of work is superior).
> And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit.
This is a common misunderstanding. Miners do not have power in the system. Anyone can fork Bitcoin, but when people want payment in Bitcoin, they won't accept ForkedBitcoin regardless of the number of miners shilling it. Meanwhile mining money will be left on the table for anyone who wants to enter mining of the original Bitcoin and at greater mining profit.
The traditional finance system is that a single central bank, owned by a cartel of rich banks- chase, jpm, etc-- issue the currency, charge us to use it and get first dibs on the benefits of monetary inflation -- google "cantillon effect".
The now much more diverse mining space is much better than completely centralized in one entity current system.
And bitcoin community has a way of working to fix weaknesses wherever they find it... there is active campaigns to diversify mining, as you pointed out those are pools-- and pools are being made obsolete. behind those pools are thousands or tens of thousands of mining operators, of all sizes, as it's viable at industrial as well as individual scale-- many use it to heat their house for less than the alternative, the earnings don't have to cover the full cost to be beneficial to people.
Googling "Cantillon Effect" gives suprisingly few results. Out of the top five results, two are Bitcoin-related, one is Reddit, and one is the Wikipedia page of Richard Cantillon himself.
The top comment on /r/AskEconomics is:
"The cantillon effect doesn't really exist in any significant capacity. Central banks nowadays announce their actions well ahead of time, that means before the actual expansion of the money supply, people know this expansion will happen, and markets price in that expansion. So there really isn't much benefiting from being "early".
Beyond that there really isn't much empirical evidence on the cantillon effect to exist in any significant capacity."
Since I know little about this topic I'd appreciate HN's view.
Cantillon's essay is not terribly difficult of a read and the "Cantillon Effect" has to be the least interesting part of it. It and Smiths Wealth of Nations are both free on the web and well worth the read.
What is the point you're trying to make?
Your claim is that European, Canadian, UK, Australian central banks are 'owned by Chase, JPM etc'?
FED is owned by private corporations?..
OP mixed the "central bank" as an unique one (it doesn’t exists, although MFI could be representative for the west) and the multiple national ones (FED for the US). They arguments doesn’t hold as the national ones creates money and the are much more numerous and diverse in interest around the world than the ~5 bitcoin pools mentioned ahead.
The FED is quite powerful and US strongly influence many other banks but that’s by situation, not by design.
Reading your comments is rather painful with all the typos. I recommend improving your typing and proofreading habits.
May you point them out? Not English native and I’ll be glad to improvise my writing.
evem tho unique starts with a vowel, we say a unique, not an unique, I guess because it's pronounced like "younique", long u. Short u would still be an tho. As in, "An understanding"
"It exists" is correct
"It doesn't exists" is incorrect, exists becomes exist, "it doesn't exist"
the "does" in "doesn't" absorbs subject-verb the conjugation, does is now the verb that needs to agree with the subject, it. Exists returns to it's infinitive (unconjugated) form, exist.
"They arguments doesn’t hold" typo they ought to be the, those or their, not sure what you meant. Since arguments is plural you want don't, not doesn't, alternately "the argument [singular] doesn't hold"
'national ones creates money' subject verb agreement again, either one creates or ones create
"and the are" s/the/they
"bitcoin pools mentioned ahead": ahead doesn't quite apply to comment threads, like on a road you have cars in front (ahead) and in back (behind), but with comments it's above and below, because you scroll up and down, not forward and backward. You could also say aforementioned referring to something mentioned earlier.
Thank you so much, I appreciate.
Same could be said for the large bitcoin pools. That happened to come about by situation, not by design.
Nonsense. While thousands of commercial banks are formally shareholders of the 12 (not one) Federal Reserve Banks,
> the "ownership" of the Reserve Banks by the commercial banks is symbolic; they do not exercise the proprietary control associated with the concept of ownership nor share, beyond the statutory dividend, in Reserve Bank "profits." … Bank ownership and election at the base are therefore devoid of substantive significance, despite the superficial appearance of private bank control that the formal arrangement creates.
https://en.wikipedia.org/wiki/Federal_Reserve#Legal_status_o...
See also https://www.atlantafed.org/about/federal-reserve-system/just...
> successful currency
Calling it a currency is a huge stretch. It’s an extremely successful token/“asset” but it’s about as much as a currency as gold is these days if not less (based on what most people use it for).
I wouldn't call it successful as a currency given its state at the moment either.
I would say that much of the reason for that is because of the perception of the currency that is widely held. It's not much good because people think it's not much good. I bought a few things online years ago with Bitcoin and it worked pretty much the way it should, but most of those places that accepted it stopped . Mostly they stopped due to the public perception.
I do wonder if it has a chance to become useful once it is old enough to not be considered interesting, and the idea of holding something while it increases in value dies.
Even if places accept bitcoin they almost universally price their goods in $/€/£/.. meaning that bitcoin is only a transfer mechanism. So it’s not really a “currency” in that situation either.
I mean if somebody accepts precious metals, jewels etc. as payment in lieu of actual money that doesn’t mean those things suddenly become a currency.
When I said "most successful" I didn't mean it was a complete success, just that this is the best we've done without a state. Currencies are hard, history is full of them failing. Maybe when an asset is liquid enough, it becomes like a currency.
Gold/silver worked reasonably well for thousands of years and unlike bitcoins they functioned as an actual currency.
Even if you can pay for stuff with bitcoin it’s not a currency until people actually start setting prices based on it.
> liquid enough
I’m sure I could find people who would accept Apple’s stock in lieu of actual money, that wouldn’t make it a currency
Last week I happened to visit a grocery store that accepts Bitcoin payments.
Huh. Were you in El Salvador by any chance?
Argentina. I didn't try it because I don't have Lightning set up.
That's the case where I think it will pick up. If the reason for its lack of use is perception based, then instances where its utility outweighs perception will gain ground.
There are numerous places and times around the world that you can look at the situation that occurred and see that Bitcoin would have been a boon had it been established at that time.
Future instances will exist like that, and perhaps that's a good enough role for it to exist on it's own. It can be the candle that provides light when the power goes out.
The irony of course that it doesn't work if the power goes out, but that's another degree of infrastructure damage entirely. It might even be sufficient to ensure the power doesn't go out during some crisis.
Bitcoin in particular can remain operational in extremely degraded conditions.
Its relatively long average block interval (10 minutes) and strictly limited maximum block size limit the total bandwidth requirement for a full node to a few kilobits per second, and you can easily run that on a laptop that consumes a few watts, easily supplied from a relatively inconspicuous solar panel or handheld gasoline generator run at a 1% duty cycle. Blockstream supplies a satellite feed of the blockchain that requires no internet connection, just a groundstation that costs less than a laptop and uses slightly more power.
Outbound bandwidth requirements from the place where the power has gone out are many orders of magnitude smaller. A Bitcoin transaction is a few hundred bytes, so outbound bandwidth requirements for transmitting one transaction at a time are a few bits per second without adding significant delay, and because the transaction is valid indefinitely in the absence of double-spending, potentially down to a small fraction of a bit per second if further delays of hours or days can be tolerated.
Now, it's true that power needs to stay on somewhere for the miners to keep running, and the miners need to be able to transmit their mined blocks to the rest of the network fast enough to avoid many orphaned forks, which requires bursts of somewhat higher bandwidth. But keeping the power on somewhere is much more likely than keeping it on everywhere.
I don't understand LN2 well enough to do this kind of analysis on it, but I'd expect it to be less tolerant of such extreme infrastructure degradation.
> would have been a boon had it been established at that time.
USD and/or EUR depending on the continent would have been used instead in such countries which have failing monetary systems.
Problem is that governments in those countries (like Argentina) often impose capital controls making it hard to acquire foreign currency. Bitcoin is almost always only a solution to that specific problem (i.e. government restrictions not currency instability).
Argentina also makes sense. Solidarity.
> currency
Well given that you basically can't spend bitcoin anywhere, it's definitely not a currency.
I did manage to use some to buy an eSIM. Still not a very good currency.
> Well given that you basically can't spend bitcoin anywhere
Grand statement coming from someone who hasn't been everywhere.
- It's not a currency.
- It can absolutely blocked by third parties (either the exchange you use or the mining cartels can).
- in practice its liquidity is tied to the liquidity of the ”stablecoins” (USDT and the likes) and as such it's not “the most liquid” since the liquidity of those stablecoins is higher.
I don't use an exchange, and the mining pools (which are not cartels) cannot block a transaction, only delay it until a different pool mines a block, typically ten minutes later. I don't think this sort of intervention by a pool has ever been observed.
The stablecoins you mention are arguably more liquid than Bitcoin, but, except for DAI, they're issued by central-bank-like institutions such as Binance and Coinbase. You're right that they're not officially central banks, but that just means you get all the drawbacks of central banks without the advantages.
Without an exchange your bitcoin is not a liquid asset, it's even less liquid than most commodity for which there are digital exchange marketplace. You can sell it over the counter, but that makes it an asset comparable to real estate in terms of liquidity.
The fact that the pools haven't intervene until now doesn't change the fact that they can definitely do it, and would if pressured by governments. Economic sanctions using the US dollar weren't a thing until they were.
And you only need to have leverage against 50% of the mining power to make that happen, which is pretty straightforward given how centralized the power structure of bitcoin is (although less centralized than for most crypto, for which the developer has full control).
The other day I walked up to a newsstand and asked the newsguy if he wanted to buy US$100 of Bitcoin. He said sure, checked the price, did some calculations on his cellphone, and proposed an amount including a commission for him. I agreed, scanned his QR code on my phone, and posted my transaction to the network. I walked to a nearby shopping mall to pee, and then saw that the transaction was confirmed. I walked back to the newsstand. He handed me a US$100 bill.
I didn't sign anything, make any appointments, buy any insurance, walk into any offices, present any identification, or even tell the guy my name. The total time involved was about 20 minutes, but only because I wasn't using Lightning. I had a similarly informal and short, but more argumentative, experience with the previous transaction, at a winery whose owner loudly insisted that he hadn't received the money... until he realized he was checking the wrong phone.
You are so full of shit comparing this to a real estate transaction that I am at a loss for words. You're about as full of shit as the winery guy. He, too, was blathering all sorts of nonsense at me about Bitcoin that showed he didn't have the faintest idea what he was talking about.
The scenario you're talking about is a 51% attack where big mining pools collude to ensure that nobody else can ever mine a block (because it might allow the laundering of tainted coins). That would be a global and extremely obvious disaster for the Bitcoin network, and it would be remedied by whatever measures were necessary to end the attack, possibly including a hard fork or strategic bombing.
Remember that the world's investor class now has 2 trillion dollars tied up in Bitcoin, and they do not want to see it collapse, and such a successful attack would greatly undercut investor confidence in the value of the asset. The Bitcoin crowd has enough pull that they extracted a pardon for Ross Ulbricht and got a friendly SEC head this year. Even before that, when one or another pool would grow to the point where it might be able to mount a 51% attack, it would get hit by DDoS attacks to bring it down.
You're comparing that to a bank declining a credit card transaction because you're in another city.
Governments have been pressuring Bitcoin miners for over 15 years; it's outright illegal in many countries. The hashrate dropped by more than half when the PRC outlawed Bitcoin mining. The effect on the functioning of the network has been pretty much undetectable.
> He handed me a US$100 bill.
Seems like an extremely inconvenient process and it’s unlikely you’d easily find that many people to agree to this unless without a significant premium (>5-10%).
Also $100 is not a lot.
I can't imagine what process of transferring cash could be less inconvenient than someone handing me a small piece of paper? And the commission was less than 5%.
The fact that it wasn't a lot is precisely why this is a good example of Bitcoin being more liquid than real estate. You can't sell US$100 of real estate, not even here in Argentina.
> can’t imagine
Really? You can’t imagine any process which would take 40x less time than 20 minutes?
Sure bitcoin is more liquid than real estate. That’s rather obvious and not a particularly high bar. It’s not particularly liquid compared to actual money or many other financial instruments though.
You seem to be selectively quoting me in a way calculated to give the false impression that I said something obviously false instead of what I actually did say, which was obviously true. What motivates this extremely discourteous behavior?
Rebutting the grandparent's claim that Bitcoin was no more liquid than real estate was one of the main objectives of my comment. I am glad that you agree that their claim is obviously false, but I think it's unfortunate that you didn't respond to their comment to say so.
I agree that Bitcoin is less liquid than dollars, which is why I was making the exchange, actually. For other financial instruments, it depends on who you are, and whether you have an account with a stockbroker. You can't open an Interactive Brokers trading account with US$100, and it's going to be challenging if you are in Venezuela. You are going to have a hard time finding newsstands that will accept your SPY shares, but they are more liquid than Bitcoin in the sense that, given that IB account, you pay much less to convert them into dollars even if you have to cross the spread, and if you're willing to wait 20 minutes, you have an excellent chance of earning the spread instead of paying it.
But none of that compares for convenience with a guy handing me a US$100 bill.
> that Bitcoin was no more liquid than real estate
You did take something that was clearly a hyperbole very literally.
In https://news.ycombinator.com/item?id=44478731 he clarifies that it wasn't intended as hyperbole in any way.
Somehow I’m seeing the complete opposite, the comments clarifies quite directly that it was used as a hyperbole
I notice you haven't answered my question. What motivated you to treat me in this extremely discourteous way?
We're talking about this quote:
> Without an exchange your bitcoin is not a liquid asset, it's even less liquid than most commodity for which there are digital exchange marketplace. You can sell it over the counter, but that makes it an asset comparable to real estate in terms of liquidity.
There is nothing in the tone of this utterance that suggests that it's joking, sarcastic, or hyperbolic; it's a series of apparently serious, sincere, literal claims which simply happen to be completely unrelated to reality.
> you to treat me in this extremely discourteous way?
This is hilarious, you talk shit to people and then whine about people being discourteous.
I don't agree with your implicit assertion that selectively quoting me in a way calculated to give a false impression that I said something obviously false is comparable in its level of discourtesy to me telling you that you are full of shit.
Try selling more than $100 to the guy at the news stand and you’ll see how liquid it is.
> The other day I walked up to a newsstand and asked the newsguy if he wanted to buy US$100
We are talking about the liquidity of an asset, $100 is change money.
Now try doing the same for $100k or $500k, without an exchange your options are very limited and the process is going to be very tedious (obviously you're not going to leave the guy to pee after moving a full bitcoin to their wallet without very strong guarantees that you will end up with the money in the end), and comparable to selling real estate. So of course it's not exactly equivalent to real estate because it's fungible and very small amount of bitcoin have some higher liquidity, it's still a very illiquid asset without an exchange compared to pretty much any other financial assets.
> The scenario you're talking about is a 51% attack where big mining pools collude to ensure that nobody else can ever mine a block
No, you just need to signal you'd mine on top of any block containing the transaction you want to block, and then no further block will ever be mined with the said transaction as other miner will follow suit. You just don't understand bitcoin except superficially and it shows.
> Governments have been pressuring Bitcoin miners for over 15 years; it's outright illegal in many countries
It doesn't matter if shithole countries with no leverage pretend to pressure bitcoin miners (yes it's all about pretending, as long as you don't see targeted assassinations in foreign country, you know the country doesn't really care). In the meantime, bitcoin and other crypto have been subsidized by governments in the Western world for years (through all the fiscal vehicles subsidizing start-up investment). You can be sure that the day a mining pool becomes the target of US sanctions (or has its staff abducted by some intelligence service) the landscape changes dramatically (it won't happen though, as they would cave without a fight).
> Remember that the world's investor class now has 2 trillion dollars tied up in Bitcoin
And they are absolutely uninterested in the ideological aspect of bitcoin, the ability for the US government to censor transactions is the least of their concerns.
I appreciate you engaging in good faith and explaining what you meant, since wqaatwt thought you were engaging in "obvious hyperbole" https://news.ycombinator.com/item?id=44475519 and I was suspecting you of trolling.
It won't surprise you to learn that I haven't had the opportunity to sell US$100k of Bitcoin, but I expect it would be closely comparable to US$100k of US$100 bills, except that I can't zap those across to fixedfloat.com to change to a different cryptocoin or a friend on another continent in 30 seconds. Maybe it wouldn't be prudent to entrust all US$100k to fixedfloat.com in one transaction; maybe you'd want to use a series of smaller transactions of different sizes to reduce the counterparty risk.
But this doesn't seem like an issue of Bitcoin being particularly illiquid. Rather, it seems like exchanges make commodities more liquid, an assertion I don't think is controversial. But most other assets, such as real estate, shares, and even precious metals, are vastly less liquid than Bitcoin in the absence of an exchange. Finding someone on the street willing to buy Bitcoin is enormously easier than finding someone on the street willing to buy your MSFT shares.
I appreciate you explaining your speculations about 51% attacks in more detail. I think the course of action you're outlining would still be very likely to cause chain forks as big exchanges decided whether or not they were going to accept blocks from the compromised mining pools. The world's investor class many be absolutely uninterested in the ideological aspect of bitcoin, but they're very interested in mitigating political risks that threaten permanent loss of their capital.
I do not think your description of the People's Republic of China is a "shithole countr[y] with no leverage" or that it was "pretend[ing] to pressure bitcoin miners". The majority of Bitcoin mining was happening there, the majority of the world's coal was and is burned there, the vast majority of the world's solar panels are made there, the vast majority of the world's other electronics are manufactured there, and virtually all Bitcoin mining hardware is still designed there. But when they prohibited mining, most of the world's Bitcoin mining activity stopped within a few weeks.
See people like you are the reason why I wouldn't even want to ever invest in bitcoin because atleast you, are so full of yourself that you called someone full of shit just because he said that bitcoin is highly illiquid which is true.
Your personal experience may be different and we are willing to hear it but don't treat it as the final truth. I am pretty sure that it was damn awkward asking.
Here I am in my country where I don't even ask for UPI payments to cash because its sometimes awkward and this guy is loading bitcoin of all things and saying its liquid lmaoo and like if it wasn't awkward.
Saying truth cut you so bad that you had to bad mouth the other person for the sake of it. Grow up at this point, man. This is highly against everything the ethos of hacker-news stands for.
I hope your social anxiety problems improve, but I can assure you I don't share them, as you have assumed I do. It sounds like you also might not understand what the word "liquidity" means in a financial context.
What "cuts" me is not people uttering uncomfortable truths but people confidently spewing total bullshit with evidently no concern for its truth-value or even verisimilitude. It's even worse when it seems to be motivated by partisan struggle, as in this case. Both confident bullshit and partisan struggle are enormously corrosive to the collective epistemic endeavor.
The difference between a currency and store of value is not an exact line, but however vague that line is it is somewhat clear on which side Bitcoin is, and it is not the currency side.
> At any point you can issue a transaction to anyone else in the world, without the possibility of a third party intervention.
With KYC and other regulations ramping up, how true is this in practice?
I guess you can get some of that benefit with a wallet only you control. But most folks can barely handle using a custodial wallet.
Transactions are also public by default, for better and worse.
> It's the most liquid asset that is not issued by a central bank. At any point you can issue a transaction to anyone else in the world, without the possibility of a third party intervention. I've had issues pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked.
Issuing a transaction may be easy, but I don't think that's meaningful when people get hit with issues similar to "pulling cash out of banks, or limited sizes available for money orders, or having debt/credit card transactions incorrectly flagged as fraudulent and blocked" on the on and off-ramps.
Almost nobody uses it as a currency. The vast majority of people cannot buy daily goods, food, gas with bitcoin.
It is an investment vehicle, not a functional currency. For most people you can't use it as a currency if you tried.
You can get rich by... having it
Sort of like gold I guess.
I have never figured out "lightning network", their "solution" for payments. (bitcoin payments are so impractical that they have a different, separate system to use for actual payments, that works completely differently.) Seems very convoluted. I need to pay a huge fee just to make a channel so I can receive anything? And there is something about liquidity? I implemented bitcoin stuff and still cannot figure lightning out.
bitcoin is mainly for buying it and looking at a chart.
> bitcoin is mainly for buying it and looking at a chart
That’s what my broker and many others do. They buy a pool of crypto and resell to investors. You don’t get a wallet, you can’t transfer your crypto at all. It just sits there until you sell it. The most distilled Hodl practice ever.
edit: typo
You can't get rich with gold. And haven't been able to for a long long time. It usually preserves wealth due to its long term real rate of return of around zero. But as BTC is new enough, the early owners have indeed become very rich.
In the long term everything goes to zero, so an asset that pays no dividends but has significant storage costs isn't much good for investment.
Bitcoin holders as a group are constantly losing money by definition. Some of them cash out at a profit, I suppose.
I'm trying to figure out what the significant storage costs for bitcoin are. It's a bit higher than a Robin Hood stock because it costs fees when buying/selling, but it's significantly lower than gold/silver which really require some investment in physical security or a vaulting service.
Mining and theft mostly.
It's the miners who are hemorrhaging hard currency. It's currently costing $8-10 billion per year to keep the BTC blockchain alive, but blockchain fees are paid when transacting, not when HODLing, so it's not a storage cost.
Miners get paid in BTC but have costs in money.
They have to sell, so the money is coming from buyers and impacts holders via reduced demand.
> Bitcoin holders as a group are constantly losing money by definition
Modulo market cap representing unrealized PnL, but yes otherwise. Miners and exchanges take a good cut.
Yeah the paper gains are nice, but they all net to zero in real money.
> What exactly does bitcoin offer the world today?
An unrivalled opportunity to fleece the gullible, and for criminals to move assets around without law enforcement supervision.
That's about it. The three categories of users are hopeful fools, criminals, and scammers.
Of course, membership of any one group does not preclude membership of the others, and some are all 3.
> What exactly does bitcoin offer the world today?
It is a highly reliable, global-scale P2P software system, we can analyse, experiment with and learn from.
Global scale using 1% of world electricity that can do 7 transactions per second, because the thousands and thousands of nodes don't trust each other and all do the same work.
.torrent be like: hold my beer
Potential?
I am trying to buy a property, and I've been moving money around to prepare for a down payment. It's July 4th weekend. I initiated some moves in the afternoon of July 3. But an ACH transaction in the U.S. takes "1-3 business days." First of all, why "1-3" and not "1" or "3" or "2"? Secondly, why business days? I get paged at night and on the weekend if something breaks at work, but the banking laws or customs say that computers only move my money 9-5 during holidays? Computers are taking non-human-holidays?
I don't get it. If bitcoin won't disrupt this, something else should.
I have been trading it weekly/monthly really simply, and it's a few K a month of profit. So I think it's useless at the moment other than as a scheme to gamble. I think there's a bit of a trust issue.
This is a US issue. In the EU you can do an instant bank transfer below a certain amount at any time, for free (after they mandated the fees away recently), and many other countries have systems that allow instant bank transfers. You don’t need a completely different way of dealing with money to get improvements to the current system.
Fair point. I don't know how many years we were behind the rest of the civilized world in terms of having chips on our credit/debit cards. And we still have the magnetic strip.
Well, we also use "feet" and "cups" instead of base 10 measurement system.
>I have been trading it weekly/monthly really simply, and it's a few K a month of profit.
What sort of tactics or strategy do you use to trade it for a consistent profit? I assume you're referring to bitcoin here.
Also, the banking hours thing is absurd, and way too common not only with banks but also some online payments processors, like, for example, the utter dumpster fire, parasitic garbage company that is Paypal. Dealing with that one alone (and with banks in certain contexts) alone makes one fully sympathize with so much of what crypto is supposed to (and to a pretty decent degree does) offer.
When Bitcoin started, a banc transaction was still like 3 days, 5 if there was a weekend in between. Also global transaction. Still a lot of countrys have different and strange systems.
The value is in the network itself. Lots of people think that its the digital tokens or coins that have value, but its the system as a whole.
The value is also in the “need”. Corporate treasuries need a way to store wealth that doesn't inflate over time, gold inflates 2% per year, bitcoin 0% - so it fills an institutional need
Does Bitcoin still fit this need with the volatility Bitcoin sees? Do corporations really want to put their stored value it something so unpredictable?
Whats been shown is that if you hold bitcoin for 4 years or longer the investment has performed very well and significantly outperformed the S&P. Companies buying billions worth of bitcoin are thinking strategically about it, they arent retail investors who panic sell after a few months
This! I was around looking for alternative "currencies" before Bitcoin even existed. But they were flawed,because they (such as Libertycoin) were shady centralized systems. Each of them were shut down by the US government. Bitcoin would have been the answer, but I lost interest before it became a thing (or it was already a thing and I somehow never come across it, because I never saw it as an accepted option.) This would have appealed to my geek nature. But I think I would have still lost interest in it after finding that Bitcoin also wasn't the answer due to difficulty in spending it. I likely would have cashed out at like $5 per coin to buy a bunch of pizzas.
A fixed supply, digital bearer asset. It’s nobody’s debt. Not that many of those. And US debt, even though it’s still the predominant reserve asset, things are slowly changing. And yeah, btc is still not a proper currency.
A hyper deflationary asset cannot ever be a proper currency.
exactly this. these people dont understand that their own speculatory practices are what makes this a terrible store of value. its unstable, they even have to rely on literal stable-coins but they still dont see the problem
for the sake of argument, is there any way to introduce monetary policy into crypto currency so as to correct for unwanted inflation/deflation? without compromising on its decentralization promise
> for the sake of argument, is there any way to introduce monetary policy into crypto currency so as to correct for unwanted inflation/deflation
yeah and you don't even need to change bitcoin - just use a stablecoin over-collateralized by BTC built on the bticoin network. In essence these systems work with $1 of the stablecoin backed by $N dollars (N > 1.6) of the the backing asset (BTC). Then they use a smart contract system of price oracles, liquidations & interest rate curves to balance supply, demand and risk parameters. It's pretty much an over-collateralized lending protocol that issues its own asset that is pegged to $1
This has worked well for the past 11 years with MakerDAO on Ethereum and it's stablecoin DAI. I think at its peak the DAI stablecoin had around $7 billion in circulation and was about 5-10% the size of USDT, now it's about half that. However, high treasury interest rates and low interest in decentralized stablecoins have made more "traditional" stablecoins like USDT, USDC vastly more profitable and successful. In recent times even DAI has been trying to become more like USDC and USDT with treasuries held in intermediaries
How is your currency real if it has to rely on a centralized currency like USD to be functional? It feels like a failure of decentralized currency if it has to be a parasite on a decentralized currency. Surely the success metric for decentralized currencies has to be that they replace centralized currency right? That was bitcoins purpose, if it doesnt do that, then whats the point?
Speculation, get rich quick schemes and scams. They will exist no matter what. At least the barrier to entry to get scammed is higher with crypto than just online payments
No, scamming people is much easier with crypto. The transactions are irreversible, for one.
Indeed. The Economist estimates the modern scam industry to be as large as the illicit drug trade by now, around $500 bn annually in revenue. Enabled in large part by crypto (pig butchering, ransomware, rug pulls were not a huge thing before crypto).
As it is with cash.
And crypto scamming is anonymous, low risk and can be automated. Scamming people for cash requires you to get close to each of your victims.
Cash is backed by a government, which can coerce parties into following the law.
> They will exist no matter what
Ok, so then they're not a bitcoin thing then right?
they laugh at the guy who spent 10 bitcoin to buy pizza back in the early days, but you can't directly buy pizza today with bitcoin.
10 bitcoin? It was 10,000 bitcoin.
10000 bitcoin
it's not made in rust
>What exactly does bitcoin offer the world today?
I can tell you down to the day how many bitcoin there will be decades from now.
Can you do the same for any fiat currency for next week?
It offers stability and a mathematical escape from very fallible humans controlling monetary systems.
Funny thing is, we don't know how many keys are lost. They say it's deflationary, and I say it's deflating to zero through key attrition. And people pay for burning electricity meanwhile. Weird game.
We know it's not a large fraction, or anyway wasn't a large fraction a year ago, because the fraction of all mined Bitcoin that hasn't moved in the last year is only about 25%.
Where did you get this number? All I can find is much higher, showing more than half of the coins have not been moved over a year.
https://en.macromicro.me/charts/32355/bitcoin-supply-last-ac...
https://charts.bitbo.io/dormant-coins/
Edit: If I understand correctly around 15% of coins has not moved in even ten years. So more than 20% of all the mined coins up to mid 2015 have not moved since.
Maybe I remembered it wrong, or maybe I was just out of date. Thanks for the correction! Still, that's basically pointing at key attrition being a fairly minor phenomenon.
People complain about 5% inflation, and you call 20% or so of money supply gone "fairly minor"?
Yes; we're talking about 20% or so over 16 years, which is 1.25% per year, four times lower than the 5% per year inflation you're saying people complain about. And the anecdotal data suggests that that key attrition was concentrated in the early years, not just before there were Bitcoin ETFs, not just before there were exchanges, but before even the Bitcoin pizza.
But the big issue from my point of view is not the actual key attrition rate but the uncertainty of the money supply, because from my point of view, these are the important questions about key attrition:
- If Bitcoin goes to zero, what order of magnitude of money will the investor class lose? 200 trillion dollars, 20 trillion, 2 trillion, 200 billion, 20 billion, or 2 billion?
- How much money and power has Bitcoin transferred to its early adopters: 2 trillion, 200 billion, 20 billion, 2 billion, or 200 million?
- How much impact could awakening dormant coins have on the market? If Satoshi, or for that matter Hal Finney's heir or another early participant, started liquidating his early coins, would that be a tenth of the usual daily trading volume? Ten times? A hundred times?
Questions like these are why lolc brought up key attrition in response to ducksinhats saying, "It offers stability and a mathematical escape from very fallible humans controlling monetary systems."
A key attrition rate of 99% or 90% to date would result in very different answers to these questions. But 20% or 50% to date is fairly minor in this context.
Yes, good point. In terms of those macro questions, the key attrition is a minor issue.
Even if it was known and it did tend to zero I don't see the issue, Bitcoin is divisible, almost infinitely if you count L2s system (e.g. Lightning Network operates on a millistaoshi base unit instead of satoshi). Inaccessible bitcoins mean that the accessible ones are more rare so in a way it benefits other holders this way.
They also serve the network as a form of security bounty, let's say tomorrow we discover a way to break encryption "soon" pepople will be provided with a path to safer addresses but these old addresses, the ones for which a public key is known, act as an incentive to look for such security flaws.
Point is that it encourages hoarding money instead of engaging in anything that’s productive. Technical issues are secondary.
Nobody prevents you from spending and replacing bitcoins, besides maybe the governments that insist on taxing smaller transactions as if it wasn't a currency.
You should ask them why they've generated about 58 million millionaires and 2,700 billionaires worldwide. That's some actual "hoarding" you should be concerned about, instead of concern trolling about Bitcoin.
> Nobody prevents you from spending..bitcoins
Well besides common sense.
If you own a deflationary asset/currency which is guaranteed to appreciate as long as the economy is growing (well it wouldn’t if btc became a global currency but that’s another matter) there is no reason for you to invest into anything unless it offers a disproportionately high return (or buy goods/services now if you can delay buying them)
It would just reduce risk tolerance for investors and increase the real cost of borrowing significantly. That’s how deflationary currencies work (we know that based on several hundreds years worth of empirical evidence).
Not to mention you can't have a robust credit market built on top of a deflationary currency.
Imagine you take out a 30 year mortgage in 2025 with 12 periodic payments of .01 BTC a year.
Imagine offering a 10 year bond that will make quarterly payments of .01 BTC. What is the price of this bond? It is just a meaningless question practically.
Did you miss the word "replace" that you have removed in your quote?
None of what you said applies to what I have suggested.
It sounds like you aren't familiar with the anti-deflation argument. I've summarized it in https://news.ycombinator.com/item?id=44471609, which you will probably want to read.
I don’t think it really does offer that escape, now that there’s so much institutional investment in it. It’s essentially tied to the decisions of 5 or 6 monetary policy committees, in the same way APPL is, because the risk free rate from the Fed or ECB is still the most significant factor in capital flows.
> I can tell you down to the day how many bitcoin there will be decades from now.
As this story itself demonstrates, you clearly can't, and it already has the potiential to affect markets: "18.04 million bitcoin sits in dormant accounts. Sizable inactive accounts that wake up after years of dormancy draw investor attention because of the potential market impact if those coins are sold."
It's impossible for you to know if the accounts are dormant intentionally or because the owner has died or lost access - and in the latter case the coins are effectively lost or destroyed in every practical sense. So you can't even say how many usable bitcoins exist at this very moment, and it is even more impossible for you to tell exactly how many accounts will be lost in the future.
That's not completely true. If there is consensus among participants (especially exchanges) to change Bitcoin (fork) they can do it.
Can't do that with Gold.
That would be a different (forked) currency then.
Or it would be Bitcoin classic and have less/no value. See ETC vs. ETH. All depends on how many (important) market participants use which version.
But what's the (inherent, or even otherwise) benefit of this?
If the goal is to hoard a currency itself instead of use it as the exchange between real investments then this makes perfect sense, but those people shouldn't be upset when we tell them we don't directly accept their "currency".
This sentiment models a correction to a complaint I first heard with people who tell us everything fell apart since we ended the gold standard. They ignore that we raised all boats rapidly when we didn't pin everything to governments ability to fight gold hoarders for small amounts of gold entering the market. Even gold hoarders are better off in terms of what the market has created to exchange for their gold because that exchange ceased to be limiting on market expansion.
One could say the US economy was exponential both before and after the currency change, but as with Moore's Law, it gets harder to remain exponential if as few as one limiting factor is emerging.
> I can tell you down to the day how many bitcoin there will be decades from now.
How does that help, when the value it translates to doesn't stay the same? Also the conversion value will be impacted by changes in fiat currency.
Discretion in money supply is a feature, not a bug.
But yeah, put 1% of your savings in each of the 20,000 coins with strictly limited supply. Their value must surely rise, right.
> I can tell you down to the day how many bitcoin there will be decades from now
So what? if you say "scarcity", that by itself has no value. plenty of things are scarce, but are not valuable, no one wants it.
And anyway, bitcoin is not even scarce. there are thousands of other coins now, anyone can create one, these will / are diluting the $$$ going into btc
Not to mention this will effectively be an overestimate given loss of bitcoin to wallets whose owners lost the key.
> stability
That’s the opposite of stability unless you have an entirely static economy with no growth.
Adopting an extremely deflationary asset as a “currency” is one way to get the no growth part I suppose. It certainly wouldn’t be stable.
We’ve (well some, anyway..) learnt that lesson with the gold standard and permanent boom and bust cycles prior to the 1930s. It was anything but stable in the short/medium term.
> It offers stability
Hahaha what? Bitcoin has insane volatility.
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I wouldn't describe bitcoin as stable.
Explaining bitcoin to someone who has no interest in it is like trying to explain to your mother in law that she should remove windows and switch to linux. From their perspective it just seems unneccesarry and overcomplicated.
Unnecessary and overcomplicated? Compared to what? Have you ever taken out a mortgage? Ever tried to send funds overseas? Ever wondered how entire cities are built by the people who run the money?
Does your mother in law know what fractional reserve banking is? A bank run? Can they explain what happened in the 2008 financial crisis? No? They why would they need to know how Bitcoin works beyond just "trust me, it does"?
It's not the how but the why. If you know you need bitcoin you know. If everything seems fine without it why would you bother?
No mortgages or funding of productive enterprises in crypto land anyway.
I have sent money overseas, fast, cheap, securely, with fiat.
The externalities of the bad US retail banking system are enormous. First we got PayPal with Thiel and Elon, then crypto. :-/
Facilitates scams and has set consumer web tech back a few years, but other than that not much.
Bitcoin is the only immutable peer to peer system ever created (barring advances in quantum computing, and even then the protocol can be updated). In a world headed toward web 3.0, generative AI content & virtual reality, I think there is tremendous value in a trustless and immutable peer to peer system. In fact, I think we NEED it, and should as a society happily bear the power consumption that underpins the security of the network.
Controversial, I know. However, already we cannot trust that a digital picture is genuine. There is currently no solution to this problem. In the near future, I imagine that the raw data of your camera will be associated with a token on a blockchain (not bitcoin, but a dedicated high-capacity blockchain). Such a system would allow us to determine that a picture was indeed taken with a physical device, and thus that the events depicted have a bearing in the real world.
My bet is that we are headed toward a future where blockchain is ubiquitous. Where everything of value is underpinned by a specialized blockchain. When you order groceries, the origin of the produce and raw ingredients are all embedded in blockchain. In virtual reality, every digital product has a specialized blockchain. Every kind of transaction; compute, assets, AI, will all be underpinned by trustless peer to peer systems.
All these specialized blockchains trade security for throughput. My bet is that Bitcoin will act as a security guarantor in our future digital society, where the state of every blockchain is periodically validated on the Bitcoin network. Thus, I bet that every transaction in the future will have an associated Bitcoin cost. Thats why I own a small amount of Bitcoin.
Bitcoin is not trustless. It has as much value as the collective trust in it. Once that trust disappears, the value tanks.
Reality is that you can’t bootstrap trust.
Not to mention the fact that you can hold Bitcoin trustlessly, and you can transfer it to someone else trustlessly, but then you have to trust that they send to you in return what they promised.
See Goharshady, Amir Kafshdar: Irrationality, Extortion, or Trusted Third-Parties: Why It Is Impossible to Buy and Sell Physical Goods Securely on the Blockchain. arXiv:2110.09857, arXiv, 19 Oct. 2021. arXiv.org, http://arxiv.org/abs/2110.09857.
Thanks a lot for the link!
It’s not clear to me that most of those use cases will be served better by a blockchain rather than a regular centralized service… but also examples like the camera don’t really work, because someone could still use the camera to photograph a generated image (for example), or hack the camera itself.
On top of that, up until this point in time, Bitcoin has been the opposite of secure. The entire history of it is filled with people constantly losing money and being scammed with no real recourse.
> Bitcoin is the only immutable peer to peer system ever created
What about the other thousands of other public blockchains, many of which are extremely similar (DOGE, BCH, LTC, ...)?
> In a world headed toward web 3.0, generative AI content & virtual reality
... Metaverse anytime now.
> there is tremendous value in a trustless and immutable peer to peer system.
Personally, I think there is much more value in trusted systems.
> In fact, I think we NEED it
... because the world didn't work at all prior to 2009?
> and should as a society happily bear the power consumption
In contrast, I think if we were to eliminate Bitcoin and other crypto, we'd save 1% of electricity with very few negative side effects, but a significant reduction in crime, frauds, and scams.
> already we cannot trust that a digital picture is genuine.
Solutions to this problem might well involve digital signatures and hardware enclaves in cameras (installed by trusted centralized camera producers which could publish the public keys of each sold camera once), but I don't see how public blockchains would add any value. The signature of the picture embedded in the picture speaks for itself.
> My bet is that we are headed toward a future where blockchain is ubiquitous.
Gott forbid.
> When you order groceries, the origin of the produce and raw ingredients are all embedded in blockchain.
Apart from the fact that I don't see the benefit of that, the oracle problem makes this impossible, I fear.
Let me clarify that I dont think any of what I described is a given. I think its one of the more likely outcomes of our future. I think its prudent to own a small amount of Bitcoin (or basket of cryptocurrencies) in order to hedge against that future or someting close to it.
> What about the other thousands of other public blockchains, many of which are extremely similar (DOGE, BCH, LTC, ...)?
They are simply not as secure and could be attacked by well funded actors. Perhaps in time another blockchain will win out.
>... Metaverse anytime now.
Just curious. Do we disagree about where this (technological progress) is headed, or is it the timeline? I think its quite likely that we will spend more and more time in vitual or augmented reality. For good or ill.
> Personally, I think there is much more value in trusted systems.
I prefer the absence of a central authority. Perhaps im cynical.
> ... because the world didn't work at all prior to 2009?
We dont need crypto right now either. I simply think that the only good outcome of our digital future is a trustless one, and I think blockchain will play a central role there.
> Solutions to this problem might well involve digital signatures and hardware enclaves in cameras (installed by trusted centralized camera producers which could publish the public keys of each sold camera once), but I don't see how public blockchains would add any value. The signature of the picture embedded in the picture speaks for itself.
The value of blockchain is in the absence of a trusted centralized camera producer that can be pressured.
> Apart from the fact that I don't see the benefit of that, the oracle problem makes this impossible, I fear.
The oracle problem is solved in the same way the camera problem is solved. By digital signatures of real world interactions of the machines in the production chain.
I think the world will lean into trustless systems over trusted systems, lets see. That is not to say that I dont think the world would continue to function on trusted systems, I just think it makes dystopian outcomes more likely.
Perhaps another way to think of it, is what would it take to be less disillusioned?
What was about it that made you think it might be a good thing? Have those aspects gone now or is the problem that there are new factors that put you off it?
Most importantly, what could be done to get you back onboard with the idea? I'm not really a fan of "Bad thing is bad" and like to think in terms of "This thing has a bad aspect, what could be done to fix it"
To my mind, I was not expecting Bitcoin to increase in value this quickly. Few people probably were. On the other hand if the end point of Bitcoin was to replace money, then I can see how it would have a high value at that endpoint. That presupposes that it reaches that endpoint. The perceived value (barring the mood based fluctuations of speculation) depends on the proportion of people who believe in that outcome and when they think it will occur.
When Bitcoin came out I thought that it was indeed like email for money, and that it would take a similar amount of time for it to be used by people in general. I figured it would be 20 or 30 years before the average person had even heard about it. Turns out I was quite wrong there.
I don't think Bitcoin is particularly impressive as an investment today, the risk when it comes to retaining value is some unknowable but probably quite high. The risk of holding and retaining your balance adds another layer to that. For the value of the mining reward to stay level with an external currency there has to be around a 20% increase per year to keep up with the halving. Exceeding that rate is what lead to the increase in energy expenditure. While it has increased more than that so far, the one rule of exponential growth is that it cannot continue forever.
It might have a few doublings left in it, but it is slowing down and with a risk level where you could probably find a lower risk way to double your money in a similar timeframe. Maybe it hits a million, but when? If it takes long enough you're better off with an index fund.
Bitcoin sits around $100,000 today, that's way higher than its current utility. I feel like the value should represent the aggregate impression of where Bitcoin will be in the long term. I mostly think this is true and bubbles represent the flow and ebb of the faith that has no logical support. I used to think that nobody could sustain the delusion of value when it is not apparent for many years on end. House prices have led me to think that maybe people can pretend that their thing is worth more than it actually is for many years without faltering.
I guess the world is in a funny place now. For even an index fund to be long term stable, some counties have to continue to exist, and people are beginning to have doubts about even that.
> What exactly does bitcoin offer the world today?
I fully agree that Bitcoin did not become what it was originally built for (a currency system for the internet), and as a matter of fact, for very valid reasons:
HOWEVER: that absolutely does not mean that Bitcoin isn't amazing and useful.Bitcoin has simply become something else entirely, a kind of financial instrument that had no equivalent up until now and which has turned out to be profoundly useful to a very large class of people (go ask USA - one of the country with the worse divorce laws on the planet - men in the middle of divorce proceeding for their opinion on the topic of assets that can't be confiscated).
Oh and yes, I already hear the shouts from the back of the room: skirting the law!drug dealers! criminals! cyber-ransoms! Won't you think of the children!. One single word to counter this argument: there is thing called the USD which is used for the exact same thing as all the above "use cases" (and worse, like toppling foreign governments) and has never been considered evil for some reason.
I do understand and feel for folks who looked forward o Bitcoin as a replacement for the dollar, lubricating internet commerce and why they are disappointed. I was one of them and it took me a long time to understand what Bitcoin actually was.
However, if you fall in the category of the disillusioned, please consider: something else will come around to solve the problem of internet currency. It won't be Bitcoin. It maybe layer two stuff, who knows.
But on the other hand, Bitcoin has become something extremely useful (and even without trying to analyze the why, the price is an inescapably clear proof of that).
Its singular properties as a financial instrument make it something that no other thing in tradfi can boast having:
https://www.youtube.com/watch?v=XbZ8zDpX2Mg TL;DR: Bitcoin won't replace Paypal, and that's actually a good thing. It has become an entirely different beast, probably as, if not more, useful than what it was designed for originally, specifically when it comes to being a tool that protects individual freedom against the excesses of the group.All of the "you can anonymously and safely hold tons of wealth that can't be taken from you" points you make fall apart when the following two are true:
- For the majority of financial transactions you might want to make, fiat is still what you need, because realistically very little IRL uses any L2 solution. Thus, you need a fiat off-ramp... Like an exchange. - Exchanges mandate you identify yourself to them - KYC/AML and all. Governments might not be able to know which wallet is yours, but they sure as hell can and have secure those off-ramps this way.
I've seen plenty of pro-BTC arguments on a technical level about privacy, resilience, independence from central banks, etc. but fundamentally I've never seen anyone able to come up with something that can out "your opponent is the government and no technical project can overcome a legal obstacle".
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You can move $2 billion worth of capital PERMISSIONLESS with a click of a button, the only thing you need is the private key, are you being disingenuous on purpose or what?
Yeah that is awesome, it's great technology but it's still not anywhere close to a revolution.
The only answer that makes sense to me is this: BitCoin is a scam started by the oil industry as a way to tie currency to exponentially hungry power consumption.
Maybe that guy who was digging up a landfill to find his old HDD finally found it!
Seriously though, what are the odds that someone has been quietly spending 10s/100s of millions in cloud compute to brute force the keys for old wallets?
For anyone else who's been vaguely following the story as it popped up every few years, the latest news came out a few days ago : he finally gave up.
> he finally gave up
Sounds like something someone who found few billion USD on a thumb drive would say :)
I wouldn't say anything.
Has he opened a bar instead?
He named it Puzzles.
That’s definitely also what I would publicize if I actually found the HDD. :)
He lost his court battle to force the local government running the dump to allow him to dig the last I heard. So I doubt it, he wasn't even allowed to really try.
Good chance those coins are 100% traceable. They were lost in the days before good privacy tools like mixers, and the database of the biggest exchange MtGox was fully leaked so everyone knows the real name, email, bank details, and date of birth of the owner of every old coin.
Very pleased I disposed of all mine long ago, and the Blockchain shows that so nobody tries to kidnap me for the keys.
In the early days, a pentium 486 in your garage could have made these coins in a few months.
And you don't need an exchange to transfer coins.
No one knows who owns these wallets... yet. That's why they are mysterious.
Plenty of address reuse happened back then
That’s what someone who hasn’t disposed all of the coins would say.
Source?
https://x.com/howelzy
I went back to the (french) articles making that claim in headlines and it turns out to be false, thanks.
He lost his appeal in his case against the city authority to search the landfill, so he can't ever search for it. It's a bit buried in his feed in between the announcements about tokenizing part of these legally inaccessible coins.
> what are the odds that someone has been quietly spending 10s/100s of millions in cloud compute to brute force the keys for old wallets?
Even if that were possible, you could brute force one wallet. Not eight wallets closely related to each other.
Keys created with an RNG that turned out to be a little too predictable?
Or some other flaw found in a wallet’s key generation?
Kinda like what happened here: https://news.ycombinator.com/item?id=6195493
(Or exactly that but nobody tried to attack this again with moar power?)
Yeah - assuming this was not the rightful owner (which it might well be), my gut is that perhaps someone found an implementation flaw/quirk in some old wallet code/keygen/RNG that effectively reduced the keysize down to something more manageable for brute-forcing. In ye olden days Bitcoin was still something of a curio for geeks and nerds and not the industry it is now, so it would not be unreasonable IMO for there to be some slightly-less-than-perfect implementations floating around from hobbyists or open source etc - the stakes were lower then.
If there was say a vulnerability in a specific wallet version it would be quite possible to narrow down search space to only the wallets/addresses around that point in time etc as well, making it easier to target your brute-forcing efforts.
It will be interesting to see if any other dormant wallets from around the same era wake up too.
One of my students believes Elon Musk and Peter Thiel created Bitcoin. Here's the summary of the 5 page doc he presented:
In 2000, according to Peter Thiel, he met with the E-Gold team in Anguilla.
Around 2001, Elon and Peter were at PayPal, and they had plans to build a similar digital currency.
In 2002, PayPal was sold, and that pretty much ended the digital currency plan. Instead, PayPal let users link their bank accounts and cards to make payments. This created a bigger dependency on banks.
By 2004, there were over a million E‑Gold accounts. Banks weren’t happy about it. Meanwhile, Elon and Peter understood exactly how much potential this new kind of digital currency had.
In 2007, the banks took the founders of E-Gold to court for running an unlicensed money‑transmitting business. That same year, the E-Gold engineers were out of work.
Bitcoin was invented in 2008, the same year Elon was broke and busy trying to save both SpaceX and Tesla from going bankrupt.
His theory is that Elon and Peter hired the smartest engineers from the E-Gold team and asked them to build blockchain so they could create their own version of E-Gold. The team worked on Bitcoin from 2007 to 2010 under the alias of Nakamoto.
I do not think that Elon would not claim he is the inventor by now. The team theory makes this entirely unbelievable. Something like this can only be pulled of by 1-2 person's whith exceptional self-restraint.
Peter Thiel said in one of his podcast he believes it was the E-Gold team who created Bitcoin under the alias of Nakamoto. He also confirmed he knew the team. But no one knows the names of the engineers or who financed them.
All we know is that Elon and Peter revolutionised the finance industry with PayPal.
Video where he said he knew the team? In the main video, he just speculates that some people at the conference made bitcoin. Never provided even a claim to having evidence.
You've just created an account to ask that question? Wow :D
https://kqmarkets.co.uk/article/did-peter-thiel-meet-satoshi...
https://protos.com/is-peter-thiel-inner-circle-behind-the-sa...
https://www.bloomberg.com/news/articles/2021-10-21/peter-thi...
"Peter Thiel met with the e-gold team in February 2000 on the Caribbean island of Anguilla to discuss making PayPal interoperable with e-gold. The goal was to challenge central banks by creating a system where PayPal and e-gold could work together. Thiel believed this collaboration could spark a revolution against traditional financial institutions."
Actions speak louder than words.
- Thiel met with digital currency pioneers in 2000.
- Thiel chose not to partner with E-Gold because he needed to stay compliant and bank-friendly.
- A few years later, Bitcoin quietly appears, solving the exact problems E-Gold ran into.
- No names. No funding trail. No way for banks to know who the enemy is. Just Bitcoin wallets full of money.
It doesn't sound like a bunch of idealistic cypherpunks building tech to save the world. It sounds like a few smart, well-connected people who understood how money moves, got frustrated with the banking system and their fees, and built a way to create wealth and move value without paying commissions.
The cypherpunks laid the groundwork for the encryption banks, governments, and corporations now depend on. They were never interested in dodging taxes or avoiding bank fees.
Perhaps plausible until you mention that they hired a team to build it.
There's no way, even if it was a single-digit number of people team that they would remain silent. If it was just Elon/Thiel I could perhaps believe it.
Also keep in mind that there were some very desperate years for Elon where his companies were extremely close to bankruptcy, wouldn't he have tapped into that bitcoin if he had access to it?
> wouldn't he have tapped into that bitcoin if he had access to it?
That's not how business works. You borrow, then borrow some more, and focus on having a long term plan to cover the interest, so you don't upset the banks or end up broke again.
Doesn't Elon sell Bitcoin whenever he needs a few hundred million these days?
The fact that we don't understand how someone could've come up with something like PayPal or Bitcoin might be exactly why Elon and Peter are the richest people on the planet.
> There's no way, even if it was a single-digit number of people team that they would remain silent.
JPMorgan moves $10 trillion a day. Would you sleep at night knowing you publicly admitted being involved in a project whose only mission is to bring them down?
Because Elon is so humble…
Seems fairly humble to me in that he's always thanking the team and giving them most of the credit.
The definition of humility is not "doing the bare minimum."
Can you name me a self made billionaire who is more humble?
Why would a humble billionaire pretend to be #1 in poe2 and then hire a team to run his pretend account, that's not humility that's deceit.
Stop glazing him sheesh.
I don't know anything about poe2 so I can't comment on that.
> Around 2001, Elon and Peter were at PayPal, and they had plans to build a similar digital currency.
> In 2002, PayPal was sold, and that pretty much ended the digital currency plan. Instead, PayPal let users link their bank accounts and cards to make payments. This created a bigger dependency on banks.
This doesn't hold up to scrutiny.
Except PayPal wasn't invented by Elon or Peter. It was Elon's company's plan to build the digital bank but they were failing quite spectacularly at it.
They merged with Confinity who'd already built PayPal, had a working prototype, etc.
Elon lasted four months as CEO of PayPal, trying to convert it from Java to ASP until the Board didn't ask him to resign, but fired him, the morning he left on his honeymoon after getting married.
PayPal is a complete red herring there. Elon had no participation in ideas on digital currency there.
> They merged with Confinity who'd already built PayPal, had a working prototype, etc.
Interesting, need to read about it. So similar story as with Tesla? Existing opinion nicely confirmed.
Some of the history between the two companies is covered in a book, "Paypal Wars.[0]
Among other things it happens to spotlight Musk's fascination with having "X" as the company name, especially for a bank.
0: https://en.wikipedia.org/wiki/The_PayPal_Wars
Yup. Also explains why X is trying to move into payments now.
Elon seems to need to finish a vision he didn't get a chance to finish back then.
I've got a Confinity Paypal tshirt from a job fair I went to in 2000 or 2001 from back when they envisioned people using palm pilots to transfer money. I always think it's hilarious that people give Elon any credit for doing anything at the company.
The people who give him credit are the same people who sold PayPal for $1.5 billion in July 2002:
Peter Thiel, Max Levchin, Luke Nosek, Reid Hoffman, David Sacks, Ken Howery, Jeremy Stoppelman, Russel Simmons.
Elon was removed as CEO in 2000, but he remained the largest individual shareholder when PayPal went public.
I saw people using PalmPilots to transfer money on PayPal in 02001.
> So similar story as with Tesla? Existing opinion nicely confirmed.
How is that similar?
Tesla was 2 dudes and an office with no IP and no product when Musk became the lead investor and chairman of the board.
Whereas when Cofinity and X.com merged it was as two functioning companies operating in the same market.
What similarity do you see?
So you are contradicting what Luke Nosek, the co-founder of PayPal, said?
Luke: "Many people don’t know this, but the initial mission of PayPal was to create a global currency that was independent of interference by these, you know, corrupt cartels of banks and governments that were debasing their currencies.”
Why should we believe you and not the person who created PayPal?
https://finance.yahoo.com/news/paypal-originally-aimed-creat...
Uhhh... nothing I said contradicts Luke Nosek.
Elon was working on a digital bank, not a global currency. His company was failing miserably.
Confinity, who made PayPal, and had a first version working, merged with them.
Elon gets no credit for a 'global currency' idea (nor do I think he and Thiel invented Bitcoin[1]), because Confinity was already working on that idea when they merged and became PayPal properly, in the four months before he was ousted.
My argument was that Elon wasn't all about the global currency.
[1] And Elon definitely didn't invent BitCoin. His ego would never permit him to have kept that a secret for a month, let alone a decade plus.
Context matters.
The PayPal mafia (Musk, Nossk, Thiel, Levchin, Sacks, and the rest) spent years working closely, obsessing over banks, money, payments, and how to move value on the internet, questioning everything: What is money? Who controls it? How do you make it more efficient, global, and digital?
My counterpoint is that if Elon were involved in any way at all, he would have taken credit for it publicly by now.
JPMorgan moves $10 trillion a day, according to Jamie Dimon. So there's the unwritten rule: you never upset the banks because that's the last thing you'll ever do.
So why would the richest person on earth do that? He's not crazy.
Back in the real world, plenty of people publicly associated with running major cryptocurrencies (and Craig Wright!) are walking around talking about how they invented the cryptocurrency and how it revolutionises banking, and plenty of people inventing infrastructure for promoting Bitcoin are doing deals with banks, whilst Elon is the sort of guy who goes to extreme lengths to piss off both political parties in the country that he and his businesses and his lucrative government contracts are based in, including ranting into the void about the most powerful and most sensitive man in the Western world is in the Epstein files when they had a fallout...
> So there's the unwritten rule: you never upset the banks because that's the last thing you'll ever do.
What are they going to do? Whack him mafia style and make it look like an accident? Here’s a more realistic rule: “If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem”.
https://www.goodreads.com/quotes/214064-if-you-owe-the-bank-...
> So why would the richest person on earth do that? He's not crazy.
You mean the guy who is so insecure he constantly lies, even about the most inconsequential things…
https://archive.ph/20250127023632/https://www.nytimes.com/20...
The guy who is so uninformed and gullible he falls for any conspiracy theory…
https://www.techdirt.com/2024/10/25/lies-damned-lies-and-elo...
https://www.youtube.com/watch?v=3u8_fp1TtJE
The guy who jeopardised billions by buying into a random tweet accusing a business partner without proof…
https://voz.us/en/world/250308/21932/mexican-tycoon-carlos-s...
The guy who invested all his time and energy electing someone like him, only to then (predictably) have a falling out…
https://en.wikipedia.org/wiki/Trump%E2%80%93Musk_feud
I mean, maybe he isn’t crazy, but that isn’t really an effective defense. Crazy people at least have an excuse.
Just applying Occams Razor here, this whole story makes more sense if the E-Gold engineers just bootstrapped this project without Musk/Thiel involvement.
E-Golds most talented 1-2 engineers weren’t poor people, and could definitely afford a 5 year career break.
Fun personal fact - the only reason I didn't invest more in Bitcoin (which would have definitely been enough to be FU money) was because I had some E-Gold when it was shut down.
Worse fun personal fact. I was planning to buy 5000 bitcoins on a Friday after work. A coworker convinced me and it made sense. Bitcoin was less than 2 a coin at that point.
Then I go down the elevator in my building and there is a huge crowd of people. It ended up being 50 cent the rapper and a few other famous people.
It was so surreal and unexpected I completely forgot about Bitcoin for a few months. And by then I could stand the fact it had tripled (or something) and I had missed it.
Would have been hundreds of millions. Could have lost the hdd or had sold later but I'd always hold some.
Lol so now I blame 50 cent that I didn't buy Bitcoin
You would’ve sold it way before it became FU money
Indeed. That's what so many miss.
One of the doge creators sold all his early doge for a used car. He'd hit the jackpot, a $5k return on something he rolled out in under a day's work, for fun.
He didn't make the wrong decision. All his coin was worth 5 bucks, then 5900. What would you do?
People always say that but (obviously) never everyone does.
I doubt it, Ive held my Tesla shares since the beginning.
If this at least involved Len Sassaman somehow, I'd find it at least worthy of digging in to this. Pass. Musk and Thiel being true cypherpunks? Come on. Musk hasn't had a single idea on his own, Thiel is way too busy coming up with ways to enslave everyone. No way they had anything to do with creating Bitcoin.
Nick Szabo, Hal Finney, Peter Todd, and Adam Back were definitely part of the team after the paper was published. But Len Sassaman? I don't think so.
> Musk and Thiel being true cypherpunks?
Even cypherpunks had bills to pay.
And who was hiring in 2007? The same people who disrupted the banking and oil industry with PayPal and Tesla.
People always forget about the great Wei Dai, who like Nakamoto is already sort of pseudonymous, he also created Bmoney which is allot like Bitcoin. He is also the creator of the Crypto++ cryptography library for C++ (bitcoin is written in C++) From all the OG Cypherpunks he ticks allot of the boxes.
True. Nothing gets built in isolation. Bitcoin was the result of decades of work by cryptographers, economists, investors, and engineers
Len went on for years about what a stupid idea Bitcoin was.
Agree. He was not impressed with Bitcoin
It was jack.
Any team involved would have long ago spilled the beans.
Conspiracies are impossible to maintain, once more than one or two people are involved.
Except for the secrecy of Colossus, Crypto AG, the 9/11 hijackings, Bill Cosby drugging and raping dozens of women, Peter Thiel funding lawsuits against Gawker, the Manhattan Project, the CIA-funded coup against Mossadegh, Stuxnet, the Five Families, most of what the NSA does, the Stealth Bomber, and so on.
Almost all of those remained secret longer than the 17 years we're talking about here, and due to selection bias, I am forced to omit the much more successfully kept secrets, because I don't know about them yet.
The selection bias, is discounting the endless conspiracies exposed daily.
People go to jail, are caught out, fired, relationships break up, governments fall, because conspiracies of even a few people fall apart. It's a regular thing.
You're mentioning some things, of which some were known during the time. The FBI had reports of the 9/11 hijackers, Bill Cosby was known by many but the women were paid off with cash or jobs (until they rightfully went public), and things such as the CIA and the Manhattan project are laced with highly patriotic people, and the death penalty or life in jail, along with people sequestered and watched by immense security.
Secrets are very difficult to keep.
The things you think of were enormously unusual in that they were kept.
They were the exception to the rule.
Very plausibly the identity of Satoshi is already known to more people than Cosby's rapes or the 9/11 hijacking plans, before everybody knew about them. The hijacking plans weren't even well-known inside the FBI! And it's also very plausible that the people involved in Bitcoin were either strongly idealistic, facing death penalties for disclosure (for example, if they work for the Mossad), or both.
I agree with your weakened claim that secrets are very difficult to keep, but much of modern society is built on institutions that are very good at keeping them: armies, intelligence agencies, and even companies with trade secrets.
I agree that Satoshi was probably just one or two people, and the difficulty in keeping secrets with more than a few people is one of my reasons for that. But you said it was impossible, not difficult, which is much too extreme to be justifiable.
(I think it's about 50% likely that it's one of a couple of dozen people I've met personally, but I wouldn't be able to convince anyone else. So you might be talking to one of the people in the position of Bill Cosby's friends before the news came out.)
I agree with your weakened claim that secrets are very difficult to keep
I think the mindspace here is what I was taught. A shared secret is no longer that. That the more people which know, the more impossible it will be.
As humans, we must conceptualize different sides of the problem, differently. As a person attempting to maintain secrecy, the impossible nature must be kept in mind at all times.
This is doubly true with some personality types, which think everything is a game. I've often wondered if some people feel mental pain, when held to their word.
So framing is important.
But from the other side, one can point to exceptions to the rule.
This is the dumbest idea I ever hear smart people say.
I can't say that to my student. What kind of teacher would I be? He might not have found out who Satoshi Nakamoto is, but he learned how to think, use research tools, ask good questions, and communicate the outcome of his investigation.
He got a straight A.
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It’s quantum computer.
Better odds: old man theory.
Some dude had the wallets on a usb drive. Maybe he mined in the very early days, never really thought of it, and ended up aged and not cognitively aware, his memory wonky.
Recently, he just passed on.
His offspring cleaned out his garage or whatever, found a usb stick, looked on it for photos, and found this.
> closely related to each other.
Like, sequential? Because if you were brute forcing...
Being seriously serious, if it was even statistically unreasonable to accomplish this once in this amount of time, it would be apocalyptic. A whole lot more than bitcoin would crumble.
I've personally always been a fan of the idea that the only reason it exists in the first place is to be a 2-trillion-pound canary for sha256
> what are the odds that someone has been quietly spending 10s/100s of millions in cloud compute to brute force the keys for old wallets?
I've been wondering the same. But in this case it's multiple wallets, so it's very unlikely.
I would say the odds are zero because that's the likelihood of being able to brute-force anything in the key space.
>I would say the odds are zero because that's the likelihood of being able to brute-force anything in the key space.
you are correct at first pass, but it's a fact wallets have been cracked many times, perhaps at least 100s of millions of dollars. The "keyspace" for the cracked wallet is a subset of the nominal keyspace - the much smaller space covered by either a flawed random number generator (RNG), or the whole brainwallet fiasco, or a RNG where a seed is crackable (e.g. milliseconds since 1970 or unix epoch - some cracks, whitehat, have used this method). That's all what we know in the whitehat space, surely other tricks exist in the blackhat space
It's not zero. https://lbc.cryptoguru.org/trophies
It's close enough.
There are 200 million+ BTC wallets.
They've found 54 out of 200 million+ or about 0.00002% of wallets - in how many years?
How does the equation change with $100m of cloud or GPU compute as GP speculated? These are all hobbyists.
It would take approximately 6B H100 GPU days to crack every active BTC wallet.
So if you had 10,000 H100s running, it'd only take ~1500 years.
You'd have a high probability to find key in under ~1000 years, though.
Even if I'm off by 3 orders of magnitude, it would take a decade and cost billions, and not make financial sense.
How do you get that?
BTC private key space is 256 bit. Let's say a billion wallets, that's 30 bits, so you need to check 226 bits to hit one wallet.
A H100 does about 1000 TFLOPS at the very most, that's 10^15 or 50 bits per second (generously assuming we can check on key per FLOP).
6B days of that will give you an additional 50 bits (6 = 8 = 3 bits, B = 1000^3 = 30 bits, day = 10^5 seconds = 17 bits).
Now we're talking 100 bits. But as discussed above, you need to check 220 bits to hit a key. There's still quite a gap.
For comparison, the entire Bitcoin network (using 1% of world electricity) does about 1000 EH/s at the moment, that's 10^21 or 70 bits per second (so, roughly equivalent to a million of H100, using the rough overestimating sketch above).
Per year, that's 70+25 = 95 bits. Still far.
*at most ... years.
People always forget those numbers are worst case scenarios. I mean, you can get luck on the very first guess too.
If that’s the plan you can guess a number for free, no outlay needed.
If your guess is generated by a QRNG and many worlds is true, than one version of you is very happy although the expected value is 1.03×10−66 USD.
Active addresses have less entropy too
Why? Are you hypothesizing that they used bad RNGs?
It changes that if you attempt to liquidate that much BTC, BTC crashes and you've got 90% less money than you hoped for.
if someone could brute force a key, they would target small inactive wallets , rather than big wallets and drawing attention to it
Do you really think they have no notion of liquidity? Why would they attempt to liquidate it all at once?
They could also do a private party transaction to sell the coins outside of an exchange, in order to hide the sale and also hide the price of the tokens sold.
This is common practice in the stock market, called "dark pools" [0]
> Dark pools came about primarily to facilitate block trading by institutional investors who did not wish to impact the markets with their large orders and obtain adverse prices for their trades.
[0] https://www.investopedia.com/articles/markets/050614/introdu...
Outside, as in off the blockchain? That would mean that after the transaction, both sides would know the key to the wallet and there would be a race about who lights up a transaction first.
After the transaction, you can still send the bitcoin to the purchaser's wallet.
But since the purchase itself happens off exchange, there's no record of how much the coins were sold for, so no impact on market price.
A large wallet that’s been dormant for years suddenly becoming active will tend to pressure the price lower from the implied increase in liquid supply and fear that the wallet will continue to distribute coins.
It’s not just the printing of transaction price that can affect the market.
The vast majority of BTC transactions are done this way. Anything of any size is traded via OTC desks or other more private avenues.
Because maybe this isn't satoshi waking up, but finally those kidnappers hit that poor guy in the latest "we found satoshi" documentary
Just the fear of future liquidation would eventually severely crash BTC.
yeah, people think it's the selling that makes the price fall. it is the anticipation . markets are forward looking
Like it's crashing now on this news?
There's ~$188B in Satoshi era wallets.
While ~$8B is huge news, due to the potential that all ~$188B might be in play, when most investors probably expected it was not prior to this - or at least the probability was low enough to barely factor, it's unlikely to crash BTC.
Further, moving BTC is one thing. Showing signs of liquidation is another.
That much should be able to get liquidated intelligently without moving the market.
It depends how it's sold. Market orders would have more impact than OTC .
Not true at all! Everyone knows there are holes in the crypto algorithms and implementations which agencies use to achieve any objective they may have. On top of that there are also holes across the software and hardware stacks of various implementations. Just because they run all the researchers and fund a lot of it does not mean there are no holes.
Especially now with AI, I wouldn't be surprised if an amateur kicked a bunch of tires and got lucky.
Just because they are not published, does not mean they are not using them, someone else found them and are using them. Or they just have the keys from back in the day.
Can't wait to follow this story as it unfolds. The other risk is Quantum... That is going to be real fun when it starts making leaps above Moores Law.
There needs to be a industry wide effort NOW! That researches and generates keys in unconventional ways, different than the ways they are being generated now. Because Quantum is a beast. Those keys will need to be Quantum proof, which means that even if the agent knows the algorithm that is used to generate the keys they cannot duplicate the keys that were generated the first instance it was run. Or you can start doing Hashing across fingerprint, eye and dna data. That is coming my folks!
You dont understand bitcoin or the math or the cryptography ehind it.
Can you look me in the eye and state that you understand Bitcoin and the math and the cryptography behind it?
Even if you do, there could in theory still be a way to narrow down the key space or find some other shortcut to a wallet key, even if nobody has figured it out yet.
I understand the math and crypto behind it to a degree. I don't profess expert knowledge however. But I know enough to know the GP is wrong and I'm happy to point that out. If I thought there was any value in correcting GP claim by claim I would do so. But in reality it will just end up in me wasting my time trying to educate someone who doesn't want to be educated, and if they did they could go and research the math and cryptography for themselves.
As someone once said, I can explain it to you, but I can't understand it for you.
People are actively doing it. Mostly using clore.ai on their 4090x bundles.
I used to work in the gpu rental space up to about a month ago.
I talked to multiple people dropping hundreds of thousands of dollars on looking for those keys.
I'd put house odds at say 20:1 that someone cracked it over someone holding for 14 years and deciding now is strike time.
Also if it's a true crack, then Bitcoin price could collapse swiftly if someone just snatched a wallet for 200k of compute or whatever.
That's always been the real existential risk. I talked about it as the DES problem over a decade ago. Let's see if this is it
Those people were wasting their money. They could be running those GPUs from now until the end of the universe and still have approximately 0% chance of finding a single used key.
Right. Those were the ones I talked to, just by random chance. It means that there are a lot of them.
This implicates a few things - (1) people win the lottery every day and (2) it's highly unlikely that the best techniques are publicly known.
Perhaps there's something that requires $1,000,000 in investment to yield a 1:100 chance of finding a particular targeted wallet using some clever shortcuts.
The other explanation is very implausible: a human sits on wallets without splitting up the funds or derisking exposure, has wallets with a billion dollars sitting it in.
Now I only have a few million, but even I have something like 6 brokerages and 12 banks. Even when I was a btc holder, I didn't keep over $100k in a single wallet.
The snatching theory requires no new revolutionary math, no substantial breakthroughs, just some clever people with a lot of resources and a goal.
Either explanation is speculative. I think the "lucky researchers at some University" theory is more likely then the "let's wait 14 years until this $1,000 becomes $1,000,000,000."
Especially because (1) we're not exactly at some high water mark and (2) if this was just a person with a wallet trying to do something like pay for life's uncertainties, you can do basically 100% of that with like 4btc.
However if you successfully snatched the wallet, you're on a clock before someone else gets it. This is exactly the kind of movement you'd be doing
Also if some old bitcoiner comes out and says "hey that was me", we're still up in the air. If I had snatched a billion dollar wallet, the first thing I'd do is payoff an old btc'er to claim its there's to prevent market panic.
This isn’t like lottery odds. The space of keys here is vast. Like unimaginably so. 2^256 is a lot of keys.
If someone had a faster method for breaking elliptic curve keys, fast enough to have a realistic chance on GPUs, the repercussions for that would be waaaaaay larger than merely stealing some bitcoin. This is the same math upon which nearly all digital security in common use today is based. It’d be full-on cryptopocalypse.
"larger than merely stealing some Bitcoin"
It's US$2 billion. I can't imagine a better way of monetizing such an exploit than to convert it into cash by using Bitcoin.
The US govt can't pay you US$2 billion without it showing up as a line item in the federal budget. That's like 20% of the NSA's funding. You'd have to get authorization from the President and hold some emergency session of Congress. Other governments would pay less.
Hacking the normal banking system is also challenging. If you steal US$2 billion someone is going to notice and simply undo the transaction because banking doesn't believe in "code as law".
Changing global politics (e.g. allowing the complete decryption of diplomatic messages) has a value and magnitude of impact that is not easily measured in dollar terms.
Assuming you're just some random person and not the govt, why would you care?
Everyone will switch to one-time pads if you released it publicly. And you'd have to be very patriotic to give it secretly to the government.
I’ve spent the last 15 years working in cryptography. I’m now running a startup making quantum computers. I know my customers :)
Switching to one-time-pads is easier said than done. Upgrading to PQC will be complicated and difficult, and there is a lot of recorded historical messages.
You're looking at it wrong. There doesn't need to be a generalizable, embarrassingly parallel, computationally lower class, key reduction.
Just this specific implementation with these specific wallets maybe using a version of the btc code with a small recently discovered bug that existed say for 3 months in 2011
You can have something extremely localized and get this result. And this is exactly the behavior people have long game theoried would happen under such a scenario.
You're implicitly making the claim that just because you can't find something widely discussed in literature than any optimization of any kind is impossible and nobody would ever dare to keep an advantage in stealing bitcoin wallets secret.
Stuxnet is way less plausible than this yet that happened.
People have been trying to do this for a decade and have in aggregate thrown probably north of $100 million into it through separate efforts. The idea of someone finally succeeding is kind of expected.
Again the only claim I'm making here is that this is not only a non-zero chance, but, in my mind, an over 90%.
the most likely weakness is in the ECC implementation. i don't understand the math (who does?) but what the debate over https://safecurves.cr.yp.to/ tells me is that very few people know what a "weak curve" is but people agree that they exist. this has always made me sketch on ECC in general, especially since it is also used in Tor. Another possibility is compromising the RNG used for creating the pvt sig? which since these are early addresses they would have been from a very early version of the software, and might have used a shitty RNG. If this is a crack it could definitely be state level actors (who has the US pissed off lately? who have they not?). Whether it is state/private the goal would be to extract as much real money as possible before creating a panic, so will be interesting to see where the money goes.
FYI the “safe curves” charts are garbage self-promotion for his own crypto algorithms. I generally respect DJB, but he didn’t even try to be unbiased with that analysis.
Just speculating here, but isn't it quite possible someone wasn't intentionally sitting on it for 14 years and instead just couldn't access it? For example, if they've been sitting in prison this whole time. Something like that seems (statistically anyway) more plausible to me than getting lucky on guessing a key.
It’s the quantum computer.
As Bitcoin increases in value, the reward for breaking into wallets grows. Satoshi’s is the ultimate target here, followed by wallets used to burn currencies. Some of these look like they’d only be brute forceable and that takes more time and energy than we think is plausible, but I suspect people will find the system isn’t as secure as expected in some weird and wacky ways as this bounty grows.
Although, I wonder if emptying the wallet is actually harder than breaking in, in some ways. Let’s say you get into Satoshi’s wallet (or they still have access), how do you move anything without spooking the entire market?
Or maybe someone just got out of prison!
Ross Ulbricht?
Bitcoin is designed with clever incentives to prevent this kind of thing. If you can afford to bruteforce wallets the incentive would be to just mine bictoin which is more probable and it also help secure the network. If you can bruteforce wallets bitcoin is effectively worthless. Or you could even use all of that compute to mine something else for example Monero.
Martin Shkreli has been spending the past month or so on Discord streaming himself doing literally exactly that.
He had only 7500. The recent move involves 60,000 according to some Reddit threads
At that scale self-hosted compute probably offers a decent roi.
this would be highly improbable. the odds of only remembering enough of the key to brute force it, is slim.
guessing a whale's key? zero
> Satoshi-era
Not true in the slightest. Satoshi was already gone by 2010, and in 2011 there were ~8000 transactions per day from folks outside of Satoshi's circle.
What? Satoshi's last publicly known email was on April, 2011 to Gavin [0], stating the following:
"I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them."
Also, let's not forget, it took BTC ~1.5 years to gain any amount of traction at all. Nakamoto was in for a long run and his sudden disappearance is always going to be mysterious
[0] - https://www.bitcoin.com/satoshi-archive/emails/gavin-andrese...
Whoever got these wallets better sell them and get a good security company on rotation quickly before anyone find out who they are. Seems like wrench attacks been been happening a lot more the last year.
I don't really get these; there's not a ton of difference between using a wrench to threaten someone with a bunch of Bitcoin vs using a wrench to threaten someone with a bunch of any other liquid asset that could be used to buy bitcoins.
If I had 8 billion in cash in my bank account and put in a transfer order, they'd block it, call me, make me come into a branch, make sure there weren't any burly guys with wrenches escorting me in, and maybe call the FBI if anything seemed off.
And if it was still legit after that, there would be days or weeks of waiting for the transfer to actually happen, during which time I could call and cancel.
Also, for the rest of your life, you'd be able to get the people arrested who stole the money.
So they'd either to kill you after, and it would be obvious why, and there'd be an easy lead on who.
Your odds of getting away with stealing that kind of money conventionally are essentially zero.
Alright, so I can see it as a matter of scale.
Recently there was a local case of someone extorting people by leaving threats in the mailboxes to not burn people’s houses down in exchange for $1k in bitcoin.
But who would keep $8B in bitcoin without some protections in place to ensure that it can’t be easily transferred away, given the associated upside/downside? That’s... roughly as foolish as keeping $8B in actual cash/gold/gems (notwithstanding the logistical problems with the size/weight) under your mattress.
> And if it was still legit after that, there would be days or weeks of waiting for the transfer to actually happen
or you get a better bank to begin with
most banks that call their slow processes "security purposes" are actually just putting up barriers to maintain liquidity. the banks that go bust are the ones that got clientele based on making it convenient to transfer
But the criminal's stolen BTC are tainted. Exchanges will not accept them. procession of them is a crime
Mixers will though.
and then those bitcoin are tainted too due to association with the mixer
How fortunate that exchanges are centralized institutions that can be held accountable by law.
This is the other edge of that double edged sword of "no regulations". It's a lot easier to steal bitcoin with no consequence because there isn't an entire financial system backed by people with guns to help you if you are wronged.
> there isn't an entire financial system backed by people with guns to help you if you are wronged
It's not the "financial system" that comes and hunts criminals with guns, but police, acting based on what laws they seen has been broken. And stealing $3 billion is as illegal if it was Bitcoins, as if it was Euro or USD.
As a matter of fact, the police return fewer stolen USD to rightful owners than the "financial system" (ie regulated banks, credit card companies, etc). If you report an identity theft (a theft of your USD via your CC or bank info) to the police, nothing will happen, even if they find the guy. The party that is going to return your money (if anyone) is your CC or your bank.
The "financial system" is even more central a player when you consider the universe of potential crimes. Why don't drug dealers put their illegal and ill-begotten money in the bank? It's because the bank is obligated to ask a million questions, and occasionally, to freeze accounts. Why don't North Korean hackers request payment by bank transfer of USD? Because those payments can be put on hold or reversed by the financial system, which is a tool of the "police" in a way that Bitcoin never can be or will be.
The "financial system" is literally a technical system which has been effectively deputized by the "police", and as a matter of technical reality the "financial system" enforces the laws in ways that bitcoin (and exchanges, custodians, etc) are designed to prevent. Financial systems sometimes return stolen money and enforce laws with the involvement of literal police, but mostly not.
Some may not like the laws, and they can argue for why bitcoin is great. But if you like the laws, you should grapple with the fact that Bitcoin was designed to robustly foil the laws. On purpose! This property is called "permissionless" or "censorship-proof" by people that like it.
The point isn't about a change of legality. It's about a change of enforceability! In the normal regulated financial system _every_ entity you can interact with is known to someone who is a) good at keeping paper traces and b) extremely motivated to provide them, given appropriate motivation, i.e. a properly formed request by authorised parties. And that limits the number of times you can do anything scammy to "few" before you need to switch identities
So in your scenario: The 3 billion will reappear at some point and they will raise flags. And at that point there is a convenient rendezvous point between law enforcement and the perpetrators. And we can all quibble about whether the authorisation is appropriate or not (not all "requests" are requests and most won't even need anything close to a court order). But it's damn convenient to follow the money
There are essentially no criminals that are stealing crypto where the police will have jurisdiction. It's main use case outside of speculation is committing international fraud and theft with no consequences.
You are confused. The people with guns will come for you if you steal bitcoin and they know who you are.
> Bitcoin thief sentenced to 5 years in prison for stealing $1 billion in crypto and laundering it with his social-media rapper wife ‘Razzlekhan’
https://fortune.com/crypto/2024/11/15/bitcoin-thief-sentence...
No, he was changed with laundering.
Bitcoin doesn’t ask questions when you unexpectedly want to make a very large transfer to a new payee. Your banker will.
But exchanges will if you deposit that much, and will freeze your $ if they don't like your response.
Why would you even use a central exchange? It makes no sense. The person holding an absurd amount of coins would not be stupid to throw it all away like that
then there is no way to liquate anything close to that much without a centralized exchange
What does Micheal Saylor do?
looking at the address types this just looks more like a security rotation to a stronger hashing method
You just need to swap them for monero and then monero for litecoin or bitcoin again. Now you have anonymous, untraceable coins.
Someone actually did that, a few months ago. 320M in BTC was converted to monero and the price of monero increased by 50% [0]
[0] - https://slashdot.org/story/25/04/28/198238/monero-likely-pum...
Not quite that simple, that’s vulnerable to an Eve-Alice-Eve attack. If $1B in BTC moves around in short succession the TXs can be linked easily. You need a mixer that splits up the amount to be paid out, and even then it needs to be done piecemeal.
Do all outputs from exchange are automatically trusted? Seems like any should be tainted forever. Or is it impossible to tell whats from mixer?
There are companies (Chainalysis) that track blockchains and ‘grade’ wallets according to who they’ve transacted with. If enough of a wallet’s funds are from a mixer it may be scored a grade lower than the exchange’s KYC rules allow to do business with.
I doubt there's enough liquidity to swap that kind of money...
Monero daily volume is like $50m lol
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If you have $8B in BTC, is there any reasonable way to turn that into any fiat currency? USD, EUR, anything? Can you even buy that much USDC?
Sure you can. If you do it over a few months, it will get absorbed by market because there are buyers (as of today). Though this is kind of unprecedented, so markets could find this kind of event bearish and front run your sells which tanks the price. But I can't imagine I'd care if I held for 14 years. There is also USDT which is much bigger than USDC.
Also if you approach Coinbase/Kraken/$exchange and tell them you have X million to offload, they'll probably let you do it off-market, so no one (except for the ledger, obviously) would really notice.
Loans using the BTC as collateral.
Buy good / commodities with BTC and resell them.
Sell the BTC.
Probably not all $8 gigadollars at once, but is there any reason you would immediately need that much?
> but is there any reason you would immediately need that much?
Because you worry that BTC will crash and want it in something more stable?
BTC is volatile but it isn't going to crash tomorrow or any time soon at least not by the amount that would make sense to sell with a wallet this old.
Compared to the “Magnificent Seven”, Bitcoin’s volatility has put it in the middle, while it’s performance puts it at or near the top depending on the time window.
https://www.fidelitydigitalassets.com/research-and-insights/...
https://www.fool.com/investing/2024/03/06/bitcoin-has-been-a...
I find it odd that someone would make a comparison between bitcoin and other financial assets, as if bitcoin was just another financial asset and its theoretical price wasn't zero... which is a pretty big market anomaly. Normally, when you find a market anomaly, you try to explain it. But these analysts, they pretend that there's no anomaly. They just don't talk about it, in the hopes that nobody will notice.
Well, what should they compare it to then?
Good has a value much higher than its use and most of its current value is just the faith that it is a store of value.
But I don't find odd comparing gold's return to s&p
It could be compared to other assets in the asset class of assets that have no intrinsic value (e.g. other crypto-currencies). I think that would make sense.
Well, one way to lower the price would be to put eight billion on the market all at once.
If the Bitcoin Sovereign Wealth Fund scam that was announced after Trump's election is launched, there will be a price bottom that is financed by public funds.
I'm not sure what has come of it. Trump is doing well with his own coins:
https://www.reuters.com/business/finance/uae-fund-buys-100-m...
https://www.bloomberg.com/news/features/2025-07-02/donald-tr...
You would have to arrange a bunch of off market transactions, Probably spread over several different exchanges. Doable, but I reckon you would end up with closer to 6 billion
Why are you asking about $8B when the article is about $2B?
If you don't want to bother, you can auction it and some hedge fund which wants to buy will take it from your hand.
Seems like a "buy borrow die" type of scenario to me.
yes, that’s why the exchanges are nearly $100bn companies
between multiple corporations buying $1bn per week, retail, and nation states, there is a large appetite for this amount with a few phone calls
nah, they are worth that much because of inflated valuations
Yes. And note that Coinbase for example charges retail around 1.5% or so on average, but only a few basis points to institutional clients last time I ran the numbers. Surprise.
a standard that applies to everything you respect as well
Bringing us full circle back to the utility of the signal
Start an ETF?
Most interesting to me is that people are worried about a $2B transaction moving the market.
How does that compare to the market depth of actual currencies or commodities? BTC, being objectively worthless, must be much more sensitive to people wanting to sell I'd expect.
How is BTC objectively worthless (I'm guessing you mean "intrinsicly worthlesss"?) as opposed to USD or other major currencies?
Other currencies get their value because the governments that provide them make people pay taxes. If you want to pay the tax the US government charges you, you're going to need some USD - so there's guaranteed demand, and hence intrinsic worth.
There's also other debt that the US government provides in USD - which provides value as well, in the form of bonds.
BTC has no such driver of wealth. Except perhaps money laundering/transfers without AML provisions.
Yeah bitcoin is (at best[0]) a kind of consensual hallucination, worth something because people believe it is. Fiat is someone with a Navy telling you it's worth money, it's very different.
[0] in practice there's a difference between the idea of a distributed digital currency and the ponzi schemes they give rise to I'm real life. Bitcoin is some greater fool thing, it's not a medium of exchange.
People value a way to store money securely in a place that can’t be physically robbed, that can be sent internationally with low fees quickly.
You don’t need anything else.
For years the haters on here would screech “but it’s volatile” - not really anymore. I wonder what they’ll decide to hate it for now, rather than changing priors.
According to your theory, all the thousands of shitcoins are valuable. But they're not.
There must be further reasons, then, that the price of Bitcoin is so high. And they're purely sentiment, I'd argue. If that changes, there's little to prevent the price from going down very far very fast. Unlike fiat.
It's brand name value. The same reason there's one basic OS, one internet search, one social network, one VOD site. People can tolerate few names for things and tend towards the default as a safe choice.
No, according to their theory a coin can be valued for its intrinsic properties, not that it will be.
I mean i mentioned its volatility has gone down.
People use stablecoins as well for the same reasons. Shitcoins are different.
This doesn't explain why the currencies of different countries behave differently.
In my view, money is a technology. People use a technology if they find it to be useful. I know this sounds circular, but bear with me. A "major" currency is designed to be useful as a medium of exchange, temporary store of value, and tool of government economic policy. For it to serve these purposes, a government has to moderate its own behavior to some extent.
Thus my view is that the value of a major currency is based, not on the expectation of paying taxes in the future, but on more general expectations of the future behavior of the government.
With that said, paying taxes is good use for money that's a short term store of value, because you rarely need to hold onto your tax money for more than a year before paying it.
>Other currencies get their value because the governments that provide them make people pay taxes
That's demonstrably false, because countries like Zimbabwe and Venezuela experienced hyperinflation (the complete devaluation of a currency) in spite of the fact that their governments were still forcing people to pay taxes with those currencies. So clearly that alone is not enough to provide intrinsic worth to a currency.
Countries like Zimbabwe and Venezuela printed those currencies in vast quantities to pay bills instead of raising [most of] that money through taxes. Taxes owed in previous quarters were worthless compared with the new trillion dollar notes Zimbabwe's central bank issues to pay government officials, and most private transactions were black market so they weren't seeing them returned in taxes. Zimbabwe and Venezuela are the defining example of how a currency which isn't backed by mountains of debt and taxes is reliant entirely on speculators' confidence...
The reason for that devaluation is that trust was eroded. GP's premise is correct, that fiat has value because of governments, but the reasoning here is not fully correct. The value is in the trust that the government and the institutions will continue to function properly.
The expected discounted value of all bitcoin's future cash flows is zero. This is because the only cash flow that a bitcoin investor can expect from an investment in bitcoins is the revenue from selling the bitcoins in the market... and the market value of something that has no use case and is held for speculative purposes only (i.e. has no intrinsic value) will tend to zero in the long run.
A fiat currency that is issued by the government has no intrinsic value either, but there's one crucial difference compared to a cryptocurrency: in the case of a government-issued fiat currency the central bank will intervene the market, by making use of its prerogative to conduct monetary policy, to ensure price of the currency doesn't drop to zero.
My house also doesnt generate cash flow/interest by itself, must have an intrinsic value of zero. Surprisingly it can be used as collateral for a loan as long as other people assign a (however disputable) value to it. So, of course you could be right when all (not just you) other people decide that BTC has a value of zero. Meanwhile i use my BTCs as collateral. Value is more of a social judgment, not a law of nature. Hence the misconception?
Houses do generate income, called "rent". Either you rent out your property and get paid an explicit rent, or you live in the house in which case you get paid in kind. So, bad example!
Agreed. How much future cash flow does a kilogram of gold generate?
Gold has very little "intrinsic" (industrial) value. Most of its value is pure speculation. Would you say gold and bitcoin are rather similar then?
Like bitcoin, gold is too a "bubble asset", but unlike bitcoin, gold is a physical object with use value and limited availability.
The thing about gold is that its price appears to to be negatively correlated with the economic cycle. Because of this some people argue that it makes sense to include it in a portfolio of stocks and bonds, so that the volatility of the portfolio is reduced, although personally I would advise against it.
And this has proven successful in many countries such as Zimbabwe, Venezuela, and Argentina
A fiat currency is indeed just an accounting unit, but it has some floor against falling to zero, as it can legally extinguish any debt, and is needed to pay taxes.
Even so, sometimes they fall to basically zero. What chance does crypto have when sentiment turns against it?
Generally speaking it has been successful, more so than the gold standard. It's true that sometimes states fail, but that's not something a monetary system can prevent from happening, or insure against.
And the Bitcoin blockchain is just another state, with just another monetary system, which you can diversify into or not, and it can fail or not.
A blockchain is not a state. A state is a political entity that rules a territory through the monopoly of violence.
https://write.as/no-time-like-tomorrow/a-blockchain-is-a-sta...
Sorry to say, but you're deluded. A blockchain is made of "information". Information has no coercive power. A blockchain can't enforce laws. It can't stop illegitimate violence. It can't perform any of the functions of a state. Not even remotely.
Leaving the gold standard has been so successful, as evidenced by the inflation crisis leading to rising cost of living and housing shortages in every western country.
Inflation and a rise in the cost of living are different things. Inflation means an increase in the (nominal) price level, whereas the cost of living is measured in real prices, specifically real wages.
Inflation is an increase in the money supply, which is why it's called inflation - the money supply inflates. I know a lot of government economists like to define it as rising prices because then there is no word for increasing the money supply which is very convenient for them and the governments they work for.
No, it's not just government economists. It's the standard definition in economics. But that's beside the point... the BIG mistake you're making is confusing an increase in nominal prices (inflation, or whatever you want to call it) with an increase in real prices (a rise in the cost of living).
Your definition of "worthiness" is entirely flawed. It seems to be base on some random economics textbook definition of "value".
I am getting tired of repeating the exact same thing on HN, but TL;DR:
Asset pricing theory is a well established field within economics. Of course it comes down, in the end, to the law of supply and demand, but that doesn't mean that we have to stop here. The law of supply and demand doesn't explain why there's a supply and a demand in the first place.
https://en.wikipedia.org/wiki/Asset_pricing
It's not backed by a government, and while some may say that's a good thing, I think it is not.
Without institutional backing, crypto is just a number in a database that people agree is worth something—for now.
If that collective belief evaporates, there’s no court, no army, no tax base, and no GDP to catch it. Contrast this with fiat currency, which—while not backed by gold—is backed by coercive power and taxation.
Let’s start from something even more fundamental. How do you bootstrap trust? Suppose two pseudonymous entities online want to exchange money for services. Such a system will likely need a reputation system to establish the trustworthiness of entities. That system needs to be tolerant to Sybil attacks (i.e., forging multiple identities), while also ensuring the service provider isn’t exploited by a buyer who refuses to pay after receiving the work.
But this exposes a deeper issue: trust cannot be bootstrapped from scratch. It needs either:
Without these, any trust system collapses into a prisoner’s dilemma. Each actor is incentivized to defect (cheat) unless: But even escrow only works when dispute resolution is possible and trusted. And dispute resolution requires either a neutral arbitrator (who must have their own identity and incentives) or hard-coded, binary rules, which rarely capture the complexity of creative or service work.More fundamentally, trust-based systems are built on recursive assumptions:
Eventually, without a root of trust—whether a state, a court, a verified identity, or long-standing social capital—the entire structure becomes circular. There’s no ground truth. Just reputation built on sand.And so, the real limitation isn’t crypto per se—it’s that trustless systems don’t exist. At best, we shift trust: from institutions to code, from names to keys, from legal consequences to probabilistic deterrents. But the requirement for trust itself never goes away.
In a pseudonymous setting, the cost of betrayal is minimal. A buyer can stiff a seller and vanish. A seller can deliver garbage or nothing. Reputation can be reset at will unless there’s an expensive cost to identity creation or a strongly linked personal history—which violates pseudonymity.
Thus, bootstrapping trust in such environments is not just technically hard—it is philosophically incoherent without compromising at least one of the pillars: privacy, decentralization, or enforceability.
It follows that if you can’t bootstrap trust, you can’t bootstrap anything that depends on it—including money. Money, at its core, is a social contract, a belief system upheld by collective trust. We accept currency in exchange for goods or services because we trust that others will accept it from us in turn. That belief is reinforced by institutional structures: central banks, governments, legal systems, and ultimately, enforcement mechanisms.
But the moment that trust breaks down, the system unravels. If people no longer trust that their money will hold value tomorrow, they will try to offload it as fast as possible, converting it into hard goods, foreign currency, or anything perceived as more stable. This behavior accelerates inflation—sometimes catastrophically.
We’ve seen this repeatedly in history:
The underlying mechanism is always the same: money ceases to function as a store of value when the population no longer trusts the system that issues and manages it. Once the shared illusion cracks, even fiat currency—backed by laws, taxes, and armies—can become just colored paper.Now contrast that with crypto. Cryptocurrencies claim to solve this by removing central authorities and placing trust in mathematics and distributed consensus. But this is not true trustlessness—it's merely replacing institutional trust with collective belief in code and game theory. And the cracks are showing: when confidence drops, as in market crashes or protocol failures, value disappears just as quickly—if not faster—than in fiat regimes.
So the uncomfortable truth is this:
Without enforceable trust, money becomes unstable. Without shared trust, money becomes meaningless.And that brings us back to the core issue: you cannot build a functioning economy without some root of trust. Whether that root is institutional, social, or cryptographic, it must be anchored, persistent, and costly to betray. If it’s not, the system becomes inherently fragile.
The reason I used pseudonymous here is exactly because we assumed govs are bad. If govs are good, then crypto degenerates to just a slower system for transactions.
> Money only works if you believe it will still work tomorrow.
Yeah. When crypto goes down, it'll be epic.
> If govs are good, then crypto degenerates to just a slower system for transactions.
That's how I see crypto: an inefficient and ill-regulated substitute for money, though suitable for crime. If governments turn bad, stable money is just one tiny part of the problem.
> being objectively worthless
Since we're on the topic of being objective, how is, objectively, something that trades at close to 110k USD per token, "worthless"?
I believe the word "objective" does not, objectively, have the same objective meaning for everyone.
I think he meant intrinsically worthless, or maybe fiat. It obviously has value, that's not a debatable fact by any meaning of the word.
It's only 0.09% of what's been mined so far. There's ~2.4T USD in circulation? So pretty similar
Trivia: there are only five publicly-traded companies with marketcaps larger than bitcoin's:
nVidia Microsoft Apple Amazon Google
BTC's marketcap is also larger than all the silver in the world...
Though their market cap is somewhat meaningful, and reflective of some value created (flawed as that measure may be). Unlike Bitcoin.
Bitcoin (capital B) is valuable. An individual BTC is not, but that's true of any currency. We can argue until the cows come home about how valuable these things really are. Speculation in these markets makes it too difficult to judge. People will bet on these things not because they are delivering lots of value to us right now or in the future, but just because they think they'll still be around in the future. That gives monopolists like the ones above the advantage, regardless of value delivered.
Just a hair under google, it crossed earlier this week I think. This list is fun to look at https://8marketcap.com
[flagged]
Wait til you see the market cap of the shitcoin I just released!
Someone just got out of jail.
An old friend of mine died 11 years ago from an overdose, and I am almost certain he used darknet markets to buy other drugs.
It's very likely there is a wallet forever lost with many Bitcoin in it from his passing. No way his family would have known anything about it (Bitcoin/dark markets)or cared much anyway circa 2014. I'll admit I have pondered ways to check this, but it's too far fetched.
I can't help but wonder if the wave of fentanyl that made optiate addict deaths skyrocket, left a huge wake of forever lost Bitcoin. I know there was a lot of overlap between addicts and darknet market users.
Most addicts would likely not hold Bitcoin in wallet, but spend it on getting their next fix as soon as they buy it. It's not like you're thinking long-term, invest in Bitcoin so you can buy more drugs down the line. There would be leftover change but not big amounts.
You'd be surprised how many of these addicts would be buying for multiple other less tech savvy addicts and essentially becoming small time dealers themselves to fund their own habit. If they got locked up or ODd at the right time there could've been a few thousand usd in btc in a wallet at a time when each btc was worth less than 10usd.
He wouldn't heroin from darknet markets and I doubt many addicts do, they need that on tap locally. But he, and many others like him, just like drugs in general and have a heroin addiction they picked up. So the darknet is more for getting lsd, MDMA, mushrooms, or whatever else.
Ross Ulbricht got out a few months ago. Could be his.
he only had $40 million . if he had $1 billion the feds would have known about it
> he only had $40 million
How could you possibly know?
Or anyone else for that matter, including the thugs who sent him to jail?
lol. Did you read the whole wired piece on how the feds couldn't find anything under their nose on that case?
Perhaps also see the linked page "Top Dormant for 5 years Bitcoin Addresses":
* https://bitinfocharts.com/top-100-dormant_5y-bitcoin-address...
I really wonder if Satoshi’s fortune is gone forever. Maybe the CIA found his real identity and uncovered his keys. Dumping that much BTC on the market would crash the market and probably even tank other financial markets.
My theory was always that Satoshi burned the coins from the beginning. There never was any fortune.
I see it as the ultimate honeypot. If those coins haven’t moved yet the network is secure.
I think you mean canary. Honeypots are decoys by definition
He may have burned the keys, not the coins. The process of burning the coins is by sending them to an address such as: 1111111111111111111114oLvT2
Why would the cia want to crash the market?
Why would they throw a dozen South American coups, import tonnes of crack to the inner cities, conduct illegal human experimentation or attempt the assassination of multiple democratically elected world leaders?
Honestly no idea, they seem a little fash-y for any logical reasoning that i can comprehend.
Maybe they had another insurgency to fund and didn't want it going through the vast ^official^ books?
the CIA actively relies on many means, including BTC, to organize their activities.
did the rumor that Satoshi was Paul Leroux go anywhere? since he is now in the hands of the intelligence services for a while this could be a good explanation for Satoshi not being able to access its coins.
Satoshi disappeared right after Gavin announced that he was going to give a talk about bitcoin at CIA, just one of the many conspiracy theories
I remember getting a slick new GPU card and learned about Bitcoin mining with my idle gpu power to collect these Bitcoin worth cents, like collecting soda cans for recycling type of $ and thought it wad a terrible waste of my idle processing power compared to harnessing my idle gpu for the noble cause folding proteins at foldingathome.org
I downloaded the bitcoin mining client and everything to see how it worked and had some faucets slipping me Bitcoin for free…
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I have been saying for a decade
Satoshi isnt gonna move wallets 1 through 10
But he probably had wallet 55, 182 and 281-290 and has been spending this whole time. Any founder of a crypto project can do that.
I find it amazing how much these type of tech articles exert themselves to systematically avoid posting any materially useful information.
Do you see a BTC address in there? A link to blockchair? Did I somehow miss it?
In fact, I've noticed that this is a systematic trend, not just with cryptos.
Most tech. journalists systematically talk about stuff without ever posting relevant links to the actual event.
I wish I had access to my old wallet. I mined around 1.5BTC with my laptop and I deleted the wallet after a while because it was worthless.
I think many others, including me, have also the same experience of mining a few and then either forgetting or deleting them because they thought it'd never turn out to be worth anything.
you probably would have sold it at $100 or something anyway
This is definitely something I remind myself of for any investment I sell and later on explodes. For bitcoin there were way too many highs that I definitely would have sold at.
Yep. I used to pay my Dish Network bill with BTC. Youth is wasted on the young and hindsight is 20/20
I know, that's why I'd like to have the wallet now :)
Even if BTC hits 1 million in the future, 150k now would be life changing.
Same. I mined 32 BTC circa ~2010-2011. Then I did a clean install and forgot I had everything saved on the HDD and nothing written down. I remember them being worth about $1 a pop at the time and thought "fuck it", but I never bothered minting any more.
I mean, if you still had the HD its likely you could recover it, and for 3.2m it would certainly cover the specialty hard drive company's fees
Has it ever been worthless (post pizza guy). There’s always been someone who will give you some fiat for them.
Is this why Martin Shkreli quit streaming? Did he actually crack them?
Quantum shorts got to him first.
https://news.ycombinator.com/item?id=44466896
Personally I think that this can be considered on the "bug" side of Bitcoin's finite number coins: if, over time, they are lost, then there's a smaller quantity† of currency that is useable to actually do stuff with.
This can make the 'rate of deflation' that occurs worse:
* https://en.bitcoin.it/wiki/Deflationary_spiral
* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...
* https://crypto.bi/deflationary/
† I am aware of satoshis.
When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more.
Considering this, while it is true that all this makes deflation worse, I’d assume most bitcoin hodlers would not mind this.
It is under-appreciated that inflation actually is desirable in a working economy.
Look at it this way. If your money (in money form) is worth less tomorrow than today, you are incentivised to spend it, thus fueling economic activity of all sorts (from going out and buying a drink to buying a car, traveling, investing). If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth; the rich get richer and hoard the money. I do not believe any of today’s economies can be healthy and competitive (or even functional) with a deflationary currency.
This argument falls apart when you consider technology though. And even daily essentials. No one would not buy food and water because they can get more in future. They need it now.
The same goes for technology. We all know next year’s iPhone will be better than this year but we still buy them…because we need them now.
I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value. It means money flows into anything and everything like zombie companies, over consumption, property. Those on the poorest end are just trapped because as soon as they get any money it starts depreciating.
> We all know next year’s iPhone will be better than this year but we still buy them
Next year’s iPhone will not only be better, but also (even with the same price tag) cost more, inflation-adjusted. That factors into the decision to buy now.
> I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value.
It is a problem when it is at extreme, like in unstable countries where money can be a liability to unhealthy degree. However, I’d argue it should be a liability to a smaller degree.
What you highlight is the ever-present conflict between personal benefit and societal benefit. Obviously for an individual it is more preferable that the value of their money increases; I would never argue that. However, for society as a whole it is more preferable if the value of money decreases at a stable rate.
Perhaps this is why all major economies settled on the idea that an amount inflation is crucial to have.
I do not buy into the idea that “everyone did it then it must have been a good idea”.
We’ve already seen the negative side of fiat currencies in how they eventually collapse (Zimbabwe, Venezuela, Argentina) and even in more developed countries wages have not kept up with inflation. Money is trending to zero People are trending to destitution.
We saw it recently in the UK - where public sector workers were not given pay rises because the government argued it would fuel inflation. So how does that even make sense.
Let’s continue this discussion when you show me a successful economy with a deflationary currency.
The only reason you can provide examples of failed states with inflationary currencies is because all currencies are inflationary. This is not a coincidence, perhaps because deflation does not correlate with things going well. For some famous examples of deflations, read on The Great Depression in US and Lost Decades in Japan.
More and more people claim this system of stimulated growth is actually wrong and the root cause for global warming.
Sources who claims this, and details as to how?
I disagree that it is the cause.
The mechanism does not distinguish between “bad economic activity” and “good economic activity”. I.e., the same mechanism applies to positive progress (carbon dioxide sequestration, more expensive technology and techniques reducing environmental impact, etc.), it just requires proper incentive alignment and accounting for bad faith actors via regulation.
A deflationary system with limited supply makes kings and ultimately defeats itself, as your money is decreasingly evidence of your effort and work and increasingly evidence of you having held to it for a while. (It is also a quality of the current system, but less so, and it should be even less so, not more so.)
The US currencies were either literal precious metals, or gold-backed and/or silver-backed, throughout the 19th century until the Great Depression, except for a couple of brief suspensions. Consequently the average rate of inflation was zero. That was the period that it went from a fractious group of rebel colonies to the center of world economic development. So, while I'm sympathetic to the idea that a fiat currency with a predictable inflation rate might stimulate the economy, I think you are making an unjustifiably strong case for it.
Britain coming off the gold standard made the pound more competitive. Prior to that, when pound was backed by metals, they increasingly suffered high unemployment, runs on gold and everything.
In the US it was nothing good either after a few years since WWI: manufacturing fell, unemployment rose[0], etc. I guess it did not help that Britain ended the gold standard which helped their exports, and US adopted protectionist policy which tanked its trade. I don’t need to retell this all but basically the depression ended with the US abandoning the gold standard and entering controlled inflation.
Perhaps the reason for these rosy takes on deflationary currencies in the US is that not many people are still alive who lived through the depression…
By the way, the US did suspend the gold standard during WWI. Why, you ask? Well, it so happened that some debt was due, plus people from across the pond were selling stocks in US companies, and so what happens at that point (when you don’t have much monetary control) is ships full of US gold floating off into the misty ocean.
Correct me if I am wrong, of course.
[0] “Did you know that every 1% the unemployment goes up, 40 000 people die?” — The Big Short.
As far as I know, you're right about those historical facts, but both of us can see only a small part of the picture. There are hundreds or thousands of countries in the world over eight thousand years since money was invented, and we've discussed a 225-year period in two of them. That doesn't seem like good justification for strong generalizations.
If you know a historical example of a successful deflationary currency…
>> If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth
By your logic, bonds are bad for the economy.
Care to write more than a sentence and explain your logic?
When you invest in bonds, they are worth more tomorrow than they are today. So you would have the same incentive to put off spending as long as you could as you would owning a deflationary currency. If that is bad for the economy when you're holding a deflationary currency, it should be bad for the economy when you're holding an appreciating asset.
I don’t think bonds are currency. You buy bonds, you spend money, now your money is doing something in the economy as opposed to if you just held on to it.
> the rich get richer and hoard the money
Well thankfully we're safe from that!
Definitely, if anything we need more of it, right?
> When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more.
Which can limit economic growth. When money was based the amount of gold available, there were long periods of economic stagnation because of liquidity issues:
* https://en.wikipedia.org/wiki/Long_Depression
* https://en.wikipedia.org/wiki/Great_Bullion_Famine
The stagnation only ended when new sources of shiny rocks were found (California; New World).
I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems. Yes, credit creation can be "too easy" and become a problem, but making it "too hard" (or physically/mathematically impossible) is even more dumb.
In US in 19th century stocks of banks that went bankrupt were used as a sort of paper money to solve the problem of money availability.
So the finite amount of base money would just mean that derivative products would be used as practical money.
> I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems.
That’s quite a mischaracterization. We can at least agree that Bitcoin’s supply is set up to increase at a pre-set rate over time. The math problems are the means to enforce that rate. Not the controlling factor.
>there were long periods of economic stagnation
During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation.
> During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation.
I don't know of many things that are viewed positively that have been given a label with "depression" in it.
> Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame.[32] However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent,[33] per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.[34]
> The dramatic shift in prices mauled nominal wages – in the United States, nominal wages declined by one-quarter during the 1870s,[14] and as much as one-half in some places, such as Pennsylvania.[35] Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s.[36] The collapse of cotton prices devastated the already war-ravaged economy of the southern United States.[17]
> Thousands of American businesses failed, defaulting on more than a billion dollars of debt.[35] One in four laborers in New York were out of work in the winter of 1873–1874[35] and, nationally, a million became unemployed.[35]
* https://en.wikipedia.org/wiki/Long_Depression#United_States
Seems like a grand-ol time.
If Congress had not demonetized silver in 1873, the metal’s decreasing value would have curbed the deflation of the time. I believe that this was one of the US Government’s greatest mistakes ever, because the reaction to the economic crisis in the 1870’s had a profound effect on the failure of Reconstruction. Friedman wrote a paper on this, called “The Crime of 1873.”
What happens when all bitcoin is mined, societal collapse?
It will go from the near totality of people acquiring their bitcoins through purchase to actual totality.
We have other coins too.
I don’t think that’s much of an issue for usage. Since a bitcoin can be divided in to 100,000,000 satoshis. There would only need to be a handful of coins left accessible for the system to be usable.
Being deflationary I agree is a problem, but not the idea that there aren’t enough usable coins left.
Everyone always repeats the "deflationary bad" mantra, but I wonder if it really would be. Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
> Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
In broad strokes, this is perhaps the most important question of environmental sustainability which stems from monetary policy.
Second most important is the matter of how much energy is spent on security (eg, in the case of bitcoin, the horrifying amounts of power spent on SHA256 hashing, and in the case of USD, the perhaps even more horrifying energy consumption of the global petrodollar empire).
We spend so much deliberation on this second question that we often ignore the first: what monetary policies will make us chill out on the whole importing-plastic-shit-we-don't-need-from-the-other-side-of-the-earth thing?
The concern is that capitalism allocates resources to the production of socially valuable goods because corporations can raise money to buy the means of production of those goods before producing them by selling shares in their future profits to investors who are willing to accept some risk of bankruptcy in exchange for those future profits, which result from consumers' rational judgment that the goods are sufficiently valuable to them to be worth buying at a price higher than the cost of goods sold.
None of the links in this chain is perfect†, but one of the weaker ones is where investors are willing to accept risk. A guaranteed deflationary currency is a risk-free way to get a return on your investment, so companies have to offer a higher rate of return, narrowing the set of goods that can justify such investment.
But the same criticism can be leveled at Treasury bonds and (to many people's minds) real estate, so I'm skeptical of it, and anyway "risk-free" is not a good description of Bitcoin.
______
† Consumers knowingly buy socially harmful goods such as cigarettes, they unintentionally buy worthless goods because producers lie to them, investors are largely speculators driven by herd mentality rather than rational assessors of future returns, corporations cheat investors due to principal–agent problems, and externalized costs and benefits such as pollution aren't measured at all. Still, it's a damn sight better at organizing economic production than the Great Leap Forward, the Southern slave plantations, or the medieval guilds.
There is plenty of empirical evidence from the 1800 to 1930s showing how a deflationary currency affects the economy. Amongst other things getting stuck in permanent boom and bust cycles wasn’t that great.
> But the same criticism can be leveled at Treasury bonds
Not to the same extent. Bond returns are usually barely above inflation. e.g. back in the second half of the 1800s you’d get 4% interest plus 1.5-2% average yearly deflation (since the economy was growing due to technological progress/etc. yet money was relatively very scarce).
It's only a problem for capitalism.
Losing some bitcoin is effectively equivalent (over the long term) to distributing it to all other holders (proportionally). So this is fine.
Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. In order to claim that "this is fine" you would need to refute the claim that deflation is bad.
> Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability.
Deflation is built into Bitcoin by design and is one of its most notable features regarding its coin growth schedule. This pros and cons of that approach have been discussed ad infinitum in the crypto community.
I wonder when did cypherpunks started to discuss this kind of mechanisms for digital currency. Was it obvious from day one or an idea that came later in the design phases.
> Was it obvious from day one or an idea that came later in the design phases.
The Bitcoin paper came out in 2009, and the deflationary criticism was already recorded in 2010:
* https://en.bitcoin.it/w/index.php?title=Deflationary_spiral&...
2014 article:
* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...
Cypherpunks were discussing digital gold and Austrian economics in the 1990s. I wouldn't say there was any kind of consensus but the ideas were out there.
The finite nature of btc, low transaction volume, and increasing cost of mining made deflation a given. The original designers simply did not solve this problem. BTC’s dominance in the crypto community suggests that this trait was advantageous for BTCs growth as existing holders are incentivized to add additional use cases/transaction volume.
Not only were they already discussing it when I joined the list in 01992, cryptocurrency was a major, if implicit, part of Tim May's crypto-anarchist manifesto which I think he presented at Hackers in 01988: https://groups.csail.mit.edu/mac/classes/6.805/articles/cryp...
He wasn't specifically calling it out as having a fixed money supply or even fungible tokens, though. And it wasn't until Satoshi figured out how to do without a central issuer like Xanadu, Digicash, or e-gold that we realized it was possible. At the time that Satoshi cut the knot, we were all convinced it was impossible because of Zooko's Triangle.
Chaum founded DigiCash in 01989, incidentally, based on a paper he wrote in 01982 presenting a cryptocurrency design for untraceable payments, but backed with dollars by a central issuer, like Tether.
However, there was always a strong association between cypherpunks and right-libertarian free-market ideology, which is where you find gold bugs and Austrian economists. You may remember that one of the minor plot points in Atlas Shrugged was that Galt's Gulch went back to specie money (tiny pennies stamped from gold) because its value wasn't dependent on government fiat.
There were early attempts at inflationary cryptocurrencies too but they didn't catch on; all other things being equal, people prefer to hold currencies that gain value over time, not lose value.
And the word currency, or current, implies movement, no?
So I think it's the issue of thinking people will use it as a currency, not that it is not a valuable asset
Given the context, "this is fine" is obviously an ironic reference to the cartoon dog sitting on a chair at the dining room table with a mug of coffee in a burning house meme.
Normally I would say you're right, but I read the context opposite to you; I read the "fine" as a straight/literal statement: the author of "this is fine" is disputing the author's parent's statement that "this can be considered [a bug]".
> Losing some bitcoin is effectively equivalent (over the long term) to distributing it to all other holders (proportionally). So this is fine.
To those that have, more will be given. What about those that do not have?
Slavery.
You can't actually know if they are truly lost or not, though. Any dormant wallet could reactivate at any time, just like the wallets in this story.
I love how people bring up deflationary spiral as a "peril" while the prerequisite for it is the universal and smashing success of Bitcoin.
The only "problem" Bitcoin poses for economies is for governments to fine-tune their local economies via currency production and related controls. In that sense, we should watch how events unfold in Turkey.
* among major "regular" economies, Turkey has the highest % of people holding crypto (≈20%). Second only to special zones UAE and Singapore (31%, 24%).
* Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%.
* Turkey does not have mandate for pricing goods in local currency: you can pay in dollars or euros, along the local lira.
* When you enter Istanbul airport, Every. Single. Gate. is marked with BTCTurk ad, inside and outside - the major crypto exchange in the country.
* Istanbul city market is full of traders who use USDT on Tron.
The experiment of social game "Bitcoin" boils down to this: will the people self-organize the functioning economy with monetary freedom, while the gov loses its grip on it; or will the economy collapse without government's regulation and protective management?
This is just a convenient way to access stable western currency. Having been to Russia and Argentina during their worst inflation years before crypto, they solved their issues by asking for US paper dollars. Crypto is just saving them currency exchange fees.
And there's no way Turkiye is behind the value of BTC. It's still driven by speculators.
> and smashing success of Bitcoin.
It's a success today, we haven't gotten to when they stop issuing any more, and mining is funded by transaction fees. I suspect there are going to be some problems then.
Like what? As far as I can tell, it will solidify its store of value.
> Like what? As far as I can tell, it will solidify its store of value.
Which is the bug:
> No currency should be able to buy the same basket of goods over very long timespans through hoarding. If you want to retain the purchasing power of your money, it should participate in society via investment.
* https://twitter.com/dollarsanddata/status/159265180975079833...
That’s a “hot take” that people take as an axiom. What if it isn’t? What is the precise definition of “participating in society”? What level of earning and spending is considered morally good and who’s to decide that? (Meta questions arise when discussing conflicts of interest of the deciders.)
> Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%.
Because the authoritarian government took over the previously independent central bank and lowered interest rates. Higher inflation was predicted by mainstream economists, and they were right.
* https://www.aljazeera.com/news/2021/3/20/turkeys-erdogan-sac...
* https://en.wikipedia.org/wiki/Currency_interventions_under_E...
Thank God that would never happen in the US.
This is one reason why Bitcoin isn't a good currency. Deflationary trends give holders a lot of incentive to keep holding and never spend.
You can buy a lot of pizzas with it now
You can't buy a single pizza with it now. Only by exchanging it for an actual, better currency
You can buy a pizza from me with Bitcoin now.
I’m not a vendor or even a chef. But, anything is negotiable.
you can buy pizza with bitcoin in many places using many methods, exchanging for another currency or not.
It’s a solid store of value. One can borrow against that held BTC, and as it appreciates over time, the loan-to-value ratio improves, without having to do anything. Also avoids capital gains taxes since you're not spending it.
Bitcoin is the world's number one store of value for converting young, impressionable men's wages into thin air and moving those dollars to other people instead.
It's a compelling rival to multi-level marketing for women in that both prospects entice low-socioeconomic standing peoples into thinking they are building value instead of consuming it.
Deflation is what you want for investment assets. Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value.
The original bitcoin whitepaper was titled: “a peer to peer electronic cash system”
The initial intention does not change the practical reality.
>> Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value.
> The original bitcoin whitepaper was titled: “a peer to peer electronic cash system”
The goalposts, they move.
> Deflation is a good thing when you are parking value.
And is deflation a good or bad thing for the livelihood and well-being of human beings?
How many people in the US has a mortgage or some kind of debt (student, medical)? Inflation makes the burden of debt easier, deflation makes it worse.
And the Top (0.)1% already has an easy enough time with parking/generating value. Deflation would only help them more (and make things hard for everyone under them).
Inflation punishes savers and rewards debtors, i.e. it disincentivises the more economically productive behaviour.
Saving isn’t economically productive, on a societal level. Spending is. Investing is.
Deflation inherently disincentivizes doing anything with the currency other than sitting on it. Want to buy something? You’d be better off waiting and buying it tomorrow because it will be worth less in your deflationary currency at that point. No one has an incentive to lend their money to others to use it more productively, so no growth occurs. No one buys anything, producers can’t sell anything, and no one can get capital to start any business ventures. The sole, viable way to accumulate wealth is to take the currency and stuff it under the mattress.
This results in a society much like Europe described in a Jane Austen novel, where wealth is simply inherited and the upper class doesn’t actually serve an economic function. They just exist to perpetuate their wealth and dole out subsistence wages to those who work their estates and have absolutely no chance of improving their station.
It’s an inherently broken system and a perfect example of Chesterton’s fence by tech types assuming they know better than everyone else.
> Inflation punishes savers and rewards debtors, i.e. it disincentivises the more economically productive behaviour.
Quite the opposite.
Deflation encourages hoarding of cash because it just sits there and increases in value. "If you want to retain the purchasing power of your money, it should participate in society via investment." — Nick Maggiulli
Isn't saving (i.e. sitting on assets) less economically productive than spending? Inflation rewards productivity by making productive use of money the only way to avoid loss over time?
>> How many people in the US has a mortgage or some kind of debt (student, medical)?
Approximately zero of them have debt denominated in Bitcoin. Meaning that the main drawback of deflation does not apply to Bitcoin.
Fair point. It seems largely that bitcoin is a store of value rather than a currency that you do stuff with at this point.
> useable to actually do stuff with
You mean actually buy stuff? Come on, everybody knows that BTC is used mostly for speculation ...
Someone who is involved in crptocurrency explain this to me. If I was this person, could I just sell these bitcoins today and get something like $2B in cash? Or is it more complicated than that?
Think about it: for you to collect your $2b someone has to be willing to give it to you and believe they will get it back in the future by buying your bitcoin. Who would do that?
Then you just magically deposit $2b into your bank account? Riiiight. That’ll set off epic levels of warning lights and in the US the feds would be up your ass instantly.
I bet it’s a freaking nightmare to sell off that much btc.
Yes. Although selling all at once on a small exchange will not give you the best price.
Better to sell lump sum. Or call them to make an over-the-counter deal. A lot of ETF companies like Blackrock get their coins that way.
Discussion landed in another thread (74 points, 32 comments) https://news.ycombinator.com/item?id=44466896
On a side note, if quantum algorithms break elliptic curve cryptography, then wouldn’t Satoshi’s wallets and others be flooding the market with coin transfers?
The BTC network will need to require all addresses with large Bitcoin UTXOs to send them to new wallets, that are quantum-resistant, by a certain date, or lose the ability to move that money.
Someone please correct me if I'm wrong, but there's no proof that a general solution to elliptic curve discrete logarithm problem can't be found.
It's reasonable to assume that a solution hasn't been found yet though, otherwise that would be the world's best kept secret.
Shor's algorithm, originally designed for integer factorization, can also be adapted to solve the discrete logarithm problem in polynomial time on a quantum computer. There is also the less efficient Grover's algorithm can also be used for unstructured search problems on a quantum computer.
I was thinking more along the lines of solving in polynomial time on a conventional computer.
That's downstream of P vs NP.
Might be the Pizza guy! The other thing they may have a small fortune in forked coins too. Like Bitcoin Cash.
The day Satoshi finally decides to move some btc around, I wonder how many automatic emails, api calls, etc will be performed because of so many people setting up alerts.
Price is dumping today, i wonder how much of a role this is playing. those coins will be hitting an exchange likely. This has always been the problem with bitcoin.. the implicit assumption is that many coins are lost , but if the early adopters start cashing out, prices will fall fast. Institutional buying and retail is still small relative to the early adopters. There are many people , miners who are quietly siting on huge fortunes.
And it’s a major US holiday, whatever that indicates.
April 2011 is not Satoshi era. Satoshi had dropped out of public Bitcoin forums by late 2010.
Hm, I can't recall when The Sleeping Beauty was making billions of dark money. This is some perverted fairy tale. The sleeping beauty is our current world, that allow all the scams, launderings, murderings to happen.
Can they be spending sidechain coins quietly or is that visible too?
You can visibly send BTC to the Liquid federated side-chain, where amounts in txs are hidden.
It pains me because I learnt about bitcoin way back in 2010 and
I learned about it here, but everyone said it was a scam and not to buy
A superposition of wrong and right if there ever was one.
Easy to kick yourself in retrospect but if we could see the future we'd all be millionaires. AAPL was $0.28 in 2002 (adjusted for splits, something like $12 at the time).
I learned about it from my friend, but couldn't bother with downloading a wallet client and mining etc
It is still a scam. Its just that critical mass of delusional people bought into it like Gamestop or Tesla stock. Even super obvious scams like Nikola take years to register price wise.
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Why pain? Bitcoin is still there for you.
You probably would have sold or lost them anyway. Probably a tiny percentage of people from 2011 still held
As someone who has been into crypto since 2012 and isn't rich, yep
... and? What is happening with people's attention span?
You're supposed to be able to fill in the second half of the sentence based on context. They consider it to be obvious from the first half.
They must be an expert in number theory. I have a marvelous continuation of this sentence which
tfw when you spent many Bitcoin on Silk Road back when it was only $8 a coin
Probably North Korea.
Imagine finding a file on an old laptop from when you were just futzing around 15 years ago. And it was worth $9 billion.
It's not that. These are addresses with 10k BTC each. That's very intentional storage even for 2011.
Wasn’t 10k bitcoin the price of a pizza or something back then?
10K BTC for two Papa John's large pies. see https://marketrealist.com/what-is-the-bitcoin-pizza-transact...
That's about US$500M per pie these days ( 1BTC ~= US$100K )
BTC ranged between $0.30 and $27 back in 2011 so not quite
why did i not mine bitcoin in 2010? fuck
Because it's a stupid waste of resources, and you had better things to do.
Chinese quantum computer just broke Bitcoin address.
What makes you think that?
They successfully broke 22 bit RSA [0], which is definitely something to worry about
[0] - https://www.earth.com/news/china-breaks-rsa-encryption-with-...
The guy found his hd at the dump?
Ah yes, the dreaded Chinese Quantum Stealth attack.
Imagine you have one of these addresses precomputed and you see it in a flashed alert
Do you sweep to a new address or what?
EDIT: Hypothetically, not running on Majorana-2
F word is what caught my eye first
Where did they transfer them? I see fck in a few lol.
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Why is Heart not in jail? Is he in Belarus?
Because there's no real case against him AFAIK? Again, from here it really looks like "what can we throw at this incredibly rich person?"
He is scammer and scammed with origin address.
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