[HN Gopher] Bitcoin is a disaster
___________________________________________________________________
Bitcoin is a disaster
Author : wyldfire
Score : 127 points
Date : 2020-12-31 22:25 UTC (34 minutes ago)
(HTM) web link (www.metzdowd.com)
(TXT) w3m dump (www.metzdowd.com)
| ancharm wrote:
| Does bitcoin moving to a proof-of-stake algorithm change your
| opinion?
| yonixw wrote:
| What is the difference? Maybe at the start, but after rich
| entities will buy the most, they will only need to decide
| whether to buy "shares" or hardware, a random person will not
| have more say either way.
| sunshinerag wrote:
| But bitcoin is not moving to a proof-of-stake algorithm, ..
| there are a lot of alt coins trying that and flailing around
| with that notion.
| Barrin92 wrote:
| >The scarcity of block chain space has led people to re-invent
| every last feature of the banks they thought they were going to
| be escaping.
|
| This is a pretty funny point because every time I go on twitter
| and see people talk about crypto, what they're essentially having
| is a discussion about public policy, and often they seem to try
| to reinvent institutions that already exist without even knowing
| it. From market-makers, exchanges, insurance and so on, precisely
| as the author points out all the dreaded middlemen they were
| trying to avoid
| tyre wrote:
| Your inalterable blockchain either dies young or lives long
| enough to see a hard fork.
| idclip wrote:
| Ironic isnt it
| hombre_fatal wrote:
| I don't see the irony.
|
| The point is that Bitcoin has introduced an actual "digital
| cash" currency without institutional/governmental middlemen.
| That institutions can be built on top of that, and that some
| people want such institutions, doesn't change the novel utility
| of finally having a currency that functions like digital cash.
|
| It's like saying it's ironic that people use physical USD for
| anonymous p2p transactions when USD banking systems have KYC
| laws. It's a non sequitur.
| oblio wrote:
| What's "digital cash" in this context? What does it offer
| extra compared to regular cash and online payments?
| jbob2000 wrote:
| It's like refactoring a codebase without understanding the
| problems behind the current implementation, and then acting
| surprised when the code is just as ugly.
| NosyHammock wrote:
| >And we are learning that analysis of that record is sufficient
| to destroy any pretense of anonymity or pseudonymity.
|
| Fortunately we have Monero! And pretty much every other issue too
| he raises, Monero has it better.
| ryanianian wrote:
| I was following along until this bit which seems to hold up the
| entire argument:
|
| > [BTC mining] is often done using electricity which is
| effectively stolen from taxpayers with the help of government
| officials
|
| Can somebody elaborate on the stolen/corruption angle?
| [deleted]
| rtkwe wrote:
| Not 100% sure but there was some news a few years back about
| miners setting up shop in towns which had really low energy
| costs because they bought a fixed block of power from a nearby
| source and thus it was super cheap... as long as they didn't
| have to go over that initial purchase, after that it became
| more expensive than normal for everyone.
| xt00 wrote:
| I think he's exaggerating here, but there are definitely
| examples where people especially in China have setup huge
| operations with the help of local officials who give them
| sweetheart deals on the electricity prices -- seems likely that
| the officials helping this happen may get some sort of benefit
| from this arrangement, but not sure if that has actually been
| reported or just assumed. In Washington state there were a
| number of bitcoin operations that started in areas with low
| cost power that promised to bring jobs to the area and my
| understanding was that the local power company often did
| upgrades to lines and substations to accommodate the added
| power needs -- the local taxpayers definitely would either pay
| for that capital cost or pay the additional maintenance costs
| down the road.
| paulryanrogers wrote:
| https://news.bitcoin.com/chinese-kennel-owner-caught-stealin...
|
| https://news.bitcoin.com/bulgarian-electricity-company-unvei...
|
| https://www.coindesk.com/illegal-miners-in-russia-stole-6-6m...
| rtlfe wrote:
| > Can somebody elaborate on the stolen/corruption angle?
|
| It's easy to find articles about stolen electricity [1][2], but
| since these are both about people who were arrested it seems
| the governments weren't helping them.
|
| [1] https://phys.org/news/2019-07-china-police-bitcoin-miners-
| mn...
|
| [2] https://news.bitcoin.com/bulgarian-electricity-company-
| unvei...
| loeg wrote:
| I mean:
| https://www.google.com/search?q=bitcoin+mining+using+stolen+...
|
| The first four links for me are:
|
| * 13 arrested for stealing $3million of electricity to mine BTC
| (China)
|
| * Illegal Crypto Miner Caught After Stealing More Than $400k
| [in electricity] (Russia)
|
| * Bulgarian Electricity Company Unveils Details of Historic
| Power Theft [it's Bitcoin miners]
|
| * Bitcoin mining operators steal $1.5 million in electricity
| (Australia)
|
| These are just the ones who've been caught so far.
| risho wrote:
| proof of work is an energy black hole. it goes to where energy
| is cheapest. this means that it has a tendency to go to places
| where subsidies exist and destroy said subsidy. if there is a
| place where electricity is being propped up by taxes or other
| such things for the benefit of the community, there is no
| reason for them to not just plug in a bunch of miners there and
| suck that subsidy dry.
| jokethrowaway wrote:
| I think he's referring to miners stealing electricity in China
| [deleted]
| leshokunin wrote:
| Well this isn't new is it? I recall chat from 2015 where people
| were pointing out that mining is just bad. Even when Ethereum
| started growing, one of the big arguments quickly became that
| proof of stake would be a superior approach.
|
| I agree. I think the use cases have never materialized. I do
| believe there's potential in peer to peer, or at least federated
| approaches. Email works. Matrix works. Irc works.
|
| But I don't think that a globally replicated ledger is the way to
| go. Especially with the ambition to use it as the basis for a
| currency that's expected to be used for every day purchases.
| sunshinerag wrote:
| I have no idea what he is talking about.
|
| I use bitcoin to buy things both onchain and via lightning and
| the experience is so smooth and much much better than the circa
| 2017 period when fees were high. Don't keep it on exchange. The
| real thing that is stopping adoption is countries trying to
| classify it as a commodity and insist to pay capital gains on
| every microtransaction. Some countries are backwards (US, UK)
| than the others. Germany and few other countries are forward
| looking. No VAT on bitcoin transactions and no CGT if held for a
| year.
| Triv888 wrote:
| They want the USD to stay king of currencies...
| etimberg wrote:
| Why do you believe there should be no capital gains on it?
| risho wrote:
| because you can't use it as a money if you need to pay
| capital gains on every stick of gum you buy. they should find
| other ways to collect taxes that doesn't inhibit it.
| raziel2701 wrote:
| What kind of things do you buy with it and where? I remember
| seeing some adoption back when steam started accepting it, but
| sometime later they stopped because it was too volatile. I
| thought paying fees for the transaction made bitcoin very
| unappealing as well. It's not anonymous either, so I just
| couldn't find a reason to use it as it didn't solve anything
| that I couldn't do with my credit card. And my credit card
| offers me protections against fraud.
|
| Has anything changed that I should look into?
| baby wrote:
| Last time I checked it was the only currency accepted by most
| dark markets.
| corty wrote:
| > What kind of things do you buy with it and where?
|
| Drugs, CP, cryptotrojan ransom, other crime related
| transactions.
|
| Bitcoin value is directly related to relevant criminal
| activity.
| s5300 wrote:
| Huh. Didn't know these were all the main exports of Nigeria
| xapata wrote:
| > No VAT on bitcoin transactions
|
| Sounds like a defect in the technology to me. A good currency
| should be able to support the full range of social policies
| (like VAT).
|
| One of the problems of the Euro is not being able to inflate
| different countries within the Eurozone at different rates. If
| Bitcoin were ever to become popular for regular transactions
| within different countries, it'd be a fiscal policy disaster.
| foepys wrote:
| Lightning doesn't solve the congestion problem for global
| adoption. To open a lightning channel you need an on-chain
| transaction. The same is true to close one. Assuming 2,500
| transactions per block, you will need ~970 days to just open a
| lightning channel for each US citizen (assuming 350 million
| citizens and no other transactions).
|
| The Lightning Network is unsuited for any "dominance".
| sMarsIntruder wrote:
| That's a nope.
| jokethrowaway wrote:
| Completely agreeable, albeit it misses a point: Governments can't
| print more of it.
|
| That's it really, everything else is noise.
|
| I can sympathize with btc (I wish we still had a gold standard,
| or a standard based on the price of common goods) but I don't see
| much the other benefits.
|
| On top of this, governments could ban btc.
| raziel2701 wrote:
| I mean, the 21 million cap is just a line of code no? No reason
| why if enough people agree to it they could just print more. Or
| they could fork and print more no? I find it strange that
| people speak of bitcoin's scarcity as if it were a physical
| thing.
| acjohnson55 wrote:
| > Completely agreeable, albeit it misses a point: Governments
| can't print more of it.
|
| That only matters if Bitcoin has a monopoly for a given use
| case. Bitcoins chief advantage is its hash power, and
| therefore, its security. So far, the only use case I can think
| of that relies strongly on that is digital gold use case.
|
| For everything else, having a constrained money supply has side
| effects that are often pretty undesirable. Folks can simply
| mint new coins for those use cases.
| analog31 wrote:
| But governments can subsidize the electricity to create new
| Bitcoins. Isn't that the same as printing money?
| rmason wrote:
| I was real excited the first time that Bitcoin was explained to
| me. I saw it as the first real alternative to paper money. But
| what I soon learned is that most of the people associated with
| Bitcoin saw it as digital gold and were only interested in seeing
| the value rise and cashing out.
|
| I've seen a few positive developments every once in a while that
| fail to get much adoption. So I keep waiting and waiting. It
| increasingly looks to me like whatever solution eventually wins
| will be built upon the existing banking system ;<(.
| SoSoRoCoCo wrote:
| Same here. I thought it sounded great because I have zero
| knowledge of monetary policy, which has been at it in modern
| form since Isaac Newton. So naturally I thought it was a
| godsend. Truth is: financial institutions aren't just something
| a few hackers can whip up in a decade. The mill-billionaire
| bitcoin hackers were in the right place at the right time for
| lightening to strike. I think like ADAS/SDV, cryptocurrency has
| a looooong way to go.
| Finnucane wrote:
| > "But what I soon learned is that most of the people
| associated with Bitcoin saw it as digital gold "
|
| Since it was basically designed to work like a pseudo-physical
| commodity, and most of the rhetoric to support its existence is
| warmed-over goldbuggery, why should this be surprising?
| baby wrote:
| Bitcoin is pretty much the modern gold, if you're looking for
| something revolutionary as in "can be used for day to day
| transactions" you'll have to check more modern cryptocurrencies
| that aim to be stable, regulated, and fast.
| heidar wrote:
| Seems like adoption as a payment method halted when Bitcoin had
| scaling issues.
|
| Now the community seems pretty split in two. There's people who
| are for Bitcoin and see it as a store of value and people who
| are for Bitcoin Cash who see it as a store of value and a
| method of payment.
|
| The main contention seems to be around block sizes and wether
| to increase the block size to make it more scalable, hence the
| BCH fork.
| MBCook wrote:
| Very well written. How I wish this would be heeded. Instead I
| fear we'll be stuck with BTC and its clones for many more years.
| theodric wrote:
| "Disaster" is a funny way to spell "I didn't buy in early and now
| I'm bitter, hurr durr Dunning-Krugerrands"
| lawtalkinghuman wrote:
| The trollish Bitcoiner answer to every criticism: "you just
| jelly of my internet money".
| jokethrowaway wrote:
| I definitely am!
|
| I can't believe btc got this far.
|
| I never bought anything because it sounds ridiculous and the
| kind of thing any western government would ban immediately -
| turns out I was wrong.
|
| I know people who are completely clueless about the economy
| who retired just by betting on BTC.
| tryptophan wrote:
| > The pseudonymity of coins being owned by the bearer of some >
| cryptographic key is a failure; People have been eavesdropping
| and > aggressively analyzing the block chain from day 1. And the
| block chain > will always be there, it will always be public, and
| it will always be > subject to further analysis. And we are
| learning that analysis of that > record is sufficient to destroy
| any pretense of anonymity or > pseudonymity.
|
| Yeah, privacy is a joke on blockchains. Perhaps that is why
| actually private coins like Monero are having such 'difficulty'
| getting adoption on mainstream platforms, with shitcoins getting
| preference. I suspect that if coinbase tried to add Monero, they
| would get a very angry letter from the CIA/FBI (perhaps this
| already happened, they have been having 'technical difficulties'
| adding it for years now).
| 37ef_ced3 wrote:
| I wonder how many Bitcoin users have read and understand the
| following extensive list of privacy "traps" (mistakes that can
| expose the identities of unwary Bitcoin users):
|
| https://en.bitcoin.it/wiki/Privacy#Bad_privacy_example_-_Usi...
|
| Are you careful to avoid these numerous privacy pitfalls? If
| not, you're leaking information about yourself
| [deleted]
| keithwhor wrote:
| Related: the current rise of Bitcoin prices has been peculiar to
| me, and seems to be a bit of a canary in an inflationary coal
| mine.
|
| We've injected trillions of dollars of fiat into the economy this
| year. It feels like the sky-high valuations of technology
| companies and Bitcoin are "shock absorbers" of sorts, or early
| signals of inflation-yet-to-come. If we assume the market is
| efficiently pricing these assets (like AirBnB's IPO) then it
| could very well be that the actual value of a fiat dollar has
| dropped dramatically -- making sky-high valuations more
| reasonable -- and we'll only see that reflected in the price of
| consumer goods and commodities once industry leaders collectively
| feel comfortable the economy is on track again. After all, you
| can only charge what consumers can afford to pay.
|
| I'm an armchair economist at best. I just can't make sense of the
| market right now, and wouldn't be surprised to see the price of
| things like groceries, beer and travel double or triple what they
| were in 2019. Is there anybody writing about this that I haven't
| been paying attention to? Am I missing something?
| ant6n wrote:
| But then what would one invest in? The stock market may just as
| easily crash.
| loeg wrote:
| BTC prices have approximately zero relation to inflation in the
| real economy (for whatever definition of that you want to use).
| Rising BTC prices are driven by pyramid scams, fraud, and
| speculation. There is no useful signal here related to anything
| else.
| doggosphere wrote:
| BTC prices have been driven by institutional demand and
| federal monetary policy.
| whatever1 wrote:
| Why coca-cola would 3ple their prices in 2021? The loans are
| cheap, the wages are stagnant, energy and raw materials are
| cheap. I really don't see this scenario playing out unless the
| financial institutions collapse.
| ddevault wrote:
| On the other hand, the existince of a cryptocurrency ecosystem
| has given us a really easy and clear indicator that a company or
| individual is lacking in scruples, and that we should move on
| from whatever they're hawking.
| baby wrote:
| That's nonsense. Bitcoin is as good a store of value as gold due
| to one unique feature: scarcity. Actually, it's even less power
| consuming that the gold industry and is much more transparent. I
| wouldn't really advise bitcoin for anything else, like day to day
| transactions, although I and many of my friends have used bitcoin
| to transact on dark markets and it works.
|
| The only argument I've heard about gold being better than bitcoin
| is that you can do something with gold. That's horseshit in my
| opinion. Gold is good for nothing useful imo, but is used in
| jewlery and other because it has value (not the other way around,
| as in gold has value because people make jewelry with it).
| papito wrote:
| From what I understand, the availability of coin that can be
| "mined" halves every year (?), so at some point there will be
| essentially no new coin. What you have is what you have out
| there. It will just keep going up in price to include all the
| accumulating "worth". That should be fun to watch.
|
| In addition, just yesterday the headline flashed in front of me,
| Marketwatch: "After recent price spike, bitcoin requires enough
| power for a country of more than 200 million people".
| seibelj wrote:
| Bitcoin doesn't care about these articles. Ignore it if you want
| - many people do. Bitcoin gives the choice to opt of the current
| financial system. No problem if you don't, it's completely
| voluntarily.
| tempsy wrote:
| the biggest difference between this rally and 2017 is that it
| appears to be mostly just bitcoin and, to a smaller extent, eth,
| and seems largely driven by institutions who now feel it is
| finally investable.
|
| imo there isn't quite the same level of excitement even though
| the price is much higher now. just feels like another asset Wall
| Street is accumulating.
| jancsika wrote:
| > Hal shipped the prototype because he had just been told he had
| a terminal illness.
|
| That's from Phillip Hallam-Baker.
|
| Is there evidence Hal was Satoshi, or is this just more
| speculation?
|
| Or am I misunderstanding his response?
| louwrentius wrote:
| This is written from the perspective of a person who believes in
| blockchain-based currencies but thinks Bitcoin as an
| implementation of said currency is a failure. He thinks the
| concept of mining is a fundamental flaw.
|
| But he keeps the door open for different implementations.
| Personally, I think the whole concept of blockchain-based
| currencies is flawed. But let's not go there right now.
|
| The value of Bitcoin is very high and that's _very scary_. Who is
| buying? All those investors who have no place else to go?
| Gambling on Bitcoin to find 'growth'?
|
| Bitcoin is quickly becoming _too big to fail_. But it will fail
| at some point, because I believe it isn't anything. (You may
| disagree, but hear me out). So when the music stops, I think it
| could be the event that triggers another 2007 /2008. Bot big
| enough by itself. But it triggers the same avalanche of
| bankruptcies, the dominos will fall.
|
| This time though, all financial instruments to save us are
| exhausted. Interest is zero. The worst may yet to come.
| baby wrote:
| Why would you put your money in gold rather than bitcoin?
|
| Also why is the concept of blockchain as currency is flawed?
| What construction would you use instead for a currency that is
| trusted throughout the world?
| svara wrote:
| There does seem to be a fundamental design issue in bitcoin and
| proof of work in general: Mining has economies of scale and
| therefore winner takes all mechanics leading to centralization.
|
| At that point the mechanism that ensures ledger integrity is the
| calculation that if the miner tampers with the ledger, that would
| destroy trust in the coin and hurt the miner in that way.
|
| But 1) that's exactly how conventional currencies work too and 2)
| it's actually an untested hypothesis. Who knows what would happen
| in a world where the economy runs on bitcoin and there's some
| "good reason" to deviate from the protocol.
___________________________________________________________________
(page generated 2020-12-31 23:00 UTC)