There is something the article seems not to point out: this looks like a failure if bitcoin is the dominant cryptocurrency, but all those conclusions seem to tend toward a success in a ecosystem of altcoins.
If the problem of bitcoin is purely core members deciding about configuration settings, altcoins are not affected.
If the problem is the blockchain not being able to support the massive amount of transactions, here too, having alternative blockchains to divide the load will help.
Doesn't alternative blockchains mean different currencies? As in, one retailer might support bitcoinA, but I only have bitcoinB and bitcoinC so all my bitcoin(n) are actually worthless to this retailer?
Fragmentation doesn't seem like the most healthy thing for any ecosystem, esp. an 'underground currency'.
Yep, by altcoin, I mean variants like litecoin, dogecoin, etc (there are already tons of them).
Indeed, this will become an exchange problem, especially since it's already difficult to get merchants to allow bitcoin payments.
But that's something payment gateways can handle by themselves. I often buy things priced in USD on the web with my EUR account, and gateways handle the change transparently (although with a fee).
Your comment on payment gateways and regional currencies is fair.
But, is the end game for bitcoin for me to be able to purchase my lunch with it? Because I can't do that now, and I can't see how replacing the one 'bitcoin' with a dozen variants is going to help.
That's the whole challenge for cryptocurrencies :) (although, not really related to the current issues discussed in the article)
For the sake of providing hypothesis, I can see one reason for which it could help. I've watched dogecoin quite closely since it was released and what stroke me is how stable it has been (past the big up and low after release): each time the btc/usd value raises, the doge/btc value lowers, and reversibly, to always keep about the same rate in doge/usd. In that regard, we could consider altcoins to be an advantage for mass adoption: the main reason why I won't keep my money as cryptocurrency is because I can't stand my wallet gaining and losing half its value one day from the other.
Now, we can find way more reasons why it wouldn't work (merchants finding adopting lot of currencies being too difficult, users being lost in all conversion rates, and I'm not even sure dogecoin stability applies in other altcoins). So I won't be too optimistic on this. It just seems to me it addresses the very problems mentioned in article.
But does anyone actually do that? Given all the bitcoin speculation and volatility, what percentage of transactions are actually someone paying for goods and services vs trading for hard currency to speculate.
That last sentence is why I think a system of altcoins won't have traction - you may as well stick with Visa/Mastercard. One of the potential benefits of Bitcoin was that if online goods were denominated in BTC, you wouldn't have all the mental math of currency conversion & fluctuations. Pricing of items would be stable against your Bitcoin holdings.
Of course, in practice, goods ended up being priced in USD anyway (and converted just-in-time to BTC). So much of that potential benefit has already been lost.
Totally, I don't see it either as being as game changing as it's often mentioned.
The main reason I'm interested in cryptocurrencies is because I tend to view current banking system for individuals as a problem more than a solution. Last year alone, I've had to borrow cash from a friend because my visa was not replaced in time and I've been stuck at a grocery with all my goods because I had hit the maximum amount I could use with my card for the week, without any warning and having way enough money on my account. Not to mention how it's annoying that wire transfers always take two business days and are not proceeded during week-end (... why?).
I can see the reasons behind that to reduce fraud, but I would totally dig having day to day money in cryptocurrency and being able to send them in a record time, always having visibility on what amount I can really use.
> Not to mention how it's annoying that wire transfers always take two business days and are not proceeded during week-end (... why?).
Even though institution-to-institution exchange is done by computer now, the laws are still in effect as if it were done by humans who---working in the banking industry---get weekends off.
Oh, I see. We've been wondering about that with a friend for a while, without finding the answer anywhere. We assumed it was to allow people to react in case of fraud, being less active on week-end.
Interesting you mention the Visa card issue, because that echoes the most compelling story I've heard in favour of Bitcoin, someone stuck overseas with all their cards cancelled and the only thing they could access is Bitcoin. [If you're Australian, check out their Coinjar Swipe card for using BTC in Australian stores & ATMs.]
That said: it's a good idea to diversify your access to money. Have accounts at different banks - if your card gets frozen (eg online fraudster), banks will often freeze all your cards, so it's good to have cards with a different bank so you can still access some of your money. Prepaid / travel cards preloaded with some emergency funds are helpful too.
Didn't think about the "global freezing" of cards in the same bank - indeed, one more problem.
The diversity could indeed be a great point for cryptocurrencies. I don't know if it's the same everywhere, but here in France we had previously three main payment methods: credit card, paycheck and cash. Paychecks are now refused in most shops (there was too many frauds around them). And banks decided you can't withdraw cash anymore by visiting them (they don't want to hold any money anymore to avoid bank robbing), so you have to use your credit card at atm to have cash. Basically meaning that credit card is now the only way to use money.
Does anyone know why this hasn't been circumvented by an update to Adblock? It's been a couple of weeks now, and Adblock has always been on top of these things.
Hearn has moved to R3 which is a banking conglomerate that many would argue are trying to destroy bitcoin. They realize the potential power of bitcoin. I wonder how much Hearn got paid to make his statements.
https://www.youtube.com/watch?v=R0iArSIU0Z8&feature=youtu.be...
This may be conspiracy theoryish but pieces aren't as far fetched as it might seem. Articles like that in the New York times don't happen by chance and Mike Hearn being more high profile and vocal than ever is a bit strange. Why would someone make themselves a lightning rod to say that they quit?
I will say that there is a likelyhood that large financial companies aren't so intent on destroying bitcoin. They may be interested in using the same techniques to speed up all the slow and opaque settlement networks so they can adopt enough advantages of crypto-currencies before they are so widespread that no one needs monolithic companies with exclusivity in their capabilities.
At the same time anyone who is a middle man in the financial industry is making money for nothing and won't give that up without trying anything they can.
I think it will turn out to be more akin to AOL trying to be the internet, or AT&T trying to make their own network. Their technology will likely not be great, but the ecosystem surrounding an open system will ultimately be overwhelming and impossible to compete with.
FIs are very interested in Bitcoin, except for the Bitcoin part, which leads to lots of talk about trying to use blockchains for various unconvincing purposes. The problem is that btc isn't suitable for large financial products, because it's an illiquid, volatile virtual asset with a market-wide price floor of zero. If FIs thought there was a bounded-risk revenue stream to be extracted from Bitcoin, rest assured they'd be doing it -- you'd see efforts to increase liquidity (more than one Bitcoin millionaire, I think, would be willing to pay ten to fifteen points to convert significant fractions of their cryptotokens to fiat currency), hedge products, and so on. The fact that you don't see that suggests that FIs can't figure out how to value btc in a way that the downside doesn't far outstrip the upside potential. Theoretically btc could become so commonly-held and widespread enough that they gain stability through ubiquity (like gold and gems), but I think the problems outlined in the original post -- specifically the fact that a small number of maintainers control the protocol, and, more damningly, that almost all the hashing power in the system is controlled by set of individuals who could trivially collude -- make that less likely than it seemed a few years ago.
> specifically the fact that a small number of maintainers control the protocol,
Is not all that fundamental. Really the miners control the protocol and it seems that the big companies involved and the miners have enough of the destructive tactics of the blockstream guys.
> that almost all the hashing power in the system is controlled by set of individuals who could trivially collude
This isn't really true either. There are large pools, but as soon as a pool goes rogue, they will lose the mining power that makes them up and never get it back, since they don't own the machines themselves.
Fundamentally though all of this is about the big picture. Bitcoin can't replace large financial products now, but eventually some crypto-currency could. The big finance companies could get together and make their own shared ledger, which might work well for them, but there isn't much reason they couldn't achieve similar effects already.
If they create their own currency, that could be a big deal however, because they could gradually put more and more resources into it. The core issue though, is that a blockchain without mining is either not open to anyone or not secure, and without a currency attached to it, the incentives to mine are unknown to me.
> I wonder how much [some person] got paid to make his statements
This kind of insinuation isn't allowed on HN without evidence. Someone having an opposing view or taking an opposing approach does not count as evidence. Doing this as a rhetorical device in an argument is a form of personal attack and a breach of the civility that this site depends on.
I can see how he would feel it is a technical failure from his perspective as a core developer, especially having been frustrated at having valid solutions adopted, but it is unlikely that Bitcoin is going anywhere, it's too widely supported at this point.
I think we will end up seeing those features adopted eventually out of necessity and perhaps this sort of blog post is an attempt to try and give the community a push, having run out of alternatives.
I hope he comes back once the dust settles a bit.
I've always thought of bitcoin itself to never be useful, but it will pave the way for a newer 'currency' or the blockchain would be used to build 'next generation payment networks' used by the Big Banks.
Bank could build upon 'the blockchain' to let me do a bank transfer in less than 2 days, or see my credit card transactions be cleared instantly.
Just to clear the air, there is nothing stopping your bank from doing either of those things. It's being done, in fact, just about everywhere but the US.
Sure. I'm in Australia, and those are problems sometimes.
My general point was that I imagine most banking systems are legacy and archaic, and if they ever wanted to improve them Bitcoin could be s potential implementation detail for a modern system.
The big transaction networks are so heavily invested in their own system and the effort to integrate is such that the likelihood seems quite low. Had the foundations of bitcoin had as a primary goal industry transition to using it, it would have become a stronger disruptive force. Upfront integration costs are on the scale of concretely-estimable billions with the any long-term rewards ambiguously-estimable. The certainty is that is divests control and related control of the transaction network. Where's the value to the existing network that reaps the transaction fees?
It made some inroads, but a future alt-currency alliance would need to find very forward thinking technical leadership from within the entrenched industry willing to put their names into efforts of such an alt-currency alliance. Those players would need buy-in from the business and political wings of their organization. Where are the CEOs at banks and transaction network players who feel moving to a non-sovereign currency makes bottom-line sense?
Finding such value and leaders seems unlikely due to political relationships that the entrenched financial industry has. Put your name on an effort to remove oversight and control of the nations whose central banks you presently need at your own risk.
Unless the banking industry gets burned like the tech industry has in terms of the Snowden revelations and popular movement around privacy, there isn't an obvious self-interested basis for taking on this sort of risk.
46 comments
[ 2.7 ms ] story [ 57.3 ms ] threadIf the problem of bitcoin is purely core members deciding about configuration settings, altcoins are not affected.
If the problem is the blockchain not being able to support the massive amount of transactions, here too, having alternative blockchains to divide the load will help.
Fragmentation doesn't seem like the most healthy thing for any ecosystem, esp. an 'underground currency'.
Indeed, this will become an exchange problem, especially since it's already difficult to get merchants to allow bitcoin payments.
But that's something payment gateways can handle by themselves. I often buy things priced in USD on the web with my EUR account, and gateways handle the change transparently (although with a fee).
But, is the end game for bitcoin for me to be able to purchase my lunch with it? Because I can't do that now, and I can't see how replacing the one 'bitcoin' with a dozen variants is going to help.
For the sake of providing hypothesis, I can see one reason for which it could help. I've watched dogecoin quite closely since it was released and what stroke me is how stable it has been (past the big up and low after release): each time the btc/usd value raises, the doge/btc value lowers, and reversibly, to always keep about the same rate in doge/usd. In that regard, we could consider altcoins to be an advantage for mass adoption: the main reason why I won't keep my money as cryptocurrency is because I can't stand my wallet gaining and losing half its value one day from the other.
Now, we can find way more reasons why it wouldn't work (merchants finding adopting lot of currencies being too difficult, users being lost in all conversion rates, and I'm not even sure dogecoin stability applies in other altcoins). So I won't be too optimistic on this. It just seems to me it addresses the very problems mentioned in article.
Really? Maybe you can do that now. https://www.menufy.com/
Of course, in practice, goods ended up being priced in USD anyway (and converted just-in-time to BTC). So much of that potential benefit has already been lost.
The main reason I'm interested in cryptocurrencies is because I tend to view current banking system for individuals as a problem more than a solution. Last year alone, I've had to borrow cash from a friend because my visa was not replaced in time and I've been stuck at a grocery with all my goods because I had hit the maximum amount I could use with my card for the week, without any warning and having way enough money on my account. Not to mention how it's annoying that wire transfers always take two business days and are not proceeded during week-end (... why?).
I can see the reasons behind that to reduce fraud, but I would totally dig having day to day money in cryptocurrency and being able to send them in a record time, always having visibility on what amount I can really use.
Even though institution-to-institution exchange is done by computer now, the laws are still in effect as if it were done by humans who---working in the banking industry---get weekends off.
http://www.npr.org/sections/money/2013/10/04/229224964/episo...
Thanks for sharing!
https://coinjar.com/stories/apostrophe
That said: it's a good idea to diversify your access to money. Have accounts at different banks - if your card gets frozen (eg online fraudster), banks will often freeze all your cards, so it's good to have cards with a different bank so you can still access some of your money. Prepaid / travel cards preloaded with some emergency funds are helpful too.
The diversity could indeed be a great point for cryptocurrencies. I don't know if it's the same everywhere, but here in France we had previously three main payment methods: credit card, paycheck and cash. Paychecks are now refused in most shops (there was too many frauds around them). And banks decided you can't withdraw cash anymore by visiting them (they don't want to hold any money anymore to avoid bank robbing), so you have to use your credit card at atm to have cash. Basically meaning that credit card is now the only way to use money.
The website displays a message asking us to disable our ad/tracking blocker to view the article.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newswelcome.html
I will say that there is a likelyhood that large financial companies aren't so intent on destroying bitcoin. They may be interested in using the same techniques to speed up all the slow and opaque settlement networks so they can adopt enough advantages of crypto-currencies before they are so widespread that no one needs monolithic companies with exclusivity in their capabilities.
At the same time anyone who is a middle man in the financial industry is making money for nothing and won't give that up without trying anything they can.
I think it will turn out to be more akin to AOL trying to be the internet, or AT&T trying to make their own network. Their technology will likely not be great, but the ecosystem surrounding an open system will ultimately be overwhelming and impossible to compete with.
> specifically the fact that a small number of maintainers control the protocol,
Is not all that fundamental. Really the miners control the protocol and it seems that the big companies involved and the miners have enough of the destructive tactics of the blockstream guys.
> that almost all the hashing power in the system is controlled by set of individuals who could trivially collude
This isn't really true either. There are large pools, but as soon as a pool goes rogue, they will lose the mining power that makes them up and never get it back, since they don't own the machines themselves.
Fundamentally though all of this is about the big picture. Bitcoin can't replace large financial products now, but eventually some crypto-currency could. The big finance companies could get together and make their own shared ledger, which might work well for them, but there isn't much reason they couldn't achieve similar effects already.
If they create their own currency, that could be a big deal however, because they could gradually put more and more resources into it. The core issue though, is that a blockchain without mining is either not open to anyone or not secure, and without a currency attached to it, the incentives to mine are unknown to me.
This kind of insinuation isn't allowed on HN without evidence. Someone having an opposing view or taking an opposing approach does not count as evidence. Doing this as a rhetorical device in an argument is a form of personal attack and a breach of the civility that this site depends on.
If you want to read more about our thinking on this, I've posted frequently about it (https://hn.algolia.com/?query=author:dang%20shill&sort=byDat...).
https://news.ycombinator.com/item?id=10905118
Does this article add anything interesting?
I guess there is also some overlap with https://news.ycombinator.com/item?id=10909886.
https://news.ycombinator.com/item?id=10880714
Bank could build upon 'the blockchain' to let me do a bank transfer in less than 2 days, or see my credit card transactions be cleared instantly.
My general point was that I imagine most banking systems are legacy and archaic, and if they ever wanted to improve them Bitcoin could be s potential implementation detail for a modern system.
It made some inroads, but a future alt-currency alliance would need to find very forward thinking technical leadership from within the entrenched industry willing to put their names into efforts of such an alt-currency alliance. Those players would need buy-in from the business and political wings of their organization. Where are the CEOs at banks and transaction network players who feel moving to a non-sovereign currency makes bottom-line sense?
Finding such value and leaders seems unlikely due to political relationships that the entrenched financial industry has. Put your name on an effort to remove oversight and control of the nations whose central banks you presently need at your own risk.
Unless the banking industry gets burned like the tech industry has in terms of the Snowden revelations and popular movement around privacy, there isn't an obvious self-interested basis for taking on this sort of risk.