One way to answer would be to take the "this" in your first sentence and replace it with a clear description of what you are talking about.
"Read the posts" isn't really a satisfactory answer, they are not particularly focused or easily distilled to a concrete prediction.
(One company issuing a tiny bond is not particularly significant news and is probably not a harbinger of the future. It is not unusual for companies to issue billions of dollars of bonds, so $25 million is not a large amount in this context.)
You make some pretty sweeping claims - strung together with some pretty appalling logic. Take for example:
---
And the rationale for this is like something right out of Alice in Wonderland. Supposedly, proof-of-work makes it prohibitively expensive for an attacker to control more than half the network. But it also makes it similarly expensive for anyone else to participate in the network at all. So the only people who'd be deterred from participating in the network with malicious intent are people who would also be deterred from participating in the network with any other intent.
---
The last sentence is just empirically false. Heaps of people are using the network.
And neither is it true that the costs of using the network are similar to attacking the network. To attack the network I need to accrue 51% + of the hashing power. That's an enormous cost. To use the network - I don't even have to download the blockchain. I don't have to mine. And even if I was mining - I don't have the same costs as a 51% attacker - simply because I don't possess that share of the hashing.
Overall this article is pretty poorly thought through.
If you want to discredit Bitcoin-related finance, have Overstock CEO Patrick Byrne be its poster child. He has an embarrassing history of making absurd statements about short selling and analysts rather than focusing on running a successful business.
The venom on HN regarding anything to do with bitcoin is surprising and rather sad.
The guy is trying to do something new and innovative (what are you doing?), it might fail or it might be a success, you think a poster on a forum frequented by geeks and entrepreneurs would understand this.
As for Overstock it is nice to see competition in a space dominated by the Ebay/Amazon duopoly.
Bitcoin was so ridiculously overhyped, the backlash is natural. "Call me when is scales," is my take on cryptocurrency. 3 transactions per second is laughable. Hundreds of millions of dollars worth of energy intentionally wasted per year for that? It just seems to lack promise.
Your comment makes it clear you haven't read how the system works. Seriously, read up on how it works, try to understand it, and then come back here and post about it. The limitations you are trying to point out are actually due to the use of desktops instead of high speed servers for nodes. The comment about mining has zero to do with transaction speed, so that means you are wrong in your assumptions (as most are on here, unfortunately). Again, try to read and understand the technology before you post about it. It's important from an infrastructure standpoint.
And yes, it was overhyped by a bunch of morons. Fortunately for all of us, ad hominem arguments are bullshit.
The 3 trans/per second limit is an inherent limit in the protocol right now.
Fixing that is being discussed but will require a fork (and has already lead to a lot of religious warfare). Even after the fork, the requirements of supporting humongous blocks just to support more than 3 transactions per second will lead to even more centralization of Bitcoin than what's already happened, as full nodes are forced to move onto server-grade hardware instead of an actual decentralized swarm.
You don't trust the USG? Great! But now you have to trust China and GHash.io instead, it's been years since Bitcoin has actually been "decentralized" in any meaningful sense.
But even with the low current block size, money supply inflation, and plummeting Bitcoin price, the network has still failed to scale as judged by the only thing that matters: Cost per transaction is still $10, and it would be even more expensive if Bitcoin price ever went back up! https://blockchain.info/charts/cost-per-transaction
Keep in mind that the cost-per-transaction is the total value of the block reward of a block (currently 25 BTC + fees) divided by the number of transactions confirmed on the network in that block.
Oh, I'm quite aware. So are the miners, and so are the Bitcoin core developers, who are increasingly starting to think that Bitcoin will never be able to shift completely over to miners' fees as a way of funding the Bitcoin network, and that the existing block reward subsidy (read: money supply inflation) might have to continue instead of being phased out the way Satoshi had envisioned.
I really need to get around to fixing that page... it doesn't represent how the majority of devs think Bitcoin will scale. It's basically just saying "throw enough computing power at the problem and we'll be ok", which is very much not what scaling is about - it's not unlike saying bubble sort scales because of Moore's law.
>I really need to get around to fixing that page...
Someone does. I tried bugging Luke-jr to start commenting here (as in HN in general), but received no reply. I rarely see bitcoin core developers commenting on HN.
Email is so ridiculously overhyped, the backlash is natural. "Call me when it scales," is my take on the internet. 2400 bps is laughable. Hundreds of millions of dollars worth of energy intentionally wasted per year for that? It just seems to lack promise.
Do you really believe hundreds of millions of dollars a year was spent on electricity to keep mail servers running in the 80s or are you just trying to make the Bitcoin = early email argument in a really bad way?
3 years ago they had "100+" AWS instances(so knowing when ops guys use 100+ I'm guessing like 125 tops) so thats what like a handful of racks for ~100 million users. So not much for the number of users they support would be the answer I guess.
Somehow I suspect that Instagram manages to handle more than 2.7 photos per second, and without each individual photo costing $10 to handle on top of it all.
Even a bubble sort will eventually get you a sorted list, but there's a reason we don't actually use it in practice.
Do you really believe that it didn't turn into billions over the years?
Seriously, add up the billions upon billions we've spent as an industry (in terms of $/KwH delivered to all the datacenters across the world) over the past, say, twenty years, and bitcoin looks downright anemic in comparison. [1]
You might not like that people are choosing to spend money on electric for BTC, but if they weren't, I imagine that juice would just be spent on serving up pics of cute cats with a side of advertising and tracking. Be thankful we found something slightly smarter to do with it.
[1] http://www.nrdc.org/energy/data-center-efficiency-assessment... - 13 billion a year for power to U.S datacenters, according to the NRDC. Slap a moving average on that, account for non-US usage, and scale it back twenty years to the launch of Netscape Navigator and the subsequent rise of colocation, and we're talking more money spent on electricity for the Interweb than most nation states annual GDP.
Is this even a real question? There are many. Remittances, micro payments, lack of credit card fraud and fees...
Right now I could pay someone in Thailand and they could take money out of an ATM from one of the largest banks in 20 minutes. You could be on the island of Koh Tao, have money sent to you from anywhere in the world, and get cash as part of the same trip to go get a cold drink from a 7-11.
Remittances are a maybe but honestly the cost of moving money is the small part of a good remittance service. Having the end points is the expensive part. So far all the bitcoin remittance companies either have skipped that part(requiring bank transfers for the last mile) or are using other peoples services. The first isn't usually cheaper than the equivalent service at traditional remittance services. The second only works as long as they are small enough to fly under the radar.
There is also the problem that as its usage increases the difficulty in offloading the bitcoins for the remittance company increases which means their costs increase.
Bitcoin sucks for micropayments. Even the core devs agree with that and recommend you do them off chain.
Credit card fraud is almost entirely a merchant problem and honestly when it comes down to it they don't matter in deciding what payments to accept. Their customers will.
I don't think you are quite understanding remittances. If someone uses an ATM on one side and another person uses an ATM on the other side, the endpoints are there and the middle man taking an extravagant cut is gone. Even without ATMs endpoints are not difficult. A stall in a mall that is frequented by Indians, Sri Lankans, or Filipinos is cheap. A tiny stall in a mall in Mumbai or Manilla is cheap too.
>There is also the problem that as its usage increases the difficulty in offloading the bitcoins for the remittance company increases which means their costs increase.
I don't understand what you are trying to say or how increased usage would make dealing with bitcoins more difficult.
It doesn't suck for micropayments, I know this because I actually use it frequently. It's great. Have you actually used bitcoin? Visa defines micropayments and anything below $23 The core devs don't recommend doing that off chain, that is 100% not true.
Credit card fraud is a massive problem no matter who you blaim. Credit cards are inherently insecure since you have to give someone all the information necessary to charge your card to use it at all! It makes no sense. Many businesses lose enormous amounts of money to credit card fraud. I buy many things with bitcoin, it's amazing how much easier it is than dealing with credit card transactions, the bank's false positive fraud protections, the banks not catching actual fraud, the vendor's false positive fraud protections (for using a vpn or ghostery), waiting for the transaction to go through, etc. Never mind putting all sorts of unnecessary information in. Bitcoin is literally two clicks.
You can say 'it won't work'. The truth is, it IS working right now.
In that situation you have two middle men the banks that own the ATMs on either side and both will want a cut once you start scaling up even if they allow free use of their services for less regular transfers.
>I don't understand what you are trying to say or how increased usage would make dealing with bitcoins more difficult.
In any given country you're only going to have so many buyers for bitcoin. So the service on the receiving end has a limited number of people to sell the bitcoins they receive to in order to get the cash to give to the recipients. As supply of bitcoin increases the buyers will start wanting to pay less and you end up with a wider and wider spread. The only way around this is for that company to then go sell them in a foreign market and deal with a large float and forex/transfer costs. All of which(spread,float risk,transfer costs) feed back into the fees they need to charge or the spread they need to have to keep them profitable.
I don't consider $20 to be a micropayment but even then once you include the overhead in acquiring the coins existing systems will match the cost in most cases until you get to a small enough number that Bitcoin is unsuitable too.
And yes I've used Bitcoin. I've been involved in the community for a few years now I just don't see it finding widespread success.
It's not about blame its about who it is a problem for. Consumers get protection from credit cards that they don't get from Bitcoin. Its the vendors that have the problems and as I said they can promote Bitcoin as much as they want but it won't reduce fraud until they drop credit cards and that won't happen because users don't want to use bitcoin.
It is working. I'm saying it won't be mainstream and that the people who have bought in expecting to be rich should be expecting to be disappointed.
In which case you're looking at 5-25% fee on either side so its still two middle men and they are even greedier than the old ones. But I think he was actually talking about things like ATMs in MX and TH which allow you to enter a code without having a card and it'll spit out money. The remittance company gives the bank money, they give them a code and you get the code and get your cash. It's meant for personal transfers though generally. I don't see banks offering it at a commercial scale for free.
Bitcoin does literally none of these better than existing systems (including remittances - ask rebit.ph about their problems getting bitcoins turned back into pesos at the .ph end).
Literally the only use case for Bitcoin is so that libertarians can buy illicit goods without having to go to the bad part of town and talk to minorities.
>Literally the only use case for Bitcoin is so that libertarians can buy illicit goods without having to go to the bad part of town and talk to minorities.
Wow at how that quote is full of xenophobia and FUD.
People were pointing out back then that TCP/IP's deliberate inefficiencies consumed the electrical output of entire countries? Somehow I neither remember that, nor remember ever reading of it.
Analogies, to be useful, should reveal internal consistencies between the things being related by analogy. If there are no consistencies between the items in the analogy then the analogy is worse than useless.
He's not attacking Bitcoin, but pointing out that Byrne is not an ideal proponent, as many people consider him to be a bit paranoid, making more dramatic allegations than he can supply evidence for. One can support his actions and opinions while simultaneously recognizing that many people view his leadership with skepticism.
Ever heard of astroturfing/cyber shills/paid trolls? On top of that, you have people who suffer of cognitive dissonance every time they hear about Bitcoin and what it fixes. They are too mentally and economically invested in the status quo. To make things worse, most people don't even know what cryptography is. Explaining Bitcoin is hard.
It's is amazing how many psychopathic corporate shills you'll find astro-turfing all over the place. It's disturbing too how much they are able to influence the discussion.
Well he does run a very successful business and only seems embarrassed by the amount of inaction from the evidence and testimony of others he collected.
Potentially increases the pool of buyers, as buying individual CUSIPs is typically associated with high transaction cost, and that's if you have a US brokerage account.
Increased market depth, as bearer bonds are more fungible, and less subject to transfer restrictions, KYC, capital flight controls, etc. than registered bonds. This first iteration might actually be registered, but I would assume they would eventually take this towards a bearer bond model.
Overstock has been the target of naked short selling before and now Patrick Byrne, CEO of Overstock, is on a crusade to change the stock market to make it impossible to do so. This is an oversimplification, but it is also a great motivating factor.
He seems to be doing all kinds of things regarding Bitcoin lately - and has actually lost the company quite a bit of money by holding it on their balance sheet. None of this has really anything to do with OSTK's core business. Maybe Byrne is trying to pull a Bezos, but I wonder how long investors will let these adventures go on.
1. Byrne alleged HF's (e.g. SAC/Cohen) were colluding to short Overstock.
2. Byrne claimed that naked short selling resulted in 6x the "actual supply"
of overstock shares in the market (i.e. Short sellers were borrowing=>selling
a lot of shares without actually securing those shares.)
3. Byrne took out a $100K ad in the WSJ in 2013, saying FU to SAC when
Cohen was forced to scuttle his firm due to reg investigations.
52 comments
[ 4.3 ms ] story [ 105 ms ] threadhttps://www.pandastrike.com/posts/20150422-bitcoin-is-bs
https://www.pandastrike.com/posts/20150527-bitcoin-central-b...
Apologies as this is obviously a self-serving comment.
One way to answer would be to take the "this" in your first sentence and replace it with a clear description of what you are talking about.
"Read the posts" isn't really a satisfactory answer, they are not particularly focused or easily distilled to a concrete prediction.
(One company issuing a tiny bond is not particularly significant news and is probably not a harbinger of the future. It is not unusual for companies to issue billions of dollars of bonds, so $25 million is not a large amount in this context.)
--- And the rationale for this is like something right out of Alice in Wonderland. Supposedly, proof-of-work makes it prohibitively expensive for an attacker to control more than half the network. But it also makes it similarly expensive for anyone else to participate in the network at all. So the only people who'd be deterred from participating in the network with malicious intent are people who would also be deterred from participating in the network with any other intent. ---
The last sentence is just empirically false. Heaps of people are using the network.
And neither is it true that the costs of using the network are similar to attacking the network. To attack the network I need to accrue 51% + of the hashing power. That's an enormous cost. To use the network - I don't even have to download the blockchain. I don't have to mine. And even if I was mining - I don't have the same costs as a 51% attacker - simply because I don't possess that share of the hashing.
Overall this article is pretty poorly thought through.
http://en.wikipedia.org/wiki/Patrick_M._Byrne#Campaign_again...
The guy is trying to do something new and innovative (what are you doing?), it might fail or it might be a success, you think a poster on a forum frequented by geeks and entrepreneurs would understand this.
As for Overstock it is nice to see competition in a space dominated by the Ebay/Amazon duopoly.
And yes, it was overhyped by a bunch of morons. Fortunately for all of us, ad hominem arguments are bullshit.
Fixing that is being discussed but will require a fork (and has already lead to a lot of religious warfare). Even after the fork, the requirements of supporting humongous blocks just to support more than 3 transactions per second will lead to even more centralization of Bitcoin than what's already happened, as full nodes are forced to move onto server-grade hardware instead of an actual decentralized swarm.
You don't trust the USG? Great! But now you have to trust China and GHash.io instead, it's been years since Bitcoin has actually been "decentralized" in any meaningful sense.
But even with the low current block size, money supply inflation, and plummeting Bitcoin price, the network has still failed to scale as judged by the only thing that matters: Cost per transaction is still $10, and it would be even more expensive if Bitcoin price ever went back up! https://blockchain.info/charts/cost-per-transaction
Someone does. I tried bugging Luke-jr to start commenting here (as in HN in general), but received no reply. I rarely see bitcoin core developers commenting on HN.
Even a bubble sort will eventually get you a sorted list, but there's a reason we don't actually use it in practice.
Seriously, add up the billions upon billions we've spent as an industry (in terms of $/KwH delivered to all the datacenters across the world) over the past, say, twenty years, and bitcoin looks downright anemic in comparison. [1]
You might not like that people are choosing to spend money on electric for BTC, but if they weren't, I imagine that juice would just be spent on serving up pics of cute cats with a side of advertising and tracking. Be thankful we found something slightly smarter to do with it.
[1] http://www.nrdc.org/energy/data-center-efficiency-assessment... - 13 billion a year for power to U.S datacenters, according to the NRDC. Slap a moving average on that, account for non-US usage, and scale it back twenty years to the launch of Netscape Navigator and the subsequent rise of colocation, and we're talking more money spent on electricity for the Interweb than most nation states annual GDP.
Right now I could pay someone in Thailand and they could take money out of an ATM from one of the largest banks in 20 minutes. You could be on the island of Koh Tao, have money sent to you from anywhere in the world, and get cash as part of the same trip to go get a cold drink from a 7-11.
There is also the problem that as its usage increases the difficulty in offloading the bitcoins for the remittance company increases which means their costs increase.
Bitcoin sucks for micropayments. Even the core devs agree with that and recommend you do them off chain.
Credit card fraud is almost entirely a merchant problem and honestly when it comes down to it they don't matter in deciding what payments to accept. Their customers will.
>There is also the problem that as its usage increases the difficulty in offloading the bitcoins for the remittance company increases which means their costs increase.
I don't understand what you are trying to say or how increased usage would make dealing with bitcoins more difficult.
It doesn't suck for micropayments, I know this because I actually use it frequently. It's great. Have you actually used bitcoin? Visa defines micropayments and anything below $23 The core devs don't recommend doing that off chain, that is 100% not true.
Credit card fraud is a massive problem no matter who you blaim. Credit cards are inherently insecure since you have to give someone all the information necessary to charge your card to use it at all! It makes no sense. Many businesses lose enormous amounts of money to credit card fraud. I buy many things with bitcoin, it's amazing how much easier it is than dealing with credit card transactions, the bank's false positive fraud protections, the banks not catching actual fraud, the vendor's false positive fraud protections (for using a vpn or ghostery), waiting for the transaction to go through, etc. Never mind putting all sorts of unnecessary information in. Bitcoin is literally two clicks.
You can say 'it won't work'. The truth is, it IS working right now.
>I don't understand what you are trying to say or how increased usage would make dealing with bitcoins more difficult.
In any given country you're only going to have so many buyers for bitcoin. So the service on the receiving end has a limited number of people to sell the bitcoins they receive to in order to get the cash to give to the recipients. As supply of bitcoin increases the buyers will start wanting to pay less and you end up with a wider and wider spread. The only way around this is for that company to then go sell them in a foreign market and deal with a large float and forex/transfer costs. All of which(spread,float risk,transfer costs) feed back into the fees they need to charge or the spread they need to have to keep them profitable.
I don't consider $20 to be a micropayment but even then once you include the overhead in acquiring the coins existing systems will match the cost in most cases until you get to a small enough number that Bitcoin is unsuitable too.
And yes I've used Bitcoin. I've been involved in the community for a few years now I just don't see it finding widespread success.
It's not about blame its about who it is a problem for. Consumers get protection from credit cards that they don't get from Bitcoin. Its the vendors that have the problems and as I said they can promote Bitcoin as much as they want but it won't reduce fraud until they drop credit cards and that won't happen because users don't want to use bitcoin.
It is working. I'm saying it won't be mainstream and that the people who have bought in expecting to be rich should be expecting to be disappointed.
Literally the only use case for Bitcoin is so that libertarians can buy illicit goods without having to go to the bad part of town and talk to minorities.
Wow at how that quote is full of xenophobia and FUD.
[0]https://lightning.network/
It's just a matter of doing a little research to find all the naysayers.
http://en.wikipedia.org/wiki/Naked_short_selling