BITCOIN

Malthusian · 14 April 2021 at 10:08AM

YellowStarling said:

Thanks for the response. But what about projects where the token is used to ‘fuel’ the transactions on the underlying technology? Ie those wanting to use the underlying technology for whatever value they would take from it (e.g. they want to use it to process a transaction, or create a decentralised app, etc) - do they have to ‘use’/spend the technology’s native token to do that? If so, then would holding some of that token be akin to holding an equity interest in the underlying technology? Ie if the demand for the technology exploded to a level where there was a high demand for the token (to be able to use the tech), holding some of that token to be able to sell to those wanting to use the technology could create (growable) value for the holder, similar to holding shares in a company judged to succeed/grow.

Or am I mistaken about projects that require certain tokens to be used as the ‘gas’, or fuel as I’ve used here?

Nobody is going to be interested in using any such technology if you have to make a load of randoms rich quick in order to buy the "fuel". You would simply create your own tokens at virtually zero cost.

YellowStarling · 14 April 2021 at 12:54PM

HansOndabush said:

YellowStarling said:

Genuine question: for those knocking Bitcoin, do they (consciously or not) substitute "cryptocurrency" (as a whole) with it, or not? In other words, are those not in favour of Bitcoin also not in favour of other cryptocurrency projects, or just Bitcoin? I know the title of this thread is specific but some posts appear more aimed at the crypto space in general, hence my question.

Just wondering whether any anti-BTC are more bullish on alternative projects, perhaps those that are aiming for the scalability/TPS targets more akin to fiat monetary systems, or smart contract/app networks, or something else. E.g. Proof-of-Stake projects like Ethereum 2.0, Cardano, Polkadot, or hashgraph projects like Hedera, etc.

That's a good question.

Bitcoin - Looks like a bubble, floats like a bubble, with a fan club of 'clever' people who know all about crypto and nothing about investing; well then I think it must be a bubble. Will pop sometime for sure.

Cryptos in general. Just google sh*tcoins and you will see how many there have been, are, and are being dreamt up all the time. How can you assign a value to any of them?

Look, central banks and governments are never going to allow bitcoin or any other independent crypto to become the next world reserve currency; it just will not happen. So forget any idea of bitcoin taking over from the dollar.

We already have digital currency in the sense that you just tap your card or type your number into a computer to pay for things. Any extension of that would be controlled by governments where a real crypto-currency would track absolutely everything you do. So they could have negative interest on your account to force you to spend; they would know exactly when currency changes hands and tax you on it, and if you aren't a sociably good person, they can restrict your account - most of which are negative developments in my view. But in and of itself, I have no objection to digital currency in lieu of cash; it's just the big brother part that worries me.

Investing in Crypto - if one came out that was fully or fractionally backed by gold, had some practical use, and could be held with FCA regulated institutions then I would be extremely interested. Otherwise you aren't buying into anything other than a number or part of a number on a computer somewhere in cyberspace only useful for criminals or speculators.

I don't know if that answers your question?

Thank you - it helps from a perspective on opinions of adoption as a currency, but at this point I think I'm in agreement with seeing the limitations there - just two points off the top of my head to add to yours above on this:

1) Demand may be restricted to nefarious types and speculators as you say, but it might extend to genuine off-grid desiring types and possibly less developed economies subject to acute/hyperinflation-causing political instability. But, there might still be a sizeable enough majority lucky enough to be in sufficiently developed monetary systems who may never seek a decentralised finance system without some other incentive I'm yet to see...

2) I'm open to thinking more creatively to work this one through but, using the existing fiat system as the comparison, a currency of finite supply seems to be challenged in supporting an economy that wants to grow, and lacks the typical levers of fiscal and especially monetary policy (e.g. increasing supply) that can be and are used to mitigate shocks to this system. If the value of the coin/token trended upwards over time due to inflationary demand, and with no way of expanding the supply (and actually the supply is easily reduced by lost access to wallets), prices of things would have to trend down to overcome the propensity to simply save coins and encourage consumption. Maybe this deflationary aspect appeals to subscribers of the fiat currency replacement theory, I am not sure.

However, I guess my question really is more on the adoption of the crypto space in terms of the various technologies and use cases it might offer - i.e. outside of being a fiat currency alternative. Without going into too much detail and repeating my other posts - if there is a use case (other than strictly a means of moving monies between parties in exchange for something else) that could be of genuine demand to consumers, but that this technology requires coins or tokens to use, then holding those coins/tokens would be akin to holding an equity interest in that technology.

Provided the demand for the technology is sustained through the value received by the transactor being greater than the transaction costs paid to those that verify the transactions (I'm talking 'transaction' as in a single use of whatever the use case is that is being demanded), then could this create value to a holder in a similar way to holding shares of a company they judge to be demanded more and more over time?

And I confess this (the whole non-fiat currency replacement use case area) is where I need to do more reading, but put the above question out there to see if there are certain areas (which may or may not be outside of Bitcoin, or Proof-of-Work technologies) people see some value and I can go from there.

Finally, if there are areas that could be use cases of genuine value to people, then I would agree that a coin that does not open up the possibility of using these use cases (i.e. a "sh*tcoin") would be worthless and, therefore, somebody reversing its (lack of) end value backwards means they shouldn't bother speculating in it in the first place, lest they risk running out of the next fool to sell it on to. Even a limited use case could then be reverse-calculated to be seen as not the great store of value it's often claimed to be (Bitcoin, with its scalability issues, could eventually be in this category, but I don't know).

In summary, I guess my question is: are all cryptocurrencies as limited as some, or as downright pointless/worthless as others, or do some genuinely enable access to technology that is, should be, or perhaps will be widely adopted/demanded?

fwor · 14 April 2021 at 12:58PM

YellowStarling said:

Or am I mistaken about projects that require certain tokens to be used as the ‘gas’, or fuel as I’ve used here?

If you're talking about tokens that are used for payments (as opposed to tokens that are used for speculation), I don't see that happening. You would have to be very very brave to develop some sort of "new tech" but link it to a specific cryptocurrency so that you could only use it with that specific token.

The problem here is the laziness of the average consumer. If you give them a choice between messing about with a new type of coin + crypto wallet or doing what they have always done, they will just get out their credit/debit card. Although we have one person in this thread who claims to have bought something with Bitcoin recently, the proportion of the population that actually does that is as near to nil as makes no difference. Sure, you can buy a Model 3 with Bitcoin, but I would guess that the number of people that do that is also a nice, round number.

So... if you give the consumer no choice about using your "token" you put up a huge barrier, and if you offer them a simple conventional alternative, they will take it.

The unfortunate thing for cryptocurrencies is that they have to sit alongside something that has worked well for many decades, and cryptocoins don't do anything else that most ordinary people want. Features like audit trails are not something that will interest the average user, and that's true of pretty much all of the technically clever features.

History is littered with technically great developments that went nowhere because of user inertia. X.400 messaging was (30 years ago) hugely better than SMTP for email - and it still is - but it went nowhere. Personal digital certificates could have been the future (20 years ago) of 2-factor authentication but, again, the average user doesn't want anything more complicated than a username and password.

That's why all of the interest in cryptocurrencies has centred on them as a vehicle for speculation. The prospect of getting rich quick can grab people's interest easily enough - the ability to pay for things in a different way when the existing ways work just fine cannot.

YellowStarling · 14 April 2021 at 1:07PM

Malthusian said:

YellowStarling said:

Thanks for the response. But what about projects where the token is used to ‘fuel’ the transactions on the underlying technology? Ie those wanting to use the underlying technology for whatever value they would take from it (e.g. they want to use it to process a transaction, or create a decentralised app, etc) - do they have to ‘use’/spend the technology’s native token to do that? If so, then would holding some of that token be akin to holding an equity interest in the underlying technology? Ie if the demand for the technology exploded to a level where there was a high demand for the token (to be able to use the tech), holding some of that token to be able to sell to those wanting to use the technology could create (growable) value for the holder, similar to holding shares in a company judged to succeed/grow.

Or am I mistaken about projects that require certain tokens to be used as the ‘gas’, or fuel as I’ve used here?

Nobody is going to be interested in using any such technology if you have to make a load of randoms rich quick in order to buy the "fuel". You would simply create your own tokens at virtually zero cost.

Depends on what you mean by "(creating) your own tokens at virtually zero cost" - do you mean somebody (who genuinely wanted to use a technology A that Coin A operates) could:

1) create their own additional supply of Coin A to then use on technology A, or
2) create technology B (which uses Coin B ) to effectively replicate technology A's would-be value to them, or
3) use Coin C (from another technology, C) that they happen to have and either use them on technology A in place of Coin A, or convert them to Coin A first?

None of these seem as easy as you claim - (1) might be achieved via some sort of mining or verification process. I may be happy to do this to be rewarded some tokens to then spend on the technology for my own use, but I may be equally (or more) happy to simply pay the transaction fee/reward to somebody else to verify the transaction I wish to make. (2) doesn't seem logical unless I have the capability to do so or envisage needing to use the technology so much that the costs are outweighed. And (3) relies on me having some other coins already, so is probably not what you meant.

And I guess it may not be perceived as having to "make a load of randoms rich quick" in order to use it - it's simply the price of using the technology for whatever the use case happens to be; no different to paying for a service or product from a company that some "randoms" may have shares in and therefore benefit from my consuming of the company's offering?

YellowStarling · 14 April 2021 at 1:22PM

fwor said:

YellowStarling said:

Or am I mistaken about projects that require certain tokens to be used as the ‘gas’, or fuel as I’ve used here?

If you're talking about tokens that are used for payments (as opposed to tokens that are used for speculation), I don't see that happening. You would have to be very very brave to develop some sort of "new tech" but link it to a specific cryptocurrency so that you could only use it with that specific token.
The problem here is the laziness of the average consumer. If you give them a choice between messing about with a new type of coin + crypto wallet or doing what they have always done, they will just get out their credit/debit card. Although we have one person in this thread who claims to have bought something with Bitcoin recently, the proportion of the population that actually does that is as near to nil as makes no difference. Sure, you can buy a Model 3 with Bitcoin, but I would guess that the number of people that do that is also a nice, round number.
So... if you give the consumer no choice about using your "token" you put up a huge barrier, and if you offer them a simple conventional alternative, they will take it.
The unfortunate thing for cryptocurrencies is that they have to sit alongside something that has worked well for many decades, and cryptocoins don't do anything else that most ordinary people want. Features like audit trails are not something that will interest the average user, and that's true of pretty much all of the technically clever features.
History is littered with technically great developments that went nowhere because of user inertia. X.400 messaging was (30 years ago) hugely better than SMTP for email - and it still is - but it went nowhere. Personal digital certificates could have been the future (20 years ago) of 2-factor authentication but, again, the average user doesn't want anything more complicated than a username and password.
That's why all of the interest in cryptocurrencies has centred on them as a vehicle for speculation. The prospect of getting rich quick can grab people's interest easily enough - the ability to pay for things in a different way when the existing ways work just fine cannot.

This is helpful, thank you. To keep it short, (I think) I actually meant neither tokens for spending as a pure currency play, nor tokens used purely to speculate. Where I was heading was the use of tokens or coins that are needed to transact on a particular underlying technology, IF it could be proven that the use of said technology was sufficiently valuable to enough consumers and therefore demanded (and I have no particular details here yet on what these use cases might be, outside of the generic/high level "smart contracts" or "decentralised apps" that I see bandied about, hence my reaching out on here for any pointers to start researching, or not as the case may be).

However, all of the above aside, the point you raise about inertia is thought-provoking, as it would mean the technology/use case that, if it existed, specified that a would-be consumer is only able to access its function/value via a particular token (or group of tokens) runs the risk of alienating some consumers against using it, or the risk of competitors lowering these barriers in some way. That said, if I think of it solely in this sense, then I could judge a cryptocurrency-based technology, and whether to buy a 'stake' in its fuel supply of tokens, in the same way I may analyse a company whose shares I could buy.

fwor · 14 April 2021 at 1:34PM

YellowStarling said:

specified that a would-be consumer is only able to access its function/value via a particular token (or group of tokens) runs the risk of alienating some consumers against using it, or the risk of competitors lowering these barriers in some way.

I don't see that as a risk - I see it as near-enough certainty. I tried to think of an example where you would have a chance of doing it without it being commercial suicide.

Perhaps you can think of an example?

The only situation that I could think of was a completely closed environment such as in-app purchases for a specific online/computer game - but that is surely never going to be a volume business. And in that situation I would buy shares in the company that makes the game (if I thought they would be hugely successful) rather than buying the tokens!

Malthusian · 14 April 2021 at 5:16PM

fwor said:

Perhaps you can think of an example?
The only situation that I could think of was a completely closed environment such as in-app purchases for a specific online/computer game - but that is surely never going to be a volume business. And in that situation I would buy shares in the company that makes the game (if I thought they would be hugely successful) rather than buying the tokens!

Computer game currency is an interesting counterexample, as digital currencies existed long before BitCoin - whether World of Warcraft gold or Ultima Online gold before it. They were also easily tradable for real currency and vice versa - despite occasional attempts by the game developers to stop it. (They wanted you to get gold by playing the game for a few hundred hours and paying subscription fees, not paying some random third party instead. It also got players' backs up if rich kids started swaggering down the street wearing the Armor of Snosgradok when they hadn't "earned it" by killing Snosgradok.)

They could never acquire the status of a real currency because they were generated by the game's code on demand - and the developers could at any time "print" loads more gold, which isn't the case with Bitcoin. (And more likely to actually happen than the Federal Reserves suddenly deciding to make dollars worthless for no reason.)

The long-standing success and persistence of WOW-gold has however led a lot of people to say "Why not combine game gold with crypto, so you can sell the crypto to players and then they can use it to buy stuff in the game?"

The problem is that no-one wants to play an MMORPG where nobody ever uses the game's currency to buy any weapons or armor because they're either hodling it or trading it between themselves trying to get rich quick. Nor do developers want to spend lots of time developing an MMORPG which nobody is playing (and paying subscription fees for) because they're either paying other players for their gold instead of whacking orcs for it, or sitting on their gold waiting to cash it in for a Lambo.

Scottex99 · 14 April 2021 at 10:26PM

Nobody uses BTC to buy stuff. It's too volatile to be useful for that.

But there about 6 or 7 major stablecoins now all pegged to a Dollar either by being asset backed or algorithmically. All these coins trade at $1 every single day. Tether (USDT) is the most traded coin by a mile every single day. The reason for that? Payments. USDT/USDC/TUSD/BUSD/DAI/PAX all work just fine. In fact my firm trades at least 1m USDT every day. Most clients are receiving it as a form of payment from 3rd parties selling it to us to receive wires in GBP/USD/EUR.

Not only have I bought something with BTC last year, last week I bought stuff on Amazon with my Monolith card that is loaded with ETH. Generally I'm super bullish on all good cryptos so I'd never dream of using them to buy stuff, but was cool to do it anyway.

Forget about BTC being a failure as people don't buy coffee with it, you don't buy coffee with gold bars or your house either. There's hundreds of other coins for that. And there are layer 2 and layer 3 solutions coming on all the chains anyway.

Big things coming, trust me. If anything the price of the assets is one of the most boring parts of it all, but it's nice to be right and get rich anyway.