Crypto Dabble.

tebbins

Zola. said:

I don't have the energy to get into another big debate with you. But I will make an effort.

You need to stop comparing Bitcoin to businesses and products. Not relevant. Compare it to something more relevant and similar, like gold. 

If you have millions of people playing chess every day and you copy the board and change a few pieces, don't expect the millions of people who like real chess to want to play with you, or care. 

I love it when people tell me "you know what your problem is" and "I've already told you, why should I have to make an effort repeat this (information I haven't said yet)". Gold has held its value since before the time of Christ, since then thousands of speculative bubbles and new assets have come and gone and you're telling me that after so many millennia, on the basis of just over a decade of data, the future of money for the next... However long, has arrived?

Aegis

Zola. said:

Aegis said:

Zola. said:

Aegis said:

Zola. said:

Bitcoin is a digital alternative to scarce, hard assets like gold. It is built on an incorruptible network, the strongest computer network ever created, backed by millions of computers working together and it grows in size every day. It is the only truly decentralised crypto asset and will remain the largest one, the open-source decentralised nature of it can only be achieved successfully once. There is no second best, no alternative, and never will be now that the cat is out of the bag.

By this logic Apple could never have started producing phones and Google could never have become a successful search engine.  This is like saying that Ask Jeeves would always be superior to Google because it was around first, or that Nokia would always outsell Apple when it comes to phones.  As I said elsewhere, reality doesn't care about what an investment has done in the past, only the future.  And to work out whether you are buying at a good price or not you need to have a method of valuing the asset in question, and you need to be able to explain why that doesn't apply to ethereum or dogecoin, both of which look just as viable to me when looking at cryptos in general.

Again, if I have one bitcoin and one aitcoin (name made up, no idea if it's a real coin) which has been cloned from the bitcoin network and does exactly the same thing, how do I determine which is worth $100,000 and which is worth nothing.  It can't be utility, because they have the same utility, it can't be scarcity, because the clone has the exact same limitations as bitcoin, so how is one network worth $1tn and the other is worthless?

I don't have the energy to get into another big debate with you. But I will make an effort.

Thanks, I guess.

You need to stop comparing Bitcoin to businesses and products. Not relevant. Compare it to something more relevant and similar, like gold. 

I don't like gold as an investment either. Ity doesn't produce any underlying income and is only worth what someone is willing to pay for it. The thing about gold is that in the long run, the price is incredibly stable, generally performing in line with inflation. Sometimes it has periods of outperforming inflation, other times it's under, but the long term position is that what you could buy with an ounce of gold two thousand years ago is broadly similar to what you could buy with an ounce of gold today. With bitcoin, what you could buy with 1 coin a decade ago isn't even remotely comparable to what you could buy with the same coin today. The price stability just isn't there, and there's no mechanism, to control the volatility. So again, the issue is trying to work out what represents a fair price for each token. With gold, you have ultra-long term financial stability underpinned by the fact that gold is useful for both jewellery and industry. With bitcoin, you have what...?

As for the last paragraph. It's largely about the network effect. Litecoin, for example, is another old clone of bitcoin and it has tried so hard to position itself as 'bitcoin's silver', its USP being a code tweak where it can handle more transactions per block. No one really cares, and its price history shows that. 

I agree, it seems few people think Litecoin has any real value. My question is why they are correct when it comes to Liecoin, but incorrect if applying the exact same objections to Bitcoin having value.

There is a book called "the blocksize war" which documents the earlier years of bitcoin, where various people tried to change bitcoin's rules and instead went on to create hard forks / new alternative coins. All pretty irrelevant today and worth less than 1% of bitcoin. 

Again, no disagreement here. The question is not so much "do these other systems have value" as "are the tokens you get as part of this system any different to those you get with bitcoin". If you come back to commodities, the difference between a gold coin and a copper coin is that the two coins are made of different metals, and those metals have different applications in either industry or jewllery, so having different prices is expected. If I have 1 bitcoin and 1 dogecoin, what ultimately is the difference?

If you have millions of people playing chess every day and you copy the board and change a few pieces, don't expect the millions of people who like real chess to want to play with you, or care. 

This feels like the best exampole you've given so far in answer to this question, but I hope that you realise it amounts to no more than "it has value because a lot of people agree that it has value".  It might work, like with diamonds, or it might ultimately crash like Beanie Babies.

1. You could say the demand, the scarcity and the proof of work algorithm which has incurred significant cost to the miner to produce the coin, so it has the backing of having required significant labour to create. 

2. Bitcoin has been perfectly designed in just about every way, changing the rules makes it worse. E.g. making the blocks larger, means it's much harder for you or I to run a node, as it will take up so much more space, so it hurts the decentralised nature of it. 

3. This is no doubt the riskiest part of this asset. But all historical money systems from rocks, seashells,  beads, to paper money, all were based on agreement and shared beliefs. The difference with paper money is it has been "backed" by the state and controlled by violence. 

1.  The problem is that this isn't relevant.  I could create a coin that was much harder to mine, and it wouldn't have more value simply because there was more cost of mining it.  In essence this is a form of the sunk costs fallacy, which is a known problem in behavioural economics (where it might be called "grounding" - I can't remember exactly).

2.  How about the number of transactions the network can handle per second?  A quick Google search says it's between 3.3 and 7 transactions per second across the network.  Compare that to Visa at about 1,700 transactions per second and you quickly see an issue of scalability.  You could argue that the introduction of Lightning will solve that, but it certainly indicates that the original network just didn't have scaleability in mind.  This doesn't account for the vast power usage that the multiple redundancies necessitate, which in itself means that bitcoin is likely doomed in the long run.

3.  The main difference to me is that money can be used to settle liabilities, which effectively makes it an integral part of the economy of the country in question.  As such, GBP is a way of participating in the UK economy, albeiut not a great way because of inflation.  But that conversion back to GBP drives the value of anything else you can invest in because the investment asset confers an entitlement to cash flows for the company or issuer.

Zola.

1. It is relevant because there are incentives from the miner to mine given the demand. Mining is a cutthroat business, if bitcoin failed they would mine something else. Network effect.

2. The base layer has been purposely designed to be 'slow' . This is a feature and not a weakness. 10-minute blocks to ensure security etc. Remember that is a final settlement, with no third parties. Visa takes days to finally settle between the intermediaries. Which of the two is actually slow?  Back in 2009 scaling was discussed on forums by Satoshi Nakamoto and they clearly mention building on layered solutions off the base layer, as adoption grows. It's open-source, always evolving. Remember Lightning is only the first real version of a layer two solution and it is working really well. There will be more development and future options. You can send pretty much any currency through Twitter right now, using the bitcoin rails. The pace of change is fascinating. 

People in El Salvador use Lighting every day to instantly settle all their day-to-day minor transactions. No one wants to stand about for 10 mins to settle a minor transaction for a coffee etc, so they build off the base layer to accommodate that 

Aegis

Zola. said:

1. It is relevant because there is incentives from the miner to mine given the demand. Mining is a cut throat business, if bitcoin failed they would mine something else. Network effect.

2. The base layer has been purposely designed to be 'slow' . This is a feature and not a weakness. 10 minute blocks to ensure security etc. Back in 2009 scaling was discussed on forums by satoshi nakamoto and they clearly mention building on layered solutions as adoption grows. Its open source, always evolving. People in el Salvador use lighting every day to instantly settle all their day to day minor transactions. 

1)  But this is entirely circular.  The coins have value because the miners put in a certain amount of time and effort, but they only do that because it's valuable for them do do so.  I agree that it makes rational sense to mine if you think the price will either remain stable or increase, but if you thik the price will decrease, then the returns available from mining are far less appealing.

2)  It's nice to know there's a reason, but it very much feels like a weakness that now needs to be addresed to make the system more viable.  Other technologies that can handle more transactions easily, and even some other cryptos can handle more transactions while still being distributed, so it's genuinely hard to see how bitcoin can maintain its dominance in the long run.

Aegis

As an aside, this is a genuinely enjoyable conversation, and I'm glad you decided to engage on the subject.  I find the subject fascinating, and it's not for me as an investment but a lot of people clearly disagree.

Zola.

Aegis said:

Zola. said:

1. It is relevant because there is incentives from the miner to mine given the demand. Mining is a cut throat business, if bitcoin failed they would mine something else. Network effect.

2. The base layer has been purposely designed to be 'slow' . This is a feature and not a weakness. 10 minute blocks to ensure security etc. Back in 2009 scaling was discussed on forums by satoshi nakamoto and they clearly mention building on layered solutions as adoption grows. Its open source, always evolving. People in el Salvador use lighting every day to instantly settle all their day to day minor transactions. 

1)  But this is entirely circular.  The coins have value because the miners put in a certain amount of time and effort, but they only do that because it's valuable for them do do so.  I agree that it makes rational sense to mine if you think the price will either remain stable or increase, but if you thik the price will decrease, then the returns available from mining are far less appealing.

2)  It's nice to know there's a reason, but it very much feels like a weakness that now needs to be addresed to make the system more viable.  Other technologies that can handle more transactions easily, and even some other cryptos can handle more transactions while still being distributed, so it's genuinely hard to see how bitcoin can maintain its dominance in the long run.

1. Exactly, it's not so different from working any job, you do it because it's creating value and someone will pay you for the effort. The whole thing has a massive amount of game theory involved. Their reward for mining is transaction fees and the chance to get newly minted Bitcoins. As for price decreases....therein lies the beauty of the "difficulty adjustment". Bitcoin has been programmed to deliver coins every ten minutes, no matter how hard or how little miners try. If the price drops, or miners take on something else, then the difficulty of the proof of work algorithm drops to accommodate. 

2. The weakness has already been resolved at least for now. A nation-state of 6 million people is using Lightning daily,  as of last month at least half the population are using it on a daily basis. Most of these people never had any financial services before in their life. 

It's growing on a global basis right now. I know of at least one cafe in my city where I can go and buy a coffee with bitcoin if I want to, using a lightning wallet. 

MarkCarnage

Crypto? Just this.....

https://www.stephendiehl.com/blog/crypto-absurd.html

Crypto shouldn't be in a savings and investment forum. 

Zola.

And who are you to say that?

Cus

Ah, for a moment there we had a real balanced discussion from differing points of view....then bang, another one of those posts..

MarkCarnage

Zola. said:

And who are you to say that?

No right to have a view then? Typical....give it its own forum. It doesn't belong in this one.