Blockchain update

[touchring]

Re: Blockchain update

While my position has always been (and continues to be) that digital currencies are here to stay, I believe bitcoin is a dinosaur on the verge of extinction. As you rightly point out, bitcoin bugs used to shed crocodile tears over poor immigrants not being able to send money abroad without incurring large fees. With the 1MB blocksize limit and $10+ transaction fees, bitcoin bugs have no choice but to admit it is an inferior form of digital cash that cannot scale - hence the gold 2.0 meme. The reason I bought XRP in 2013 (my address is ~TBE) is because I knew the scaling debate would eventually occur. There is no question in my mind that the explosive rise in XRP this year (~40X) and the Bitcoin Cash fork happened because of the scaling debate.

How about the legal aspect of cryptocurrency? Are cryptocurrencies actually legal in the first place? I do know that it is illegal to issue your own paper currency without approval from the government.

For example, if I were to create notes which I call "iTulip Dollars" and start selling these on ebay at a value of 1 iTulip $ = 1 US$, I can be arrested in many countries on many charges including money laundering.

On the other hand, I can print collector's game cards and sell them on ebay without any legal implications.

[Southernguy]

Re: Blockchain update

Interesting news: Bulgaria holding more than 200 000 bitcoins
http://www.zerohedge.com/news/2017-1...illion-bitcoin

[thriftyandboringinohio]

Re: Blockchain update

How about the legal aspect of cryptocurrency? Are cryptocurrencies actually legal in the first place? I do know that it is illegal to issue your own paper currency without approval from the government.

For example, if I were to create notes which I call "iTulip Dollars" and start selling these on ebay at a value of 1 iTulip $ = 1 US$, I can be arrested in many countries on many charges including money laundering.

On the other hand, I can print collector's game cards and sell them on ebay without any legal implications.

That question is interesting to me too.
Clearly, people most anywhere are allowed to have a pocket full of currency from any other country, or accounts holding them somewhere.

Traditionally nation states have guaranteed an important role for their national money by requiring that taxes be paid in the coin of the realm, and by making all government purchases of materials and wages in the local money. So you need to sell part of whatever wealth you hold in land or gold or dried fish or foreign coin into the local money to pay your taxes, and you need to accept the national money as wages if you have a govt job or you sell them anything like road construction or vehicles or fuel.

[touchring]

Re: Blockchain update

That question is interesting to me too.
Clearly, people most anywhere are allowed to have a pocket full of currency from any other country, or accounts holding them somewhere.

Traditionally nation states have guaranteed an important role for their national money by requiring that taxes be paid in the coin of the realm, and by making all government purchases of materials and wages in the local money. So you need to sell part of whatever wealth you hold in land or gold or dried fish or foreign coin into the local money to pay your taxes, and you need to accept the national money as wages if you have a govt job or you sell them anything like road construction or vehicles or fuel.

I'm just wondering if it is all legal, why won't the likes of Mark Zuckerberg issue a fb$? I mean, with the reach and networking of FB, he could become the first trillionaire in the world if he does that.

[DSpencer]

Re: Blockchain update

If by tangible value you mean to narrow down the use cases from which value can be derived, here's 19 disruptive use cases for blockchains... some of these will be public ones, some private ones.

This is the part where I feel like the magician switches the coin from one hand to another without the audience noticing. But maybe I am just missing the point because of a lack of technical knowledge.

I believe that there are a lot of uses for blockchain, but how many of them would actually use Bitcoin in particular as opposed to some generic form of blockchain technology? It's hard to find a good analogy for cryptocurrencies but it seems almost like saying that computers are the future and therefore COBOL or C++ or whatever should be worth a trillion dollars.

If Bitcoin isn't a good currency anymore and it's not a good store of value, then what is it? Is Bitcoin just one interesting application of a promising technological tool? Or is it somehow integral to the development of all these other blockchain use cases?

[thriftyandboringinohio]

Re: Blockchain update

This is the part where I feel like the magician switches the coin from one hand to another without the audience noticing. But maybe I am just missing the point because of a lack of technical knowledge.

I believe that there are a lot of uses for blockchain, but how many of them would actually use Bitcoin in particular as opposed to some generic form of blockchain technology? It's hard to find a good analogy for cryptocurrencies but it seems almost like saying that computers are the future and therefore COBOL or C++ or whatever should be worth a trillion dollars.

If Bitcoin isn't a good currency anymore and it's not a good store of value, then what is it? Is Bitcoin just one interesting application of a promising technological tool? Or is it somehow integral to the development of all these other blockchain use cases?

+1

I love this quote:

"Gentlemen, you are now about to embark on a course of studies which will occupy you for two years. Together, they form a noble adventure. But I would like to remind you of an important point. Nothing that you will learn in the course of your studies will be of the slightest possible use to you in after life, save only this, that if you work hard and intelligently you should be able to detect when a man is talking rot, and that, in my view, is the main, if not the sole, purpose of education."
- John Alexander Smith, Speech to Oxford University students, 1914

When I try to understand to how cryptos work and what makes them worth buying, it seems like double-talk and gibberish to me.
I seem to detect they are talking rot, except when they point out the price keeps going up dramatically.

[DSpencer]

Re: Blockchain update

There are a number of reasons why future uptrends are not guaranteed. Today, there are 1337 digital currencies out there as of this writing per coinmarketcap. Five years ago, there were only a handful of digital currencies out there. Moreover, not only is the space being hyperinflated externally, it is being hyperinflated internally. While most people know that Bitcoin Cash is a hard fork of Bitcoin, they are not aware that so are Bitcoin Gold, Dash, and Zcash.

Five years ago, the rebuttal that bitcoin bugs would throw out there is the "network effect" argument, i.e., bitcoin will remain dominant because it had the first mover advantage and would thus solidify itself as a standard much like the QWERTY keyboard format (even if there were technologically superior digital currencies in the future). Today, this type of rebuttal is no longer as persuasive as it used to be. Five years ago, bitcoin had nearly 100% market share - today it is closer to 50%. I would argue that the digital currency space was destined to be hyperinflated due to the tremendous built-in financial incentives to do so. From a purely speculative perspective (and let's face it - most people in the digital currency space are speculating), altcoins promise far greater potential returns since it is easier for a $1B altcoin to double in value versus one that is $100B. Thus, even if we were to assume zero technological progress (in terms of transaction speeds, anonymity, scalability, energy consumption, etc.), there still exists a strong financial incentive for the space to be hyperinflated with altcoins (and for speculators to participate in altcoins).

While my position has always been (and continues to be) that digital currencies are here to stay, I believe bitcoin is a dinosaur on the verge of extinction. As you rightly point out, bitcoin bugs used to shed crocodile tears over poor immigrants not being able to send money abroad without incurring large fees. With the 1MB blocksize limit and $10+ transaction fees, bitcoin bugs have no choice but to admit it is an inferior form of digital cash that cannot scale - hence the gold 2.0 meme. The reason I bought XRP in 2013 (my address is ~TBE) is because I knew the scaling debate would eventually occur. There is no question in my mind that the explosive rise in XRP this year (~40X) and the Bitcoin Cash fork happened because of the scaling debate.

I'm a big fan of narrative economics. I believe the next narrative will be around fungibility. As for the long-term, eventually someone will create a digital currency that will actually function as a currency, i.e., the supply will increase/decrease lockstep with the CPI (or another price index like the MIT BPP) in order to prevent the malinvestments that occur due to general price inflation and price deflation. For example, if the BPP is down 2% this year, the supply of this digital currency (in my wallet and everyone else's) will increase by 2% in real-time in order to maintain stability.

If the only advantage Bitcoin has over other cryptocurrencies is the wider adoption as a first mover and that advantage is largely negated by its decreasing utility as a currency it seems like you may be right that it is doomed to extinction or at least irrelevance. Surely it can't survive forever purely on speculation.

[lakedaemonian]

Re: Blockchain update

To me it feels very much like a mutated version of internet bubble 1.0

But instead of equities it’s crypto and private unicorns.

I think crypto deserves a new Jim Rogers to travel the world and have a look at crypto from the ground up from young savers and small businesses.

Metcalfe’s Law applies, but it seems very excessive.

[Adeptus]

Re: Blockchain update

How about the legal aspect of cryptocurrency? Are cryptocurrencies actually legal in the first place? I do know that it is illegal to issue your own paper currency without approval from the government.
For example, if I were to create notes which I call "iTulip Dollars" and start selling these on ebay at a value of 1 iTulip $ = 1 US$, I can be arrested in many countries on many charges including money laundering.
On the other hand, I can print collector's game cards and sell them on ebay without any legal implications.

We've had a Wiki tracking that for several years now, in fact I think there's more than one, but a 2 minute google search yields:
Is Bitcoin legal in X country? https://en.wikipedia.org/wiki/Legali...y_or_territory


Answer: Probably yes, but you should click the page and hit refresh at least once a week, as every other country changes its mind.

Also: https://blogs.thomsonreuters.com/ans...ncies-country/



It seems Bitcoin/Crypto is mostly illegal in oppressive regimes because those governments have more to lose. Now give Bitcoin/Crypto another 2-4 years, and if market cap expodes to 5, 10, 50 Trillion USD... I bet even 1st world countries will be questioning it's legality as it has the power to over throw governments through citizens dumping national currencies.


The trick is that even within a single country (i.e. USA), there's still ongoing government debate as to what "Bitcoin" actually is.
* IRS thinks it's an asset, so it wants to tax it for capital gains
* FINCEN claims Bitcoin is a currency and wants to have states to offer Money Transmission Licenses
* SEC thinks ICO tokens (soon coming to Bitcoin via RootStock) are securities, so it wants to regulate those as a securities
* CFTC claims it's an asset, so it wants to regulate it as an asset

Conclusion: It's a complete clusterfuck out there. Every Statist wants to claim it is under their jurisdiction, when all claim the same, clearly that's not going to work. Bitcoin is all those things and none of them. It's almost like you need a whole separate gov dept just to deal with Crypto. Then just as they figure out what they think it is, it morphs. If they try to shut it down, they will be playing whack-a-mole for years.

https://bravenewcoin.com/news/bitcoi...mmodity-first-cftc-ruling-against-a-bitcoin-options-trading-platform/

https://www.cnbc.com/2017/11/30/bitc...rs-beware-the-irs-wants-its-cut-and-you-may-not-know-it.html

https://www.coindesk.com/bitcoin-law...tate-level-us/ (FINCEN)

https://www.sec.gov/oiea/investor-al..._coinofferings (SEC)

DOCUMENTARY: Ulterior States (I am Satoshi) -
Excerpt.... skip to 28:02 for relevant section, but entire documentary is very interesting too.

[Adeptus]

Re: Blockchain update

I believe that there are a lot of uses for blockchain, but how many of them would actually use Bitcoin in particular as opposed to some generic form of blockchain technology?

The answer to that is still outstanding. I do believe there is a future for both public and private blockchains - both will succeed, as there are unique use cases for both, much like the Internet and private networks within Enterprises called "IntrAnets". From each category though, I see only a few dozen succeeding/becoming relevant, not 1000+.

It's hard to find a good analogy for cryptocurrencies but it seems almost like saying that computers are the future and therefore COBOL or C++ or whatever should be worth a trillion dollars.

The demand for COBOL/C++ is limited, and is generally available at a fixed price in an infinite quantity. Bitcoin has the potential for everyone in the world to want some (mostly due to price speculation, I will conceed), it's price is anything but fixed, and its quantity is extremely limited by design. There is no good analogy from the past, and this is what is keeping all the governments scratching their heads. By the time they figure out which boxes Bitcoin should fit in, it will have morphed into many other capabilities (i.e. ICO market is coming to Bitcoin, also it will have 'Layer 2 solutions' allowing for multiple digital currencies to ride on top of Bitcoin, with different monetary properties than Bitcoin itself, it will sooner than later have fully private transactions - at which point, governments will be completely blind to WTF is going on with Bitcoin transactions). If you think Bitcoin is complex now, give it a few years. Bitcoin is programmable, it is not 1 thing now, and it will be even more things in the future.

If Bitcoin isn't a good currency anymore and it's not a good store of value, then what is it?

I'd argue that it's not a good store of value. Arguably, it's one of the BEST stores of value, because your value goes up over time. Fiat currencies are inflationary, so they are definitely not a good store of value, wherein each year your ability to purchase X goods goes down, thus fiats have decreasing value. Gold could be said to have a more or less average store of value, as the old saying goes, "1 oz of gold purchased you a fine gentleman's suite 100 years ago, 500 years ago, as it does today".

The lower layer Bitcoin is not indeed a good currency (due to value fluctuation), but higher layers that allow for 'lightening' transactions with near zero transaction fees, may actually make better currency. Also people are working on 'stable coin' projects, which mimic the 0-2% inflation rate of fiat currencies - without a central bank... Enter "MakerDAO" (where DAO = Decentralized Autonomous Organization). In short, the stability of value like a fiat currency will exist as a second layer on top of a top 5 Crypto Currency, if you can wrap your head around that.

https://makerdao.com/
2min VIDEO - https://player.vimeo.com/video/225643431

Why Bitcoin is not a good currency in 1 graph:

Is Bitcoin just one interesting application of a promising technological tool? Or is it somehow integral to the development of all these other blockchain use cases?

Bitcoin is not an interesting application (singular). It offers a series of interesting applicationS. Yes, a technological set of toolboxes would be more correct.
It is only integral to the development of all the other blockchains in as much as a foundational concept in Science is integral to deriving/advancing other ideas. What I mean is other crypto currencies stand on their own, without any dependancy on Bitcoin; however, they all borrow some or all of its key concepts, and in some cases (i.e. Ethereum), they have significantly altered/evolved some of the concepts to offer even more use cases of blockchains.

[Adeptus]

Re: Blockchain update

If the only advantage Bitcoin has over other cryptocurrencies is the wider adoption as a first mover and that advantage is largely negated by its decreasing utility as a currency it seems like you may be right that it is doomed to extinction or at least irrelevance. Surely it can't survive forever purely on speculation.

I would mostly agree. At the moment Bitcoin has network effect AND name/brand recognition. "Ethereum" the brand is starting to be mentioned by Mainstream Media along with Bitcoin, so eventually it will also start getting some name recognition, but what about the 1000 other public blockchains? Or even the top 50 that arguably have some potential significant use case? There is some probability that some of these eventually will usurp Bitcoin, or at minimum detract from its current use-case values, as they present enhanced use cases. Bitcoin itself is not however remaining as-is, static. Bitcoin is evolving significantly, multi-layer solutions are coming, which will further re-define its capabilities. I am not actually a Bitcoin "Bulliever" in the sense that I think Bitcoin is plagued by a semi-toxic set of extremely intelligent core developers, and their approach of taking seemingly forever to improve various aspects of Bitcoin, or being hard headed about not altering others, will likely result in something else out there eventually taking the lead from Bitcoin. It is those platforms that I'm hedging my bets on, although Bitcoin may still have one or more parabolic waves of speculation left in it. But just look at Ethereum. It's up 4000% this year whilst Bitcoin is up "only" 1600%. So next year, you think Bitcoin will do another 1600%? What about some two bit $0.10-$5 coin out there with much superior capabilities than Bitcoin from the get go? You don't think those have a higher probability of doing 4000%+ like Ethereum?

[patrikkorda]

Re: Blockchain update

I'd argue that it's not a good store of value. Arguably, it's one of the BEST stores of value, because your value goes up over time.

With a price sample of ~7 years, we cannot say its value goes up over time. Moreover, the price peaked near $1,000 in December 2013 and did not recover back to $1,000 until earlier this year (that's 3/7 years with no new appreciation). Thus, even within this tiny sample we see years of falling prices.

I consider something that maintains its value over time to be a store of value, not something that goes up in value during most decades (like stocks - which have a price record of more than 7 years). A store of value is something that is stable - bitcoin is as volatile as it gets.

Fiat currencies are inflationary, so they are definitely not a good store of value, wherein each year your ability to purchase X goods goes down, thus fiats have decreasing value. Gold could be said to have a more or less average store of value, as the old saying goes, "1 oz of gold purchased you a fine gentleman's suite 100 years ago, 500 years ago, as it does today".

Gold fell both in real-terms and nominally between 1980 and 2001. In 2001, gold could hardly buy a fine suit. Like any other commodity, gold can be pretty volatile and rise/fall (in real-terms) for extended amounts of time.

The lower layer Bitcoin is not indeed a good currency (due to value fluctuation), but higher layers that allow for 'lightening' transactions with near zero transaction fees, may actually make better currency.

In theory, scaling bitcoin, reducing transaction times/fees, reducing energy consumption, etc., are all just a matter of updating the code. In practice, updates to a decentralized network that relies on consensus with tens of thousands of nodes are virtually impossible. It becomes one big paralyzed bureaucracy incapable of being nimble. It is much easier and much faster to simply start a new digital currency (e.g., Ethereum) or create a hard fork (Bitcoin Cash).

Bitcoin is anything but fungible. As bitcoin approached the 1MB blocksize limite earlier this year, the debate was about scalability (hence the massive rise in XRP & BCC). The next big discussion will be about fungibility.

[DSpencer]

Re: Blockchain update

Bitcoin is not an interesting application (singular). It offers a series of interesting applicationS. Yes, a technological set of toolboxes would be more correct.
It is only integral to the development of all the other blockchains in as much as a foundational concept in Science is integral to deriving/advancing other ideas. What I mean is other crypto currencies stand on their own, without any dependancy on Bitcoin; however, they all borrow some or all of its key concepts, and in some cases (i.e. Ethereum), they have significantly altered/evolved some of the concepts to offer even more use cases of blockchains.

Maybe I am underestimating the degree to which Bitcoin can/will change to fit different applications. It just seems like for many applications it will make much more sense to simply create a new blockchain. However, I don't have enough understanding to grasp how easily other applications can be layered onto Bitcoin and take advantage of its network.

I guess I am trying to grasp the connection between the general uses of blockchain and the cryptocurrency aspect. Is there some fundamental reason why blockchain cannot succeed as a technology while cryptocurrencies remain a novelty or narrow application?

[Adeptus]

Re: Blockchain update

Maybe I am underestimating the degree to which Bitcoin can/will change to fit different applications. It just seems like for many applications it will make much more sense to simply create a new blockchain. However, I don't have enough understanding to grasp how easily other applications can be layered onto Bitcoin and take advantage of its network.

So right now, it can make more sense to just create a new blockchain for your specific application use-case. The primary reason for this is because both Bitcoin and Ethereum are failry clogged and transaction times are taking far longer than the recent (advertised) average; however, this is a temporary issue (that could last for 1-2 years). Public blockchain scaling to allow for parallel transactions and thousands if not millions of transactions/sec down the road is a question of maturity, which takes time to get there.

But understand, the main reason people are creating alternative blockchains is to actually try different ideas upon the core concept. For example, Monero & Zcash allow for fully anonymous transactions. Tezos allows for on-chain governnance and formal verification for smart contracts (aka. smart contracts that won't die by accident due to bad coding). EOS is attempting to fix the scaling issue head on, by leveraging some past blockchain experiments and taking it to the next level, if successful we could end up with 100's of thousands of tx/s upwards of millions. Qtum is trying to anticipate the rise of quantum computers being able to attack X blockchains using Proof of Work (PoW) like Bitcoin. etc.

There's also far more blockchains just launching because there's millions of dollars available to be made, simply through copy/paste, changing a few parameters, and a lot of marketing. These are obvious scams, to just benefit the creators of said blockchains.

Bitcoin is at present a bad example to use as a blockchain that has many different applications layered on top, because it doesn't (yet). "RootStock" (2 min video) is an update recently added that starts to enable that, but the better example would be Ethereum, which has allowed for native smart contracts from its inception,although only in 2017 did they really take off by disrupting Sillicon Valley Venture Capital, with it's numerous ICOs (icoalert.com).

What's unique about Ethereum is that it is a 'turing complete' blockchain, which basically allows anyone to create any application on top of it. Think of it as Android OS. Alternatively, for every application you have to create a different blockchain, which means programmers have to spend a bunch of time dealing with lower layer concepts of blockchain like Operating System, rather than on just the application they want to program. In other words, think of these founding blockchains such as Bitcoin, Ethereum, Tezos and EOS as Decentralized Operating System platforms upon which application developers can just build their apps and have them automagically be decentralized. Of course which one you pick matters. So far, if you had picked Bitcoin, you would have been waiting for literally years for RootStock to be launched. If you picked Ethereum, your app would have exeprienced slowness a few times this past year as mega-ICO's launched and sucked up all the processing power for a day or so each. More recently (past week), Ethereum has become totally bogged down affecting all applications on top of it. Tezos and EOS haven't yet launched.

The TL;DR answer to your question is:
* Because by launching your app upon a stable, well establish blockchain, you can be more assured that your app will benefit from:
a) The network effect of the OS/blockchain you've launched on
b) The security of said blockchain (Bitcoin and Ethereum haven't been hacked in the past few years), so why take the risk and create and maintain your own blockchain, just to launch a simple app?
c) The skill level required to maintain a low layer blockchain like Bitcoin and Ethereum, is much different than the skillset required to build simple higher layer apps

I guess I am trying to grasp the connection between the general uses of blockchain and the cryptocurrency aspect. Is there some fundamental reason why blockchain cannot succeed as a technology while cryptocurrencies remain a novelty or narrow application?

To answer your question, we'd first have to understand what you mean by "blockchain". Public blockchains are meant to be used by completely strangers that can perform financial or other transactions with each other through a completely trusted, decentralized platform that can't be shut down.

Alternatively, 'Corda' is R3CEV's private blockchain which is the brainchild of about 40+ global banks.

It has:
* No consensus protocol (i.e. Proof of Work mining), which results in only a few /few dozen nodes participating - vs Bitcoin's 100,000+. So it's not nearly as decentralized.
* It is closed source, so nobody from the outside can review its code base, which makes it more susceptable to being hacked.
* It requires permission to participate in the network. Public blockchains require no permission
* Because it requires permission, it is not censorship resistant. At any point in time, whomever administers it, or some government regulator(s) could force changes on it or request it be shut down.
* Because it is closed source, more people can't try different ideas with it to improve it, so the speed at which it evolves may be limited.
* Because it is designed with specific use cases in mind (i.e. Banking), it will likely be unable to execute a wide range of possibilities already possible on more public blockchains.
* Since only X participants can use it, it is not Boarderless and some countries may be outright unable to use it (i.e. Russia recently threatened to be banned from SWIFT wired transfers, likewise Iran and North Korea).
* Since it only allows X participants, it requires ID, so fully private transactions are in fact impossible.
etc

Despite all these short comings, it is called a "blockchain". In reality, it is vastly different than Bitcoin. The better analogy would probably be a multi-clustered Database managed by different *cough* trusted parties; but DataBase is an old word and it doesn't sell tickets, "blockchains" on the other hand is the hot buzz word right now, and their value goes up every other day ;-)

Have a listen to this VIDEO - BLOCKCHAINS vs BULLSHIT: skip to 7:35 to start

Private Blockchains, WILL succeed without needing to function as a currency as well. Here's an example of IBM's HyperLedger partnering with Walmart to improve end to end logistics of the food industry. The tokens of this particular private blockchain have no monetary value

The reason most public blockchains have monetary value, is because it is an easy way to pay its developers/founders to continue to develop X blockchain, and also a good method to attract people to buy and use its blockchain. People may initially buy its tokens as a form of investment, but down the road, they may actually use it for the functions it provides.

[Adeptus]

Re: Blockchain update

patrikkorda - I agree with every one of your statements. Thanks for chiming in. I stand corrected! ;-)

Also, I recall you went into ALT coins before I went in, so I hope that has treated you well, although I entirely disagree with you on XRP being a good coin, despite it going up 5000% in the past 1.5 years... but that's a whole other debate