> Its a pity that a decade and more of hypeactivity, speculation and noise in cryptofinance will not leave much to show for it but the smoldering ruins of bizzare house-of-cards.
Weirdly, there's still plenty of speculation in this space, and still plenty of people getting rich off of it. Look at the price of bitcoin for example, it's rebounded substantially since the FTX collapse. People have become millionaires from this nonsense and a great many people seem to feel like there's still a lot of value.
I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?
> it's rebounded substantially since the FTX collapse
Who cares about the price? Seriously. Its not that important.
What are the systems in place to prevent another FTX-like collapse in the bitcoin space? Answer: None. In fact, Tether remains a fully unaudited, potential house-of-cards, situation.
People aren't worried about the price going up or down. Its really not that important. People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
It has become abundantly clear that not only is cryptocoin vulnerable to incredible collapses of financial services... but the cryptocoin community is wholly uninterested in solving that problem. Mt. Gox collapsed. Celsius collapsed. Voyager collapsed. FTX collapsed. Each situation, individuals lost anywhere from thousands, to millions, of dollars in one fell swoop.
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Meanwhile, every SIVB and First Republic Bank customer has been made whole. Yes, the banks collapsed, but no one actually lost any money over it. In fact, the mainstream banking collapses occurred over the weekend (when the banks were closed anyway), and everything was fixed by Monday Morning.
I'm not necessarily saying that an "FDIC-of-cryptocoins" needs to be setup. But the cryptocoin community needs to come together and figure this crap out... how to provide assurances to the public that these systems are safe and worth using.
>but the cryptocoin community is wholly uninterested in solving that problem.
Because it isn't a problem to them. By and large, the people running sketchy "exchanges" and crypto companies make shitloads of money even as their "business" fails. SBF only went to jail because he is a sociopath that's never been punished in his life, and thinks he can do no wrong.
> People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
I read this somewhere and it rings true - centralized exchanges are like public toilets. Try to avoid them as much as possible. If you have to use them, get in, do your job quickly and get out. Use such exchanges only to buy Bitcoin with your fiat and then move that bitcoin to your own wallet. In a lot of countries, it is much easier to maintain your own wallet compared to preserving your wealth via other means. I have compiled some real world examples here: https://news.ycombinator.com/item?id=32406095
> Yes, the banks collapsed, but no one actually lost any money over it.
If everyone lived in the US / Canada / Western Europe, maybe. What about people in Venezuela, Russia, Turkey, Iran, China or Sri Lanka. From the article I shared above: "Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
I sometimes feel the visceral reactions to Bitcoin are mainly from people who have experienced only great governance. They simply fail to see that Bitcoin[1] is a lifeline for a lot of people trapped in shitty places.
[1] and every diehard Bitcoiner will agree with you: don't buy shitcoins. not your keys, not your coins. centralized systems should be avoided or else minimally used.
And when BTC Transaction fees climb to $30, like they did a couple of weeks ago, then what? We just stop transacting?
Centralized exchanges are a natural result of the absurd transaction fees that the BTC community refuses to fix. If it costs $30 to make a transaction, it makes more sense to centralize and perform off-chain transfers of BTC.
Even today, where the BTC Transaction fee has dropped to "only" $3.60 / transaction, many natural uses of BTC are simply priced out. At least... using a hardware wallet is priced out. A centralized exchange which performs off-chain transactions doesn't have to pay of course.
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The price of Magic the Gathering Black Lotus just keeps rising higher and higher as well. But no one actually plays with the card in practice. Similarly, since BTC transaction fees are denominated in... BTC... the higher the BTC price, the higher the transaction fee, and the less likely everyone is to use the base system.
Seems like lose-lose over the long term. The only ones who want to buy BTC are speculators. Everyone who wants to "use" it for transactions is priced out, or rug pulled.
It doesn't have to be like this by the way. But its like this because the community doesn't care.
> Price (in the long run) is all that matters.
The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
As far as currencies go, I think people care about the number of transactions. How much trade occurs with the currency? There's also a desire to keep prices consistent, rather than going up or down over time (too much inflation, and too much deflation, is both bad. A balance of keeping prices steady is best).
With regards to the Stock Market, companies mostly care about IPOs and SPOs, how many $Billions they can raise by selling stock. Trade volume is kind of a side-show, and even price is a side-show and easily manipulated (see BRK.A shares, which are overpriced on purpose... by having fewer shares control a larger % of the company)
> And when BTC Transaction fees climb to $30, like they did a couple of weeks ago, then what? We just stop transacting?
If it is akin to one-time transaction of buying gold as a safe asset, then people gladly pay 30$. Even in poor countries. If you want to use BTC to buy coffee, then 30$ transaction fee is a hassle. But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
> The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
Sure and it has been in that range for the last 30 years. It has held its value which actually proves my point that Yen is backed by some good governance and hence Japanese citizens may not actually need BTC. Now look at Zimbabwe where government printed 100Trillion bank bills and the currency's value was destroyed in a few years. That is the target market for BTC.
> Now look at Zimbabwe where government printed 100Trillion bank bills and the currency's value was destroyed in a few years.
Why can't they use US Dollars or Japanese Yen instead?
And if they're a country like Argentina where they print a ton of money and then ban US Dollars/Japanese Yen (etc. etc.), what prevents them from banning BTC as a means to protect the local currency?
Either the country is working in the global economic system (and therefore has access to global currencies like USD / Yen / etc. etc.), or it isn't and its probably cut off (including from BTC).
> But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
At larger than $1000+ valued denominations, you've now got the problem of counterparty risk, because BTC organizations disappear every few months. Who and/or what are you buying in BTC, and why do you trust that the other guy is going to keep existing 6 months from now? Even large companies like FTX turn out to be shams and disappear overnight.
Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
On the other end, trying to use smaller denominations to experiment and grow the community... we have the random price of transactions (ex: $30) that prevents the use of cup-of-coffee-like transactions.
So BTC is dead on the small-end due to transaction fees. And its dead on the high-end due to unreliability of the community. What exactly should I use BTC for?
> Why can't they use US Dollars or Japanese Yen instead?
If you burnt by your own government, chances are you will not trust a foreign government either, especially the one which has a recurring record of bullying other countries and freezing dollar assets for foreign entities over geopolitical matters. There is a reason why Gold is so popular world over - people had shitty rulers for most of our history and they trusted no one, not even a benign ruler from some other country.
> its probably cut off (including from BTC).
You can't cut off BTC. That's the beauty - as long as you have internet, you can use BTC.
> Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
Strawman. I didn't propose that at all.
> And its dead on the high-end due to unreliability of the community.
No it's not. You can store your wealth in BTC and use it sparingly with trusted parties, just like people have done it with Gold for centuries.
> What exactly should I use BTC for?
Store of value. Just like Gold. Con: it doesn't have long history of Gold. Pro: it is much easier to transfer or take it with you (just 12 words) when you are fleeing.
I have never understood Bitcoin from a speculative investment perspective. I've always been a crypto doubter and often a cryto hater. And yet here I am still thinking to myself "If only I'd bought in at X price...."
Same reason as the last 5-6 crashes. People still believe in its potential or are using it to transact today. Bitcoin is not a "bizare house-of-cards" anymore than the web was after the dot-com bubble. All the failures you have heard of were fraudulent or badly run businesses that had very little to do with the actual protocol.
The web was immensely useful before, during, and after the dot-com bubble. Debate about its utility didn't last long because of how obviously useful the Internet was. Skeptics were proven wrong in a matter of weeks or months.
"Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
Indeed, the analogy is limited. I would agree that Bitcoin has limited utility today, compared to the early days of the web. But there was also no real competitor to the web and it was not threatening some of the most powerful entities on earth (e.g. the US government). I don't know how long it took for gold to become a form of money but I bet it was a lot more than 14 years.
Regardless, the point was not to compare the utility of Bitcoin to that of the web. It was to highlight that the prevalence of bad investments and fraudsters in a given technology sector is not necessarily linked with the merits or potential of the underlying technology.
Why are we comparing Bitcoin to the web? Bitcoin will never have as much utility as the web. I don't think anyone has ever expected such a thing to happen.
The utility of bitcoin is well defined in my eyes. It is a store of value that can be borrowed against. People will complain all day long on the day to day volatility, but that is irrelevant in the long term when you're using it for collateral.
> The utility of bitcoin is well defined in my eyes. It is a store of value that can be borrowed against. People will complain all day long on the day to day volatility, but that is irrelevant in the long term when you're using it for collateral.
The volatility is very relevant if you are using it as collateral because it increases the risk of margin calls.
I don't believe there is any way to borrow against bitcoin that isn't susceptible to some kind of margin call when the price of bitcoin drops.
Bitcoin when ~50% collateralized is pretty stable honestly. Sure, we see it go to $60k and then eventually down to where we are now at $27k... but we've been in this current range for months now. It also is only an issue in one direction if the item you're borrowing is USD (btc going up, doesn't hurt you). If you borrow something like ETH, they are so tightly correlated, that it is easier to maintain.
Any way... this is something that can be managed, while still giving BTC a lot of utility.
> I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?
Probably the same reason people throw money at casinos. Despite tales of people losing the shirts on their backs, there are also those that hit the jackpot. The biggest winners are of course the casinos who facilitate the transfer of wealth between the aforementioned groups while directly or indirectly taking a nice cut for themselves.
Weirdly, there's still plenty of speculation in this space, and still plenty of people getting rich off of it. Look at the price of bitcoin for example, it's rebounded substantially since the FTX collapse. People have become millionaires from this nonsense and a great many people seem to feel like there's still a lot of value.
I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?