Just to give someone who doesn't live in these markets some idea of how volatile they are
> Goldman Sachs Group Inc. demanded some clients set aside collateral equal to 100 percent of the value of their trades, people familiar with the investments said last week. The guidelines are inclusive of other margin requirements such as Options Clearing Corp.’s 44 percent, required to clear contracts traded at Cboe, and the 47 percent CME is demanding.
> Interactive Brokers Group Inc., which has said it handled 53 percent of the first day’s trading in Cboe’s bitcoin futures, will require a margin of 50 percent for long investments, and about 240 percent for short selling, based on current rates
For a more typical futures contract like say wheat, its common to have to put up 5 to 15% margin. SO there isn't alot of leverage that you can get from these, which is almost certainly a good thing:)
The odd part to me is that people forget how much you get for the measly 2% or so in fees you pay to a bank annually. You get FDIC insurance, protection against fraud, someone you can call for assistance, relative stability, ability to pay for things anywhere. With btc you get none of that, plus risk of losing your assets due to a user negligence, ignorance, hacks, sophisticated scams, or other culprits.
Ah, except that capital equipment in your business you pay 2% interest to finance? The manufacturer sold it at a cost + profit margin that included the 2% fee they're paying on their equipment, payroll bridge loans, etc. So did their suppliers, which factors into the costs paid further upstream and passed on down. There could be many, many layers from resource extraction (mining) to consumer goods, making a multiplying effect. And what is GDP? The aggregation of all these transactions.
So even if the bank only captured 2% from you, in aggregate the banking system sucks double-digit percentage of word GDP into their coffers for something that history has shown they don't actually do a good job of providing, in the absence of bail-outs.
(And, fwiw, I don't know where you're getting 2% interest. Any real industrial financing would be much higher, with larger compounding effects.)
You really get nothing because the 2% doesn't make up for inflation. Heh, in fact you are probably losing money keeping it in a FDIC insured savings or checking account that pays interest.
This is going to sound completely ridiculous but I'm going to posit this anyway.
Avoiding the debate of whether there are any widespread real-world usage for cryptocurrencies, is it possible that cryptocurrency is valuable (and has long-term staying power) simply because the ecosystem surrounding it is so much fun for a non-negligible swath of people?
I know this sounds ridiculous. But hear me out. The entire process of setting up exchange accounts, reading about alternative coins, jumping into the drama, worrying about massive gains or losses, buying hardware wallets, chatting with others doing the same thing, thinking about complex systems and new coins, etc. is a lot of fun.
Could it be that cryptocurrencies are somewhat of a 'simulation currency trading market' that just so happens to allow you to cash in and cash out with fiat currency?
I have little doubt that the current value of BTC and other coins will blow up in the future, and if you've got anything more than disposable income invested in it, you'll probably get burnt really bad. I think it's almost a given. But I suspect that the idea of cryptocurrency is here to stay, at least for my lifetime. Solely because it's fun. But of course like anything, I could be wrong.
I'm interested in collecting strategies for destroying bitcoin. Would anyone like to brainstorm?
If the resources of all governments combined were brought to bear on the problem of demolishing BTC, what would be a way to accomplish that?
Making it illegal won't work. Neither will buying it – that will just raise the price. 51% attacks aren't effective because all they can do is double-spend coins, not arbitrarily reassign wealth.
It's virtually indestructible. But global prohibition would limit its utility and likely cascade to diminished investment in mining.
But it will likely never go away until/unless you could find an unfixable flaw. For example, a flaw in the hashing algorithm that permits you to double-spend. Unfortunately there's effectively an enormous bounty on that particular defect that no one has yet claimed. If someone did, another coin with another hashing algorithm would take bitcoin's place.
More importantly -- what is your motivation? Let's please enumerate the evils going on in the world and rank bitcoin appropriately. It's not worth your time.
If you are really in a huff over the energy consumption I think your consternation is poorly focused. Again, let's rank our concerns here. In any case, the best way to "destroy" proof-of-work coins is to invest and promote coins that are similarly effective without proof-of-work. e.g. proof-of-stake coins like Raiblocks.
Slowly infiltrate the development team and sabotage the progress from within. Utilize divide and conquer and fracture the community by controlling social media with strong censorship and an army of trolls. Sabotage the development by inserting poison pills, stalling any progress and develop vaporware.
* Crack ECDSA and forge transactions (slowly/slyly enough to make a hard fork fix infeasible)
* Create exchange(s), get users, then implode them ("oops, bad code / we got hacked") (bonus: free $ for black ops)
* Create competing coins, either crappy ones just to suck away mindshare or legit one(s) backed by the gov't that grants some stability through gov't capability. Or heck just designed well enough that people want to actually use it for spending.
Or just go the more traditional / direct route and create regulations or make it outright illegal, and shut down exchanges and throw people in jail (probably the most effective)
There is a substantial demand for money laundering and purchasing things like drugs that traditional payment processors will not allow. Bitcoin works for this now. Another crypto currency could replace bitcoin, and destroy the value. If the value goes down enough, miners will switch currencies and this could leave bitcoin as unusuable with a frisbee on roof attack. To destroy crypto currencies in general you would need to solve the underlying issues and reduce demand or block money laundering and payments for illegal goods.
Making it illegal would have a huge impact on mainstream uptake. If it were made illegal across the US and Canada, Europe and SE Asia, that could effectively kill it for most people.
Has anyone found a place where detailed arguments for bitcoin (pros and cons) are laid out? Forums seem to be meme-based (e.g. "HODL") and/or superficial.
From my understanding, the main benefit is zero trust transactions. You can make a digital transaction without trusting anyone, especially the other party.
The downside is this guarantee has some trade-offs. Mainly transaction speed is super slow (10m to confirm a transaction went through) and transaction fees are very high (especially now with the "bubble", it's something above 10$/transaction). Furthermore, all transactions are public record, which isn't desirable if you're a fan of privacy. The value is very volotile right now, making it hard to really budget out your net worth.
IMO, if you can just trust a third party (eg, credit card processing), then you get much better guarantees. (Fast payment, relative privacy, low transaction fees), with the further benefit of chargebacks. If someone steals money from your Bitcoin wallet, you're screwed, with a credit card you phone them up and they undo it.
Actually, even with Bitcoin you need to trust a third party: the exchange. Many people hold their money in the exchange, and there have been multiple cases where they've lost a bunch of user's money. IMO a real bank or credit card processor is more trust worthy than a crypto exchange.
That's all to say that currently crypto makes no sense for real transactions. That's not to say the issues are unfixable, for example Monero provides privacy guarantees.
As well, other uses may be valid, the main case is "a hold of value", like gold. IMO, crypto has no intrinsic value (not even decorative like gold) and is very volotile, so it's up to you to decide whether it's going to last.
Lastly, there are novelty uses like ethereum's trusted computation platform. That's a complicated topic in itself but pretty much each of these uses has a counterpart with much better guarantees if you can use a trusted third party.
Curate a list of people in the space to follow, whether on Twitter, Reddit, or elsewhere.
For example, Vitalik Buterin (Ethereum's creator), is always thoughtful, wary of the bubble hype, and posts interesting technical items on his blog, Twitter, and on Reddit. He obviously focuses on Ethereum, not Bitcoin, but some of his insights on blockchain are generally applicable.
The arguments for digital cash have been laid out since the cypherpunk days of the early '90s. Go read True Names: and the Opening of the Cyberspace Frontier for the philosophical underpinnings.
This will sound absurd, but https://www.reddit.com/r/Buttcoin/ is the best place I've found for rational and serious discussion of bitcoin (and yes the occasional butt joke).
Try posting a serious question there and see what happens!
pros: decentralized, judgement resistant store of value
cons: unconnected to any economic fundamentals, therefore without any analytical way to determine price.
One of the big ones driving the value (AFAICT) is that it's a way to get your money out of a government-controlled bank account. Not too useful in the US, but very useful when you have high inflation risk or tight controls on how much money you can take out of the country.
I put here two of my favorite youtubers on crypto; they post almost daily. They are positive about the space, but also throw so-often-missed caution, plus thoughtful technical details and repercussions of the various cryptotokens.
People discussing Bitcoin's cons are typically downvoted away by the same people yelling "HODL" and spewing various unhinged, delusional predictions about how a single Bitcoin will eventually be worth more than the US GDP. Because there are so many greater fools buying at ATH then trying to create more of themselves to avoid being the last one off the bus, it's pretty difficult to find an internet forum where it's possible to have an honest discussion of Bitcoin's pros/cons.
Honestly, no, I haven’t. But, in my opinion, the pros and cons of Bitcoin are similar to the pros and cons of any decentralized system:
Pros: as long as you are able to keep your private key a secret, no one can take your bitcoins from you; doesn’t require trust in party knowing what it’s doing
Cons: no one there to bail you out; poor throughput (currently around 10 transactions per second)
Most other pros/cons I can come up with depend on ones convictions regarding economic theory, so I only included the objectively true ones.
BitMEX Research continues to do very smart and sophisticated observations in the crypto space.
Regarding your question you might want to have a look at
this specific blog entry
https://blog.bitmex.com/value_proposition/
About 10 seconds of searching w/ your favourite search engine would reveal the Bitcoin wiki, which has this nice document: https://en.bitcoin.it/wiki/Myths
I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme. Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase? At some point, the price of Bitcoin will level off, investors will exit, and then the price will fall, quickly and steeply.
I read someone else who wrote about this before. One question I have is why you think that specifically about Bitcoin and not about other things like gold or stocks?
People who purchase stocks early do so expecting the price to rise when more people buy in later for higher prices. Same thing with gold. People say stocks have value because they provide dividends, but when was the last time anyone made significant income due to dividends? I think most companies do not even pay dividends.
If Bitcoin was actually a pyramid scheme then the early investors would be eager to cash out at the expense of everyone else, but many people involved in Bitcoin truly believe in the technology and the idea of a global currency that exists outside of government/bank control. Those people are not eager to part with their Bitcoins, and I don’t know why that would change all of a sudden.
> I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme.
A pyramid scheme requires unsustainable exponential growth in number of new participants. Bitcoin can survive without that, so it's not a pyramid scheme.
> Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase?
Investment being motivated by expectation of future price increases is not enough to make something a pyramid scheme. I mean, that's what motivated most investment in anything.
Except that pyramid schemes are usually designed from the start as such.
Bitcoin wasn't: it was designed in good faith as a cryptocurrency. That people ended up using it as a speculative device says more about these people than the actual technology.
Also pyramid schemes are usually run by few people that cash out when it is no longer sustainable. Once it is so, it's over, as it usually the scheme gets exposed and owners lose all credibility. Bitcoin on the other hand went already through several "crises", and came out even stronger.
Also, in the case of Bitcoins, as more people buy them, and original owners cash out, the amount of actual owners dilute, so that the possibility of a few people dictating huge movements in price lessens over time.
Calling it a pyramid scheme it is an oversimplification, although on the surface it shares many traits with them: I don't think many people can predict how it will turn out.
One question these smooth debut articles don't answer is - How easy it is to short bitcoin futures on these markets? Without an effective way to short, this is still unproven.
Wow, the downvotes. it seems the fanboys don't really want to hear the truth. So long it is an echo chamber, on with the ponzi scheme.
You can short right now but there are heavy margin requirements. But you are absolutely correct that being able to short is critical here. BTC futures are cash settled, which relies on market forces to keep the future market tied to the underlying asset. However it seems to be OK so far bc CME futures are at 18960 and gemini spot is at 18500. We saw 15% spreads when CBOE launched last week so this is a good sign.
My best guess is that this is great for everyone involved. Traders and investors can hedge future risk, brokers and exchanges can rack up fees, and institutional banks can hold the futures contract of an unregulated asset on their balance sheet. Eventually something will have to give, but for now I don't see any negatives here.
What makes that quote entirely meaningless, is that it doesn't in any way define the potential of the non-infinite growth. If humans can manage 2-3% global economic expansion per year vs sub 1% population expansion for the next several hundred years, growth might as well be infinite for our purposes. There's no reason to think that very modest outcome can't be accomplished given our demonstrated ability to make great technological leaps over time.
Humans can also increase the resource potential of the planet through engineering, which has already begun in a massive way with eg agriculture and will dramatically accelerate with robotics, AI, CRISPR, etc. It also ignores the ability to harvest the solar system and pull greater resources toward earth, which we will do in the coming centuries.
There's nobody of any credibility seriously proposing infinite growth, it's an invented strawman to easily knock down by Attenborough, for ideological purposes.
Stop trying to understand bitcoin, you privileged, elitists hacker news folk won't ever understand it how is to deal with a hostile corrupt government that through banks/inflation just robs you.
[+] [-] chollida1|8 years ago|reply
> Goldman Sachs Group Inc. demanded some clients set aside collateral equal to 100 percent of the value of their trades, people familiar with the investments said last week. The guidelines are inclusive of other margin requirements such as Options Clearing Corp.’s 44 percent, required to clear contracts traded at Cboe, and the 47 percent CME is demanding.
> Interactive Brokers Group Inc., which has said it handled 53 percent of the first day’s trading in Cboe’s bitcoin futures, will require a margin of 50 percent for long investments, and about 240 percent for short selling, based on current rates
For a more typical futures contract like say wheat, its common to have to put up 5 to 15% margin. SO there isn't alot of leverage that you can get from these, which is almost certainly a good thing:)
[+] [-] samnwa|8 years ago|reply
[+] [-] garmaine|8 years ago|reply
So even if the bank only captured 2% from you, in aggregate the banking system sucks double-digit percentage of word GDP into their coffers for something that history has shown they don't actually do a good job of providing, in the absence of bail-outs.
(And, fwiw, I don't know where you're getting 2% interest. Any real industrial financing would be much higher, with larger compounding effects.)
[+] [-] electic|8 years ago|reply
[+] [-] PunchTornado|8 years ago|reply
[+] [-] xiphias|8 years ago|reply
[deleted]
[+] [-] dmichulke|8 years ago|reply
For some people that amounts to fraud.
[+] [-] wakkaflokka|8 years ago|reply
Avoiding the debate of whether there are any widespread real-world usage for cryptocurrencies, is it possible that cryptocurrency is valuable (and has long-term staying power) simply because the ecosystem surrounding it is so much fun for a non-negligible swath of people?
I know this sounds ridiculous. But hear me out. The entire process of setting up exchange accounts, reading about alternative coins, jumping into the drama, worrying about massive gains or losses, buying hardware wallets, chatting with others doing the same thing, thinking about complex systems and new coins, etc. is a lot of fun.
Could it be that cryptocurrencies are somewhat of a 'simulation currency trading market' that just so happens to allow you to cash in and cash out with fiat currency?
I have little doubt that the current value of BTC and other coins will blow up in the future, and if you've got anything more than disposable income invested in it, you'll probably get burnt really bad. I think it's almost a given. But I suspect that the idea of cryptocurrency is here to stay, at least for my lifetime. Solely because it's fun. But of course like anything, I could be wrong.
[+] [-] sillysaurus3|8 years ago|reply
If the resources of all governments combined were brought to bear on the problem of demolishing BTC, what would be a way to accomplish that?
Making it illegal won't work. Neither will buying it – that will just raise the price. 51% attacks aren't effective because all they can do is double-spend coins, not arbitrarily reassign wealth.
[+] [-] wyldfire|8 years ago|reply
But it will likely never go away until/unless you could find an unfixable flaw. For example, a flaw in the hashing algorithm that permits you to double-spend. Unfortunately there's effectively an enormous bounty on that particular defect that no one has yet claimed. If someone did, another coin with another hashing algorithm would take bitcoin's place.
More importantly -- what is your motivation? Let's please enumerate the evils going on in the world and rank bitcoin appropriately. It's not worth your time.
If you are really in a huff over the energy consumption I think your consternation is poorly focused. Again, let's rank our concerns here. In any case, the best way to "destroy" proof-of-work coins is to invest and promote coins that are similarly effective without proof-of-work. e.g. proof-of-stake coins like Raiblocks.
[+] [-] lawn|8 years ago|reply
[+] [-] ad_hominem|8 years ago|reply
* Create exchange(s), get users, then implode them ("oops, bad code / we got hacked") (bonus: free $ for black ops)
* Create competing coins, either crappy ones just to suck away mindshare or legit one(s) backed by the gov't that grants some stability through gov't capability. Or heck just designed well enough that people want to actually use it for spending.
Or just go the more traditional / direct route and create regulations or make it outright illegal, and shut down exchanges and throw people in jail (probably the most effective)
[+] [-] CoryG89|8 years ago|reply
[+] [-] raducu|8 years ago|reply
[+] [-] mancerayder|8 years ago|reply
This is my best guess, and I'm legitimately curious if it's a believable threat.
[+] [-] gnopgnip|8 years ago|reply
[+] [-] Nursie|8 years ago|reply
[+] [-] makomk|8 years ago|reply
[+] [-] runeks|8 years ago|reply
The only problem Bitcoin solves is double spending. Without this ability it’s worthless.
[+] [-] dokein|8 years ago|reply
[+] [-] bsurmanski|8 years ago|reply
The downside is this guarantee has some trade-offs. Mainly transaction speed is super slow (10m to confirm a transaction went through) and transaction fees are very high (especially now with the "bubble", it's something above 10$/transaction). Furthermore, all transactions are public record, which isn't desirable if you're a fan of privacy. The value is very volotile right now, making it hard to really budget out your net worth.
IMO, if you can just trust a third party (eg, credit card processing), then you get much better guarantees. (Fast payment, relative privacy, low transaction fees), with the further benefit of chargebacks. If someone steals money from your Bitcoin wallet, you're screwed, with a credit card you phone them up and they undo it.
Actually, even with Bitcoin you need to trust a third party: the exchange. Many people hold their money in the exchange, and there have been multiple cases where they've lost a bunch of user's money. IMO a real bank or credit card processor is more trust worthy than a crypto exchange.
That's all to say that currently crypto makes no sense for real transactions. That's not to say the issues are unfixable, for example Monero provides privacy guarantees.
As well, other uses may be valid, the main case is "a hold of value", like gold. IMO, crypto has no intrinsic value (not even decorative like gold) and is very volotile, so it's up to you to decide whether it's going to last.
Lastly, there are novelty uses like ethereum's trusted computation platform. That's a complicated topic in itself but pretty much each of these uses has a counterpart with much better guarantees if you can use a trusted third party.
[+] [-] berberous|8 years ago|reply
For example, Vitalik Buterin (Ethereum's creator), is always thoughtful, wary of the bubble hype, and posts interesting technical items on his blog, Twitter, and on Reddit. He obviously focuses on Ethereum, not Bitcoin, but some of his insights on blockchain are generally applicable.
[+] [-] clarkmoody|8 years ago|reply
The arguments for digital cash have been laid out since the cypherpunk days of the early '90s. Go read True Names: and the Opening of the Cyberspace Frontier for the philosophical underpinnings.
[+] [-] briatx|8 years ago|reply
Try posting a serious question there and see what happens!
[+] [-] vasilipupkin|8 years ago|reply
pros: decentralized, judgement resistant store of value cons: unconnected to any economic fundamentals, therefore without any analytical way to determine price.
[+] [-] randomThoughts9|8 years ago|reply
https://think.ing.com/uploads/reports/171218_Why_Bitcoin_to_...
[+] [-] lallysingh|8 years ago|reply
[+] [-] juanmirocks|8 years ago|reply
2. Crypto Investor: https://www.youtube.com/channel/UCTKyJALgd09WxZBuWVbZzXQ 1. DataDash: https://www.youtube.com/channel/UCCatR7nWbYrkVXdxXb4cGXw
[+] [-] 659087|8 years ago|reply
[+] [-] runeks|8 years ago|reply
Pros: as long as you are able to keep your private key a secret, no one can take your bitcoins from you; doesn’t require trust in party knowing what it’s doing
Cons: no one there to bail you out; poor throughput (currently around 10 transactions per second)
Most other pros/cons I can come up with depend on ones convictions regarding economic theory, so I only included the objectively true ones.
[+] [-] lug0r|8 years ago|reply
[+] [-] jacobr|8 years ago|reply
[+] [-] Obi_Juan_Kenobi|8 years ago|reply
https://bitcoin.org/bitcoin.pdf
It's not a pro or con article, but it's the most cogent description of Bitcoin you'll find.
[+] [-] PKop|8 years ago|reply
http://nakamotoinstitute.org/mempool/
Some highlights:
The Bitcoin Central Bank's Perfect Monetary Policy
Hyperbitcoinization
Speculative Attack
[+] [-] cup-of-tea|8 years ago|reply
[+] [-] uncoder0|8 years ago|reply
[+] [-] brndnmtthws|8 years ago|reply
[+] [-] JonnyNova|8 years ago|reply
https://www.yours.org/user/riversandmountains/
https://www.tradingview.com/u/RiversAndMountains/
https://twitter.com/upsupsanddowns
[+] [-] bayareabronco|8 years ago|reply
[+] [-] craigc|8 years ago|reply
People who purchase stocks early do so expecting the price to rise when more people buy in later for higher prices. Same thing with gold. People say stocks have value because they provide dividends, but when was the last time anyone made significant income due to dividends? I think most companies do not even pay dividends.
If Bitcoin was actually a pyramid scheme then the early investors would be eager to cash out at the expense of everyone else, but many people involved in Bitcoin truly believe in the technology and the idea of a global currency that exists outside of government/bank control. Those people are not eager to part with their Bitcoins, and I don’t know why that would change all of a sudden.
[+] [-] dragonwriter|8 years ago|reply
A pyramid scheme requires unsustainable exponential growth in number of new participants. Bitcoin can survive without that, so it's not a pyramid scheme.
> Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase?
Investment being motivated by expectation of future price increases is not enough to make something a pyramid scheme. I mean, that's what motivated most investment in anything.
[+] [-] Kurtz79|8 years ago|reply
Bitcoin wasn't: it was designed in good faith as a cryptocurrency. That people ended up using it as a speculative device says more about these people than the actual technology.
Also pyramid schemes are usually run by few people that cash out when it is no longer sustainable. Once it is so, it's over, as it usually the scheme gets exposed and owners lose all credibility. Bitcoin on the other hand went already through several "crises", and came out even stronger.
Also, in the case of Bitcoins, as more people buy them, and original owners cash out, the amount of actual owners dilute, so that the possibility of a few people dictating huge movements in price lessens over time.
Calling it a pyramid scheme it is an oversimplification, although on the surface it shares many traits with them: I don't think many people can predict how it will turn out.
[+] [-] solotronics|8 years ago|reply
[+] [-] thisisit|8 years ago|reply
Wow, the downvotes. it seems the fanboys don't really want to hear the truth. So long it is an echo chamber, on with the ponzi scheme.
[+] [-] detroitcoder|8 years ago|reply
[+] [-] sedtrader|8 years ago|reply
[+] [-] betolink|8 years ago|reply
Now we can add "bitcoin investors" to the list.
[+] [-] adventured|8 years ago|reply
Humans can also increase the resource potential of the planet through engineering, which has already begun in a massive way with eg agriculture and will dramatically accelerate with robotics, AI, CRISPR, etc. It also ignores the ability to harvest the solar system and pull greater resources toward earth, which we will do in the coming centuries.
There's nobody of any credibility seriously proposing infinite growth, it's an invented strawman to easily knock down by Attenborough, for ideological purposes.
[+] [-] Codestare|8 years ago|reply
[+] [-] down|8 years ago|reply