Table of Contents
- Craptocurrencies
- Ponzi Schemes
- Not a Currency
- Offending Transaction Fees
- Slow Transactions
- Privacy
- A very crappy Store of Value
- Average Joe can’t safely handle a decently sized amount of Cryptos
- Blockchain is Garbage
- A Glorified Linked List
- A Climate Threat
- A giant Memory Leak
- A Laughable TPS
- 51% Attack
- ChinaCoin
- Quantum Threat
- Evil Governments
- Conclusions
Hi Ripsters,
I didn’t plan to write about Crypto today. It’s not a topic that interests me much. But every other question I receive is about Cryptos and NFTs, and I think it might make sense to vomit my thoughts about this fantastic world that my boomer brain can’t fully grasp.
I sometimes question my possibilist approach to almost everything. I will find convincing reasons behind every side of each debate about any topic. I’m aware of the work required to have an opinion and I do my best to keep my opinions at bay when I haven’t done all “the work required”. The more I look for “the truth”, the more I discover that I know nothing.
John Snowcrates is my hero.
But on the crypto thing, truth is so clear to me that I need to pay respect to my biases. I’ve looked for other sides of reality, listened to respectable exponents of the crypto-enthusiasts crowd, and approached the global discussion with an open attitude.
The more I look around, the more I think I see it clearly: in their current form, cryptos are Ponzi schemes. And NFTs are Ponzi schemes squared.
I’ll be wrong ad history will laugh at me. I’ll be “wrong” for my entire life, like they tried to make Galileo Galilei wrong about which celestial body was dancing around which.
I’ll be wrong like heretics have been for the last 2000+ years – because false claims can be made true if a lot of people believe in them.
I’ll be wrong like I’d be wrong if Flat Earthers would overtake the world and outlaw even thinking about a non-flat Earth.
But deep down I hold this position (and my agnosticism, and my “non-flat-Earthism”) pretty strongly.
The hype around Crypto today is a global hallucinations, and the explosion in crypto market prices is the biggest bubble of all time.
Ok, let’s get started.
Craptocurrencies
Let’s focus on cryptos today.
I also want to talk about NFTs, but in a later episode of this series.
Ponzi Schemes
Nobody is “investing” in crypto because they think the value of their cryptos is going to be stable for the next 10 years. Nobody. If you know anyone, please let me know. No fucking body.
Everybody is “investing” in crypto because they want their money to 2-10x in the short term.
Everybody is just betting, looking for a greater fool.
Full stop.
Nobody signed a working contract with their compensation expressed in a crypto.
Wait, wait… before you scream, I know that there are two categories of people who do get paid in cryptos.
First fake group is populated by those who are working on yet another crypto startup and who are paid in their own shitcoin. This doesn’t demonstrate anything. it’s just betting that you’re going to be millionaire at the ICO or go broke. It’s like being paid 100% in stock while working in a startup. It’s betting in 10x or nothing. it’s another way (a crazy one) to look for a greater fool. And a good way for crypto startups CEOs to only pay their workers if they’d become billionaire themselves. Essentially a Ponzi Scheme definition.
Second fake group is populated by the crypto fanatics who work and interact with other crypto fanatics. I’ve seen a few guys claiming “to get their salary paid in crypto, and to pay their rent in crypto”. This usually means nothing more than having transactions in BTC or ETH but the reference value is good old Dollars, Euros, Swiss Francs or Zimbabwean Dollars. Which means they signed a work contract with amounts expressed in good old Benjamin Franklins, but on the pay day they get paid that amount converted in crapcoins. Then they can convert it on the spot back to real money or – again – look for a greater fool who’ll pay 10x their virtual amount in a month.
Nobody in the real world accept to sign a contract in BTC or ETH. it’s simply not a thing.
Italian average salary is 30k per year, nobody would sign a contract for 0.5 BTC per year. Either BTC will go to 1M and their employer will fire them to hire someone for 0.03 BTC/Year, or BTC goes to 10k or less and the employee will starve, quit, or ask for a raise in BTC – which means they’re essentially using EUR as the real contractual currency.
Btw, how to legally prove that the monthly salary has been paid? Who would you sue if you employer “forgot” to pay you a salary this month?
Not a Currency
Cryptos are not currencies. They lack everything that make a currency a currency.
Full stop.
Limited supply is bullshit. No monetary policy is possible with limited supply. No deficit spending. No credit.
And if you think that “this is a feature, not a bug” you should be kept very far from places of command.
If the world was using BTC as the global currency during the covid pandemic, today we’d be talking about the ongoing third world war. Governments being able to borrow money from the present to find a way to pay it back in the future is what brought food on the table of hundreds of millions of individuals everywhere in the world. Stimulus checks, unemployment benefits, money being printed, interest rates being low and controlled… without this we’d be locked in our bunkers with weapons and canned food today. So, fuck you BTC.
I’m not saying that monetary policies are necessary or good every time (and governments today are abusing a bit in my opinion), but with a real government owned currency they’re possible. Of course I fight for more responsible governments and central banks around the world, and I complain with the distortions they’re creating to the free market, but their eventual mistakes are several orders of magnitude better than what would have happened if we’d be all using cryptos today.
No credit, no debts. Have you contracted a debt in BTC recently? No? Guess what, nobody did. Nobody could. Nobody would!
First of all, good luck designing a smart contracts to enforce debt repayment (or good luck asking for justice in this field) without a collateral lockable in the blockchain.
Second, assuming you were able to contract a debt in BTC for your home purchase few years ago, now your debt is just 10x larger. Tomorrow it could become 100x smaller. or another 10x larger.
Cryptos are not currencies.
Offending Transaction Fees
Bitcoin transactions are “free”. You just broadcast your intention to transact on the BTC network and some gentle miner will grab your transaction and try to mine a packet including it.
You can say “thank you” to your kind miner and add a “tip” for the job of mining. The tip should be specified in the transaction itself.
So far so good. So Hippie. So anti-establishment. Right?
Wrong.
Tips are non-optional. You MUST tip your miner, else he’ll pick other transactions to maximize revenues. in fact nobody calls them “tips” anymore. It’s a fee.
There are fee calculators based on number of bytes that your transaction occupies in the block, and a market price of satoshis per byte.
Currently we’re above 100 satoshis per byte, for a transaction that you want to be confirmed within 6 blocks (1 hour). Given satoshi’s price and average transaction size in bytes, on average your BTC transaction will cost 20 USD today. No matter the amount of coins being moved.
Ethereum fees are similar.
Essentially we got rid of the “evil banks and credit cards”, but now we’re begging an oligarchy of Chinese miners to grab our transaction into their packet for a fee that’s an offense to human intelligence. How cool is that?
Mind that the fees are:
- Doomed to grow with crypto price growth. Same satoshis per byte, but if BTC reaches $1M a satoshi would cost 13 times more than today in USD.
- Doomed to grow with future halving events. Every ~4 years the reward of mining a new block halves. Energy costs ain’t going to get slashed. Miners gonna need food on their table. Fees must grow, else what am I mining for?
Good luck 😉
Slow Transactions
“Hey bro, I can’t wait for ever. There are customers waiting on the other tables.”
“Wait, wait, I guess we should be close… let me check on Blockchain Explorer…”
“Your coffee is getting cold… it’s almost 15 minutes, I’m going to kick you out if you…”
“No no no wait, I’m wiring you the money, trust me. It’s 5 CHF, do not worry, it’s coming… that fucking miner didn’t grab my transaction before but I’ve raised the tip to 15 CHF, it should be enough… OH NO, AGAIN?? How much do you want, 20? 25? I’m fucking trying to pay a coffee!!”
“Bro, get out of here”
“No, no please, can you wait another 10 or 20 minutes? I promise, this is the future!”
imagine the above scene at a bar.
Currently, BTC blockchain difficulty is set up to mine a block every 10 minutes. It means your transaction can’t be immediate. You need to wait at most 10 minutes if you’re lucky and your transaction is picked up next by a miner that’s going to win the lottery of infinite hashing.
And even if your transaction is included in the latest mined packet, mind that the world might require 2-3 more packets after yours in the chain to validate your transaction to avoid lucky (cr)hackers.
Not fun.
Privacy
“Hi Mr RIP, how can I help you? You should try the freshly baked wood oven bread! Also, taste these pastries 😉 ”
“Hi Gennaro, wow, your bakery is really amazing! I take this, this… and that. How much is it?”
“It’s just 125 satoshis (plus 10k satoshis transaction fee of course)”
“Excellent, 1% signal vs noise ratio, the miners in China are very generous today. Last month it was 0.5%!”
… 20 minutes later…
“Here we go! You should have received my satoshis!”
“Yes, received… hey RIP, congrats! I’ve seen you went to Gaetano’s bakery last week, why? Btw, congrats for the pay raise 🙂 ”
“Ehm… yes, thank you! About Gaetano… you recognized his address? Well, check his balance. He’s having financial problems and he’s low on satoshis as you can see. I wanted to help him. I’ve looked up your wallet and you’ve doubled it in 2035, last year.”
This is pretty awkward (says the guy who publishes his Net Worth on his blog), but BTC address, and their complete history of transactions and current balance are public.
Modern wallets bypass this by providing temporary addresses for each transaction. Harder and less convenient to do with paper wallets. And a death sentence to blockchain explosion in size.
I’m all in for transparency, but I’m not sure having it forced on everyone is a good idea 😀
A very crappy Store of Value
BTC is a crappy store of value, maybe only worth it for those who live in hyperinflationary economies.
If you were living in Venezuela during 2018-2019 you might have been better off relying on the “stability” of BTC than the local currency. Now that inflation is back to a “normal” 2000% per year, you might want to think twice before playing the crypto roulette.
Anyway, except for those who were living in Venezuela in 2018-2019, in Zimbabwe in 2008-2009, or in Germany during the Weimar Republic (and few other cases) you’re probably way better off storing your value somewhere else if you care about – like the words say – storing and preserving your purchasing power.
“What about Gold??”
That’s a fallacy.
First of all I don’t consider gold a store of value either. Just sayin’… I don’t have to defend Gold.
Second, Gold has some intrinsic value. A little, I know. But it’s still a thing we as a society value in terms of jewelry. We can wear Gold. We don’t wear hardware-wallet-necklaces.
Third, you can own Gold pepitas without having to rely on an intermediate network that could shut down their operations, or get hacked, or you get the password stolen or lost, or the company producing wallets shuts down, or you get cornered in the dark of a dead end with a gun pointing to your face and a gentle request to “wire” your satoshis to this guy.
Speaking of which…
Average Joe can’t safely handle a decently sized amount of Cryptos
A lot of kids are playing with hundreds of dollars worth of cryptos, and that makes a good paste time, I agree, a nice alternative to betting on sport games or playing the casino.
But what about holding 6, 7 or more digits amounts in cryptos?
Take a look at this amazing post on Swiss Mustachians Forums by user Dago about “Security tips on holding a large crypto position“.
just listing few threats:
- You lose your passwords. Like Stephan Thomas, who lost the password of his wallet holding 7k BTC ($400M).
- Your devices being hacked: mind that crypto transactions are not reversible. Banks or credit cards transactions offer infinite protections in comparison.
- Your devices being stolen. enough said.
- Paper Wallet stolen, lost, degraded. For hardcore paper walleters.
- Life threats. People recommends to use different addresses for each transactions, and cold storages usually work this way… how convenient! People also recommend to use a dedicated PC/Laptop to handle your cryptos, hardware always offline except when you need to trade, using a VPN to hide the IP address of your transactions, reducing the risk of being tracked down physically. How fucking convenient! I guess my father is eager to adopt this amazing technology!
- Explosion, earthquake, fire, tornado, flooding or other natural disasters happening to your home. There’s no bank with distributed datacenters holding your balance, sorry. Yes, you can hedge against it, like having a secondary wallet (paper or hardware) in a bank safe. How cool! Using banks to contribute to this revolution against the evil… banks!
- Phishing and Scamming. You sent some BTC for your purchases and nobody is shipping your product? Call your bank and block the… wait, which bank? But you can always sue… wait, who?
- Exchanges being hacked. Do you remember Mt Gox? I do! It was 2014… A lot of BTC have been stolen back then. Now things are way safer! Or… are they?
- Your fucking death. Are your survivors able to handle your wallet? Are you prepared to die tomorrow? Last time I checked, Mr. Death wasn’t required to call you the day before coming for a visit.
And luck loves to mix ingredients, like having your wallet on Quadriga exchange being lost because the CEO suddenly died in a mysterious way with his encrypted wallet and it turns out it was a giant Ponzi Scheme.
Is this a technology ready for mass adoption?
No, this is garbage!
Speaking of which…
Blockchain is Garbage
For those who don’t know, the blockchain is the core data structure behind today cryptos.
Here’s an amazing introductory video by Grant Sanderson at 3Blue1Brown:
The Bitcoin blockchain introduced by Satoshi Nakamoto in 2008 was not an original concept. it’s been theorized in 1982 by David Chaum, later expanded in 1991-1992 by Haber, Stornetta and Bayer. In 1998 Szabo worked on Bit Gold, the first decentralized currency.
It’s 40 years we’re playing with this glorified linked list and still it has no practical use cases.
Yes, the blockchain is a glorified linked list. It’s a very inefficient database. It’s a giant “memory leak”. Its large adoption is a climate threat. And it’s slow and expensive to use.
This is the definition of garbage.
A Glorified Linked List
Not much to add.
It’s just a distributed linked list, no rocket science.
Queries on such an inefficient data structures are expensive. You need to “integrate” the entire blockchain history to check if a trade is possible, i.e. if the source addresses of a transaction have enough funds.
Good luck handling that in 20 years.
A Climate Threat
To “remove the middleman” we decided that proof of work would be the “thing to trust” instead.
But proof of work is the largest dystopian enabler in current era. Forget about nationalism or alt-right, the least dystopic dystopian scenario I can see in the far future is a planet whose available energy gets depleted to calculate an insane amount of hashes with increasing difficulty. Good job humans!
Currently BTC mining energy consumption doubled in less than a year, and the entire mining network consumes more energy than Argentina (Population 45M). It was Switzerland (Population 8M) a couple of years ago, and it’s just a doubling away from entering the top 10:
Bitcoin average energy consumption per transaction is 6 orders of magnitude larger than 1 VISA transaction. Current estimates say that one Bitcoin transaction required the amount of electricity needed to power up 1.57 American households for a day (source).
This is a visual from Statista:
This is ridiculous, and mining this shit should be forbidden by the United Nations. Greenpeace activists should occupy mining farms instead of caring about irrelevant (in comparison) whales and oil spills.
Take a look at this nice article on TechCrunch about The debate about cryptocurrency and energy consumption.
“But RIP, Proof of Stake…”
… isn’t what 80%+ of Crypto Market Cap is currently based on!
Let alone the heavy criticism that PoS carries along.
Anyway, since Ethereum is planning to move to PoS soon-ish we’ll have more data do analyze.
A giant Memory Leak
The blockchain is jut a giant “memory leak”. Ok, not exactly “memory” but disk. But the meaning and the implications are similar. Blockchain is doomed to keep growing in size. And there’s no official “entity” who’s entitled to distribute “snapshots”.
There’s no monthly statement saying “this is your balance and transaction list. If you shut the fuck up, we’ll take it as an acknowledged response and get rid of your transaction history beyond the legally required minimum time frame of say 5 years”
Yeah, banks are evil, but banking and credit cards data don’t trace back transactions since the invention of banking.
This has huge implications.
First, as I said above, glorified linked list with “append only” behavior is domed to linear O(N) access complexity, where N is the number of blocks. Since the “difficulty”-picking algorithm keeps constantly spaced in time, e.g. a block every 10 minutes for BTC, N is also Time.
Second, the storage required to store the entire BTC Blockchain is growing more than linearly, and it surpassed 300 GB earlier this year (link):
Impossible to store on a smartphone, very expensive to store on a desktop/laptop.
You gotta trust snapshots, isn’t it fun? Blockchain is Trustless!1!
If you don’t wanna trust an entity who owns the ledger and “aggregate” the past, you’re doomed to keep growing, and track down every Satoshi movement since the beginning of time. Excellent! Very scalable!
Btw, Ethereum is another 200 GB, you better pick a single currency, your computer can’t handle holding multiple coins in a “really trustless” way. What? You buy BTC on Revolut off chain? LOL, you’re really on top of things 😀
Take a look at this IBM document: Storage Needs for Blockchain Technology.
A Laughable TPS
Let’s mass adopt Bitcoin for daily transactions! Yay!
Let’s check, how many transactions per second does the Visa network handle today?
It seems that they handle ~2000 Transactions per Second today, with a Peak capacity of 65k+, according to their 2018 factsheet.
What about the BTC blockchain? How many TPS?
Seven.
Wait, whaaaat?
Yes, 7 TPS. Not joking. I’ve bene working as a SRE on low level services at Google who handle 8-9 digits QPS. Digits QPS, not QPS. In the range of 100,000,000(s) QPS. And the future of currency is a piece of garbage that can’t handle a two digits amount of concurrent transactions? Are you kidding me? Italian National Pension System website – which is the Wikipedia definition of garbage software – crashes several times per month under “massive amount of 300 connections per second” and still it outperforms BTC by almost two orders of magnitude.
No way.
This is know as the Bitcoin Scalability problem:
And you better keep maximum number of concurrent transactions low or else… do you remember the storage problem above? Well, good luck with that in case BTC would allow 1000x more transactions per second, or 1MB blocks and same “a block every 10 minute” policy. The bugchain will grow by 1.5 GB per day or 0.5TB per year! You gotta rent a datacenter and call it your “wallet” 😀
“But there’s Bitcoin SV, which is a fork of Bitcoin Cash, which is a fork of Bitcoin that can handle up to 9000…”
And that’s another currency! It’s not your beloved BTC. And in fact, even if it’s a better version of your BTC, it’s trading at $200, not a $60k.
“Yeah, but it’s free money spawned from my existing BTC. I love forks!”
But it’s part of the same global hallucination, and it’s not going to last. You can’t keep creating “something” out of thin air for long.
It’s like if the Flat Earthers took over the world and then… puff, you now have a Flat Mars, a Flat Venus and so on. A forked lie doesn’t turn into a truth.
And btw, who the hell decides when to fork, or what changes to the protocols / software should be applied? I never fully accepted that. isn’t this shit supposed to be trustless? Who takes decisions? Are you really letting “entities” vote?
… speaking of which
51% Attack
As we’ve seen, blockchains are based on trustless consensus algorithms, the most famous being Proof of Work (PoW) and Proof of Stake (PoS).
Both suffer from majority attack risks, also known as 51% attack for PoW based Blockchains, or 34% attack for PoS based blockchains.
(Plus 200+ more vulnerabilities, according to Cloud Security Alliance)
It means that if 51% of computational power among the miners cooperate to append malicious packets your cryptos are screwed.
“Oh come on RIP! Do you have any idea of how huge is 50+% the mining power of the entire Bitcoin blockchain? It’s impossible to coordinate a 51% attack at this scale!”
去他妈的你自己
“What?”
ChinaCoin
Guess where the Bitcoin mining power is currently located:
Surprise! 😀
Yeah, two thirds of BTC mining power is in China!
Last time I checked China was not a democracy. Last time I checked the government was able to do the hell they wanted with internet stuff.
How safe you feel now against a 51% attack?
I don’t know you, but my idea of “getting rid of evil intermediary” didn’t involve me waiting for an hour for my transaction to be picked up by a miner whom I offered $20 for the service, and it didn’t involve me trusting a non-democratic nation to care for the ledger where my holdings are stored.
Quantum Threat
I’m not an expert on this field, so here my criticism is less strongly held. But I think it should be mentioned in the list of crypto-problems.
There are serious threats to cryptography and cryptocurrencies coming from advancements in Quantum Computing. This report by Deloitte says 25% of BTC are currently vulnerable to Quantum Attack.
Deloitte is not the only source I’ve found that worn us about the problem. Take this Crowdfund Insider article on the subject.
There are of course factions who claims that quantum threat is non-existent or not as impactful. For example, Roger Huang explains why in this article, even though he admits that “The real threat is when quantum computers become many scales larger than they currently are“.
Last two sources I’ve found interesting and worth mentioning are more equilibrate: this RSOS publication titled Committing to quantum resistance: a slow defence for Bitcoin against a fast quantum computing attack, and this article on Forbes titled The Bitcoin Boom And The Quantum Threat.
I couldn’t make my mind, I lack knowledge in the field of quantum computing, but I think it’s worth mentioning in this article.
Evil Governments
What about governments regulations?
So far so good. Mostly because no anti-crypto laws have been approved (yet) in the western world.
But no country loves to see citizen evading taxes with ease.
Because let’s be honest, if we start moving money this way, in a decentralized p2p uncontrollable way, how are government supposed to verify your income (and collect income tax)? By voluntary disclosure? 😀
This Wikipedia page tracks the legal status of bitcoin (and more) in each country. This page on Comply Advantage is more complete (and also tracks where cryptos are considered legal tender).
You might also be interested in this publication by 3 MIT professor in defense of Bitcoin Legitimization. Still not convincing enough, in my opinion. I’m too old for this level of hype on idealistic but unpractical ideas.
Conclusions
Unmotivated hype around literally nothing.
Dopamine driven prices, a global hallucination.
Current implementations of the most hyped coins are thrash. ETH is thrash. BTC is thrash. They’re both unusable for their original intents. Defi is imploding, PoW is exploding, fees are growing.
Your Privacy and safety are at risk.
Cryptos with a limited supply are “deflationary”, and no monetary policy can be adopted on a deflationary currency. If the world was using BTC during this pandemic we’d have blood on the street right now.
I LOVE having protections with banks and other circuits where payments are reversible, there’s a backup mechanism if I lose my passwords, and scams and frauds are partially reversible as well.
Nobody can point a gun and force me to give them my wallet. Well, technically they could, but my (physical) wallet is almost empty!
Cryptos are not usable by the masses in their current form. My father would never be able to use them. My wife neither. I’m not sure I could use them safely if all my wealth was in cryptos right now.
They’re tools for nerds and games for kids.
They might find a place in the real world in the future, but at the moment there’s a 100x speculation overpricing multiplier that is pure nonsense.
I know that I could and will be wrong!
But… a global hallucination could keep going forever. See Religions. imagine Flat Earthers convincing everyone what the earth is flat. A lie doesn’t become truth because everyone believes in it. Even (especially) if famous people keep pumping it.
[Begin of Mini Side Rant on Tesla]
One day someone will explain to me why the fuck this guy with this meme company that keeps raising capital in late 2020, asking money to shareholders while being the 6th largest company in US, has “invested” its first profits since years in BTC!
money that, btw, came from selling regulatory environmental credits (i.e. governments thanking you for using clean energy, taxpayers money), not from a sustainable business model.
It’s like if your old broke cousin who asks you money at every Christmas to bring food on the table for his 3 children one day gets a job in the “alcohol addiction prevention office”, and with his first paycheck instead of returning you some of the money he asked over the previous two decades, or just saving it, or even squandering it on random stuff… he buys 100 bottles of whiskey! And next time you meet him he will ask you money again “for the children”.
Please, come on…
[End of Mini Side Rant on Tesla]
Maybe a real, solid, new crypto will show up (or it is already here) and I can change my mind, but current mainstream cryptos are thrash.
Sorry.
Change my mind.
“Yeah, I know, BTC has some limitations… but you can’t dismiss the crypto world because of BTC limitations. I’m a fan of the technology… current implementations are just proof of concept, how can you not be excited about the potent…”
Oh come on, shut up! It’s BTC that’s trading at 60k per “coin”, isn’t it? BTC dominance is 60% according to coinmarketcap today! If you think BTC is just “a prototype” then let’s all give up on this bullshit, let this garbage go to zero and let’s design a real, useful, decentralized currency if we can find a valid idea – I doubt it, but I’m willing to listen.
Anyway, there are some good/promising aspects of Cryptos, even in BTC and ETH (in terms of ideas, not implementations), and I might want to publish a “Part 3 – The Good” one day. It’s not in my short & mid term plan though.
Have a great day!
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A great ant that nearly made my day 😀
(Slight uncomfortable feeling as I’m owning 1 ETH which I bought with Revolut)
By the way you are not a Boomer (kasasa.com):
“Baby boomers were born between 1946 and 1964. They’re currently between 57-75 years old / Gen X was born between 1965 and 1979/80 and is currently between 41-56 years old”
and with ant I mean rant..
Just buy a NFT with it 😀
I know, I’m a GenX, but I like to joke on me “being old” 🙂
Beautiful article. Do you have any blogs, podcasts, youtube channels, subreddits or groups to recommend to explore this topic further? I’m mostly interested in the technology side and a possible evolution of it. Thanks!
I don’t follow much the topic, so I don’t.
If you want to hear from a crypto enthusiast that I love check out what Naval Ravikant has to say on the matter.
Start from his latest Tim Ferriss podcast appearance: https://tim.blog/2020/10/14/naval/
Hi RIP, my feeling reading this article is that you had a bad mood reaction not against blockchain “per se”, but rather against the “blockchain hype”. As you know I’m not currently invested in blockchain (and sometimes my greedy part regrets it) but I think one should really separate the financial/hype aspect from the technical aspect – which, in my opinion, does enable useful applications.
From my experience, 99% of the “blockchain believers” are people trying to get rich from nothing, and 99% of the “blockchain haters” are people envious and regretful of not having believed in blockchain long ago. I do not consider you belonging to either of the two, and I am also not in either class.
I wish you asked me more about the quantum threat related to blockchain before writing this 😛
Plus, sorry, but I disagree with two points at least (I’ll read better later, I might find more 😛 )
1) Blockchain = Bitcoin. This is like saying that Internet = Darpanet. BTC is the “dinosaur of blockchains”. The fact that most of the money today is around BTC is totally irrelevant here. And you cannot demonize blockchain as a whole technology because of global warming – most blockchain applications today run on proof of stake protocols for example, but there is also active research on proof of work blockchains that tackle real-world computational problems rather than wasting power to crunch random numbers.
2) Bitcoin/Gold fallacy. I totally disagree on your second and third point.
This does not prove anything: wearing gold is only a show of status, and hence a social construct entirely consequence of scarcity. You can make a better point by mentioning that gold has useful chemical/industrial applications, but again, even a lame blockchain like BTC has applications – different ones but still useful. For example, I can certify that I created some data before a certain point in time (patents, last wills, committed secrets, sealed bets… applications are there), I can upload data that it is virtually impossible to take down (which has pros and cons admittedly), etc etc.
I’m not sure what you are referring to here. By “intermediate network” are you talking about the Bitcoin network or some exchange? You don’t need to use the latter, and I don’t see how the former can “shut down” etc. Let’s not talk about the bad analogy with the armed guy forcing you to reveal your password but being unable to force you to hand over your pepita 😉
Long story short, we discussed this already: I stand by my opinion that Bitcoin is like gold – and not like cash, as you also point out. But blockchain is more than bitcoin.
Now, to make you feel happier:
Is blockchain overhyped? Yes.
Is blockchain useful for application X? Very most absolutely likely not.
Are most people buying cryptocurrencies playing a Ponzi scheme? Yes.
Is BTC’s proof of work a waste of energy? Yes*
Is blockchain a bubble? Blockchain I’m not sure, cryptocurrencies probably yes.
Are there issues in the blockchain ecosystem right now? Yes, definitely.
But you cannot say that Machine Learning as a whole is shit because Watson failed to detect cancers.
there is conspiracy theories according to which BTC is an NSA operation to find collisions on SHA-2 but any cryptographer or security expert can tell you how BS this is.
Hy MR RIP
Refreshing to read about a very different opinion on this topic from an IT-expert.
In 2017 I was interested in bitcoin, but I thought the same as you. As a currency its inefficient, its slow, its to volatile and most important: I did not se the utility of it. So “what can you do with it?”. Since then, Bitcoin did not interest me at all. I thought all Cryptos are scams and ponzis.
But bitcoin did not die. It hit 20k in 2017/18 and fell back under 5k. 3 years later btc hits 60k. 12 Times higher than 1 year ago. Why? Why are Naval, Garyvee, Elon Musk so bullish on btc? Why are so many smart people into bitcoin? And I dont mean banks (they only want to sell, what is demanded). Why do they teach the monetary side of blockchain in the economic universities? Maybe its not all a scam.
I will never be able to understand the technical site of btc, but now, as BTC hit ATH, I started to dig deeper into the monetary side of btc and cryptocurrencies and I finally starting to see value in cryptos. And it fullfills the monetary characteristics of a currency. Above that, its more efficient, because its decentralized and there is no way to manipulate. you dont have to go as far as zimbabwe, or venezuela. Look at argentina, or look at turkey. The President ( I wont tipe his name) changed the chairman of the central bank, who raised intersts from 7% to 15%. The TRY felt extremely. After 1-2 years the president kicked the chairmen out. TRY felt once again.
I would agree with 80-90% of what you wrote. The biggest thing what changed my mind, was, to start seeing bitcoin as a digital value storage and not as a currency. like a digital gold. Well, you can be friend of gold or not, its the boomers store of value. So could btc be the digital store of value of the gen X.
I dont think like 90% of bitcoin fans, that the central banks will lead the world in hyperinflation. But I think btc and the actual monetary policy can coexist and complement each other.
The value of cryptos is the decentralized network and working as banks. You can borrow USD with leaving your cryptos as collateral and you can stake (works like a savings account). For the top 10 coins you get around 5-6% and for stable coins as USDT you get 10%. There is a lot of potential, which needed to be proven, but maybe with smart contracts lending and borrowing, online shopping will become more easy.
Today, in the early years, btc is very volatile. When (and if) it gets more accepted, volatility will decrease.
I also heard rumors, that visa is considering to integrate btc in their payments.
BTC Mining per se is not an issue. Its the energy source, which is the problem. China using coal, which is very bad for the pollution. THere is the case of Island, where BTC is mined with wind. You cant eliminate completely the pollution, that digital payments occur. Visa payments also use energy.
Conclusion:
I see potential and value in cryptos but they are not ready and got a lot to improve. Many smart people are convinced – and i dont mean crypto investors/sellers, who would supporting ponzi schemes. 80-90% of the coins today are scams. Like everywhere, where money is and where it is hard to distingush.
For me, the conclusion is to see bitcoin as a digital gold. With growing acceptance and fame among the new generation and its limited unit of 21 Mio. maybe its not a bad idea to consider holding a very little size (1%-5%) of your portfolio.
Bella analisi! Ci vuole coraggio a parlare contro qualcosa che è in crescita, si vendono più giornali (o like) promuovendo ciò che da sensazioni positive e prospettive oniriche di benessere e soluzione dei nostri problemi. Una verità che da disillusione non piace a nessuno, bisogna essere cattivi per dire che babbo natale (o un asset che cresce del 40000% in pochi anni) non esiste. Chi vuole investire in bitcoin lo faccia senza dare una spiegazione “razionale” alla sua scommessa (che non dico andrà male, per carità), non si approfitti del silenzio della ragione. Oggi ha scritto MrRip, appena il Bitcoin farà un tonfo serio parleranno molti molti altri…
io credo che non esista il concetto di “investire” in bitcoin, dbbiamo cambiare linguaggio. ci sono due cose che si possono fare con le crypto:
– “usare” le crypto.
– “speculare” sulle crypto.
investire no, non ha senso.
Infatti quello che non capiscono in molti che dicono di investire è falso: stanno speculando sulla scarsità di un asset al pari di quelli che comprano le bustine pokemon e le aprono tra 10 anni sperando di fare una fortuna paragonandole all’oro. Non è nemmeno trading, non c’è una strategia di uscita sui gains, sebbene molti utilizzino pac mensili di ingresso per abbassare il prezzo medio di carico. L’investimento si fa su qualcosa che produce un reddito o che si pensa lo produrrà aumentando il suo valore nel tempo. Btc è solo un oggetto vuoto manipolato da gente che sa di poter accumulare per mesi, creare fomo nei retails e poi shortargli in faccia con tonnellate di opzioni put e realizzi da capogiro.
You are making great points, Mr.Rip, but I respectfully think here your research could be better. I can rebuttal most of your points with two words: “Lightning Network”, and I think I can rebuttal the rest, but it will take many more words 🙂
Thanks Dimitry, I know I could have done a better “tech journalistic” post, but my knowledge in the field is limited. I’m trying to reason on first principle as always.
I guess your two words rebuttal can be rebutted with “off chain”.
There is “custodial off-chain” that you mention in regards with Revolut, which is a joke, I agree. But there is also “non-custodial off-chain”, which lightning network implements. And this is exactly the same decentralized and trustless Bitcoin, just wrapped in a smart contract that makes transactions almost instant, much more private and very-very cheap. Truly fascinating technology, one of the most magical things I’ve seen as a developer. It is like game theory and graph theory had a baby 🙂
“For Keynesian and Marxist economists, and other proponents of the state theory
of money, money is whatever the state says is money, and therefore it is the
prerogative of the state to do with it as it pleases, which is going to inevitably
mean printing it to spend on achieving state objectives. The aim of economic
research, then, is to decide how best to expand the money supply and to what
ends. But the fact that gold has been used as money for thousands of years, from
before nation states were ever invented, is itself enough refutation of this theory.
The fact that central banks still hold large amounts of gold reserves and are still
accumulating more of it testifies to gold’s enduring monetary nature, in spite of
no government mandating it. But whatever historical quibbles the proponents of
the state theory of money may have with these facts, their theory has been
obliterated before our very eyes over the last decade by the continued success
and growth of Bitcoin, which has achieved monetary status and gained value
exceeding that of most state-backed currencies, purely due to its reliable
salability in spite of no authority mandating its use as money.”
Dr. Saifedean Ammous
blah blah blah but it’s the state, not your anarcho-capitalist dystopia who prevented million of people killing each other for sudden loss of employment and lack of resources
You live in Switzerland, the capitalist and speculator country by definition, but think of those who live under a totalitarian regime or where there is hyperinflation. Then you would not say so much blah blah blah.
Even investing in stocks is speculating, you know? And don’t bring up that you do it to invest in the “real economy”.
Today the transfer of wealth through the change in purchasing power happens from the poor to the rich, so the rich get richer and richer. For the rich it is easy to buy assets, they have fresh money coming to them in quantity, it is not so for the poor or the losers, those at the base of the pyramid.
There is therefore a drain/theft of wealth that starts at the base of the pyramid and goes all the way to the top.
The printing of new money never has an even distribution but is always for the exclusive benefit of financial institutions. Of those at the top of the pyramid.
The losers are left with nothing but debts that increase and money that loses value over time. Fiat currencies are created out of nothing but debt.
Who is at the top is the creditor of the debt, who is at the bottom is the debtor.
The debtor is the slave of the creditor.
The private sector, businesses and citizens desperately need to reduce debt but new money only comes to those who need it the least. At most, a little comes to the flatterers of the rich, those who are the middle floor.
By the way, for Covid and various crises, the creation of new liquidity through this mechanism is happening in an increasingly massive way.
The FED in 5 months of Covid has printed more than in the decade after 2008.
Take care.
Il fatto che si possa speculare (ovvero approfittarsi e basta, senza scrupoli, di situazioni economicamente vantaggiose per un profitto individuale) sulle azioni non esclude che investire in capitale di proprietà/rischio non sia automaticamente speculazione. Può non piacere, ma la proprietà condivisa di mezzi di produzione è uno dei caratteri essenziali dell’economia dei capitali moderna. E’ anche un modo per avere un controllo decentrato (ove possibile) ed un profitto distribuito, questioni affatto anti-democratiche. Si può confutare l’intera economia capitalistica, ma considerando che anche il maggior paese comunista del mondo ha ormai abbracciato l’economia di mercato si diventa un pò un pesce fuor d’acqua. Per il resto la proprietà di azioni è anche l’essenza più pura di concetto di INVESTIMENTO, contrapposto alla mera speculazione. INVESTIRE è impiegare le proprie risorse in qualcosa di produttivo per condividerne i frutti, e nulla mi viene in mente di più appropriato delle azioni. Speculare è fare un’operazione in cerca di un mero, personale, vantaggio economico senza alcuno scrupolo di esternalità negative verso tutti gli altri. Solitamente l’Investimento è in concordanza d’interesse, la speculazione è più in conflitto d’interesse. Se acquisti un indice (Mr.Rip, ed anche io nel mio piccolissimo, usiamo molto gli ETF) non c’è nulla di più lontano dalla speculazione, soprattutto con un approccio di lungo termine: non stai neppure facendo neppure stock selection: distribuisci sull’intero mercato di riferimento l’investimento, è quanto di più equo, democratico possibile in senso capitalistico… forse sarebbe piaciuto anche a Marx, nell’impossibilità di perseguire le sue teorie sul plusvalore e la proprietà proletaria dei mezzi di produzione. Come Mr.Rip ricorda invece è difficile parlare di Investimento con una Crypto… magari c’è la volontà di investire (credendo a molti racconti sulla costruzione di una valuta universale ‘del popolo’, shared, nata dal basso, globalizzata e incontrollabile), ma di fatto si sta solo speculando: compri Bitcoin perché il Bitcoin ha fatto +40000%, non per condividere i frutti di un’attività umana.
Apart from the fact that investing in Bitcoin does not preclude investing in something else, as I also do from a lazy perspective, but true bitcoiners invest because they believe in the project, they believe in the failure of this system, they believe in democracy, efficiency, social equity.
Do you realize that the first translation of Keynes’ work was in German and the young Hitler liked it so much?
The richest periods of human history are those where sound money was used. See Ray Dalio’s paper.
But why do you like so much to rely on others, always go through an intermediary and never take responsibility for what you do and how you hold your wealth.
Bitcoin is a long road but it is progressing as planned.
Even visionaries like Elon Musk can’t open your eyes.
Even traditional finance – see Azimut – today announced its own coin project (quite different from Bitcoin’s purpose, let’s be clear).
The fax machine is no longer used for a long time, we have already switched to email 😉
Let’s keep up to date because revolutions like the Internet can’t be stopped by anyone.
Attenzione ai veri Bitcointer che non lo fanno per inseguire il sogno del +40000% ma perché condividono l’ideale un pò anarchico del valore senza intermediazione né legge (valore legale). Perché il loro successo non si poggia sulle spalle di giganti, bensì sulle spalle di tanti nanetti, con il nasino rivolto verso l’alto, che stanno guardando al Bitcoin esclusivamente per la sua impetuosa crescita. Immagino che rimarranno tutti dentro anche se il Bitcoin passasse da 60000 a 6 dollari, del resto l’ideale non ha prezzo. Io suggerisco di continuare a non vederlo come un investimento, ma più come una scommessa.
Hej Rip,
I’m a regular shadow reader of yours and been waiting for a similar article for a long time mainly as a reassurance, that I didn’t turn into “ultra-conservative” boring old guy from a passionate coder/researcher whatever in his 30s.
Most of your writings are spot on with my (well more limited)experience regarding corporate philosophy, hiring, stocks, etc.
Thanks again for the great material and reassurance, good to know I haven’t turned insane or if yes I’m not alone 😀
Good to know 🙂
But I don’t aim to create factions “pros” vs “cons”… I want to better understand what are those “good parts” of cryptos
Great article,
Here is an extensive analysis about BTC/Crypto from a financial Macro Analyst
https://www.linkedin.com/pulse/bitcoin-bubble-anti-bubble-diego-parrilla/
Thanks ATM, will take time to read it.
the analysis can make sense, but the fundamental point of view i believe is wrong. innovations are not easy to be perceived and accepted. and it’s not about replacement of FIAT…
I’m here to have my positions challenged, so any evidence is welcome
Ciao MrRip,
ti ho conosciuto da poco grazie al video di Marcello Ascani.
Sto leggendo tutti i tuoi articoli in ordine cronologico e wow complimenti.
Sei un esempio per me, perchè i nostri lavori e hobby sono simili, btw continua cosí!
Sono un bitcoin-entusiasta, di quelli che vanno ai meetup a Milano(quando si poteva) per intenderci.
A mio parere, su alcuni punti hai preso in pieno, su altri meno.
Su cosa sono d’accordo:
– centralizzazione del mining in Cina (anche se ci sono le pool in realtà) grande minaccia.
– grosso spreco di energia (anche se tanta energia che viene usata è rinnovabile) sono d’accordo.
– problema del debito/credito in un eventuale mondo con un bitcoin-standard ci sarebbe un grosso problema di accesso al credito (ma siamo realisti potrà mai esserci un bitcoin-standard?)
– la blockchain non è un’invenzione nuova, è una serie di altre tecnologie inventante tanti anni fa che come hai detto assomigliano ad una linked list inefficiente (vero per bitcoin).
– il 95% dei compratori vuole diventare ricco in fretta e specula su bitcoin.
– su tutta la parte nft
– che in tanti che stanno comprando adesso potrebbero perdere tanti soldi
Su cosa non sono d’accordo:
– sul numero di transazioni al secondo si utilizzerà un layer-2 chiamato lighting-network molto più efficiente.
– per nazioni con monete instabili e restrizioni da embargo bitcoin è fondamentale (Turchia, Iran, Libano, India, Argentina, Nigeria …)
– che serve una moneta indipendente di internet non agganciata ad uno stato (ad esempio per gli scambi internazionali) al posto del dollaro.
– e’ innegabile che ogni anno ci siano persone nel mondo che scoprono bitcoin come oggetto non speculativo e diventano degli hodler che sostengono il progetto e la causa, di fatto mantenendo il prezzo ad un livello superiore dopo il crash dovuto al boom ad ogni ciclo di halving.
My two cents:
mi piace studiare la storia dell’economia e sembra proprio che nessuna moneta fiat resista più di qualche decade prima di una ristrutturazione o un fallimento. A mio parare le banche centrali non stanno esagerando “a bit” come hai detto, ma hanno perso la maniglia con M1 e M2. Vedremo tra qualche anno chi avrà ragione(spero con tutto il cuore che abbia ragione tu) ma se vedremo nei prossimi 4-5 anni un inflazione al 10% annuale (con tassi al 1%) vorrà dire dimezzare il purchasing power, ed eliminare la middle class.
Conclusione:
Siamo alla fine del ciclo del debito a lungo termine, come continua a dire Ray Dalio?
se abbiamo delle monete solide(euro, dollaro) ovviamente bitcoin ha molto meno senso di quello che penso.
Se invece nei prossimi anni assisteremo ad un debasement della moneta e ad una inflazione galoppante, bitcoin avrà sempre più seguito da parte di persone smart/company.
Gran bel commento (peccato in Italiano, molti altri avrebbero beneficiato se l’avessi scritto in Inglese)!
Sto imparando tanto, ad esempio riguardo queste lighting network, anche se il mio first principle thinking mi fa dire “quindi sono off chain? no perché sempre solo 7QPS possono finire in BTC blockchain…”
D’accordo che in nazioni intabili BTC ha aiutato, ma parliamo comunque di un qualcosa che è instabile ed inaffidabile… se domani BTC perde il 90% mi sa che ai Turchi gli conveniva tenersi le lire.
D’accordo anche che serva una moneta “di internet”, e qusto è il pensiero di Naval Ravikant, ben espresso nel suo ultimo podcast con Tim Ferriss. non sono sicuro che le attuali monete siano adeguate.
Anche io condivido le paure sull tenuta del sistema FIAT, iperinflazione non compensata da tassi d’interesse dignitosi, etc… più per colpe dei governi e delel banhe centrali che per altro. Resta comunqueil fatto che almeno durante il covid qualche politica monetaria andava fatta, e si è potuta fare solo grazie al funzionamento delle mnete FIAT oggi. Vedremo domani se abbiamo fatto un marshmallow test al contrario o se si risolverà qualcosa.
Gran bel commento, grazie mille Alberto 🙂
Ciao Alberto, solo due commenti al volo:
– centralizzazione del mining in Cina (anche se ci sono le pool in realtà) grande minaccia.
In realtà in Cina si sono (c’erano, perché le stanno spostando in Iran alla faccia di tutti i tentativi di embargo) le mining pool perché le mining farm, oltre che lì, sono già sparse un po’ per tutto il mondo
– grosso spreco di energia (anche se tanta energia che viene usata è rinnovabile) sono d’accordo.
Vero, ma il problema non è il mining in sé che non è così energivoro, quanto la “corsa al mining” (come all’epoca della ricerca dell’oro nel Far West), cioè la massima prestazione per cercare di minare per primi i blocchi più profittevoli. Ma dell’estrazione dell’oro fisico nessuno se ne preoccupa, con tutti i danni sociali e ambientali che comporta.
Ci sono delle lunghissime discussioni in rete sulla questione ambiente & Bitcoin che, personalmente, mi toccano molto ma bisogna considerare due aspetti: 1. i costi delle fonti classiche stanno diventando sempre più insostenibili (economicamente e socialmente) e sono proprio i miners a spostarsi sempre di più verso la geotermia (Alaska e Siberia), l’idroelettrico (Cina) o solare (anche solo in California) 2. renderà l’attuale sistema dei pagamenti obsoleto (sapete quante migliaia di volte è più energivoro il sistema SWIFT – tra l’altro più caro per il commercio internazionale, i circuiti Visa, Mastecard e Amex e anche solo il consumo delle banche?) così come quello della raccolta e del lending; guardate già adesso con la CeFi e, soprattutto, con la DeFi negli USA come stanno erodendo quote di mercato.
E le banche lo hanno capito: alcune lo osteggiano ma altre cedono e cercano di rincorrere il treno (vedi il voltafaccia di J Dimon di JP Morgan) .
Ma questo è un treno che non puoi più fermare!
Non è mai esistito nella storia dell’Uomo “a decentralized, programmable, open-source, permissionless, borderless, censorship-resistant, confiscation-resistant, verifiably scarce digital asset beyond the control of govts and corporations”.
Bitcoin non è speculazione, Bitcoin è FIRE per definizione, è il migliore strumenti oggi per cambiare (in meglio) il Mondo, per renderlo più equo e democratico.
L’ho approcciato in maniera speculativa ma ne sono innamorato per le sue enormi potenzialità, solo minimante espresse dal prezzo attuale.
E lo S2F model ne è una conferma da 9 anni. Meglio ancora il più recente S2fX. Scarsità e domanda sono il valore di qualsiasi cosa. Il valore intrinseco ce l’hanno solo il cibo e l’acqua.
“Not a currency” => ok.. so what?
“Offending Transaction Fees” => true, but I believe this is a matter of time until layer 2 and 3 solutions will fix this. I remember browsing the internet the first time and downloading an image took 5 minutes.
“Slow Transactions” => same as above
“Privacy” => Fair point, solutions exists not for BTC
“A very crappy Store of Value” => I wished i stored all my wealth in btc 5 years ago..
“Average Joe can’t safely handle a decently sized amount of Cryptos” => Partially true.. if you use conibase it’s hard to fuck up
“Blockchain is Garbage” => I’m not sure what’s your point here, blockchain solved for the first time the double-spending problem. simple idea? maybe… Inefficient? yes.. Garbage? must be easy to find a better solution then..
“A Climate Threat” => fair point… i would like eth to move to pos asap..
“A giant Memory Leak” => ethereum is not 200GB it’s 700GB. Those numbers seem high or low depending who you ask..
“TPS” => same as above.. not ideal but there’s a solution for this.
“51% attack” => I’m not sure where you got the 34% rule for POS from… So far the 51% of attackers have been performed on smaller POW chains by people purchasing a lot of computing power and reaching 51% with pos somebody would need to buy 51% of the whole currency, the problem is everybody would see this and stop transactions.. a 51% attack cannot craft transactions out of thin air
“Quantum Threat” => fair point.. same for the internet
Una disquisizione molto interessante, anche perché essendo fuori del Coro stimola delle riflessioni.
A mio parere, tuttavia, nella discussione manca completamente un’analisi dei possibili casi d’uso delle Crypto, che oggettivamente esistono nell’ambito della tracciabilità & garanzia neutrale di Contratti & Transazioni… attendo con trepidazione la parte 3 😉
Hi Mr Rip.
I just found out your blog and it is an incredible source of information!
About your critics on bitcoin I am partially agree but :
Ponzi Schemes : True but the same argument can be made on fiat money in general, it is not intrinsic to the current currency itself. in case of fiat there is just an infrastructure of laws and how the society is structured
Not a Currency: Agree it is not and I doubt it will be, I have always thought since 2011 when I heard something about bitcoin that it is an asset. “Stimulus checks, unemployment benefits, money being printed, interest rates being low and controlled… without this we’d be locked in our bunkers with weapons and canned food today” it is true but looking from the other side, if money spending would not possible what the government could do to prevent a disaster? An incentive to spending on debt when events go shit I don’t think it is sane way of managing a society unless it is in case of an unexpected shock. This is the argument of quantitative easing, it should be short duration. Actually it is happening for the last 12 year since 2008. You need a way to control deficit spending, so having an elastic production of money is fundamental for crysis times but at the same time you need a way to control the opposite as well. I don’t know how to find the right balance
Blockchain is Garbage: I don’t think you can divide the concept of blockchain from the implementation of system as a all. you need blockchain for implementing you need miners to validate transaction in decentralized way you need reward to incentivise the grow of the network. Even TCP/IP is a shit but fixing here and there we stream from our home now! The real question do we need a personal (without intermediate) decentralized network to manage value? Maybe not in some use case (western democracy), maybe yes in authoritarian regime
A Climate Threat: As I stated previously there isn’t a fix way to value something it depends what we think it is valuable. Having an immense cost of energy to create a decentralized network is valuable or not? I don’t take “it is a waste of energy” as a valid argument. Is it cost too much for what I get? I don’t think it is so easy to answer. Even using the car for going to buy food is energy inefficient but if it will save me 1 hour of my time to do something more valuable maybe it is not a global waste.
I absolutely love this post. Pretty much sums up my belief. All this talk of Bitcoin etc become a new currency is total BS. I see nobody, I mean nobody using Bitcoin for buying and selling goods and services.
All I see is people holding Bitcoin and other cryptocurrencies in the hope that it will just go up in value.
Sounds like the new Tulip bulb.
I’m into crypto but still I must confirm what Mr Rip said, especially about BTC aka Chinacoin.
Look at what happened on 16/04/21 to BTC hashrate when a single region in china lost powerhttps://finance.yahoo.com/news/bitcoin-mining-pool-hashrates-plummet-110000621.htmlhttps://imgur.com/a/SRJNDM7
Too bad you did such a bad analysis. Actually ALL your counterarguments are debunked by Robert Breedlove in his podcast with Preston Pysh. I highly recommend you listening to it.
No matter how much you have bitcoin, it’s just stupid to allocate not even 1% of your portfolio to it… Because your dislike will not stop it from going up.
Great article…easily summed up by the true cause of it all: unsound money…the natural state of capitalism & free markets (neither exist) IS deflation… Of course, when you want to borrow enormous amounts of money for an inherently inefficient, wasteful, & coercive monopolist (the definition of government) you need an inflationary monetary policy…and yes, it will continue. Financial bubbles occur (larger & economy-wide) because of a LACK of sound money… The beauty of Gold standards (gold won over time for a reason as a currency) is that it forces discipline…Even Bretton Woods (a gold exchange standard) was pretty good until the US FedGov messed it up by spending more money than it had (and USD holders overseas demanded gold)…
By the way, keep in mind that Cryptocurrencies are the 1st competing currencies that the Treasury has tolerated… Other competitors to the USD fiat system were crushed & jailed… But again, the reason these things exist at all is that the value of the USD continues to depreciate and lacks the deflationary (increasing value of currency) common sense that non fiat economic systems enjoy (low time preferences, increased savings, etc…the natural state of capitalism & free markets (again, neither of which exist) is deflation & increasing currency value over time, it also forces far favorable time prefences in decisionmaking) Rothbard explains this well in his writings….
Very good article except the part about the earth being flat. Perhaps you can show me some convexing water!
Hai dimenticato uno dei piú grandi contro del mercato crypto al momento.
Quasi la totalitá dei volumi é in USDT, sia sullo spot che sui derivati. Dovesse saltare USDT (ed é anche probabile visto trattasi di una compagnia piuttosto sketchy) sono ca**i amari per tutti.
Detto ció non possiamo non dire che le banche siano tecnologicamente arretrate quindi la domanda é: ci metteranno meno le banche a seguire l’evoluzione tecnologica o il mondo crypto a risolvere i propri problemi?
Altra cosa, i mercati sono sempre piú correlati, un asset che va un pó per fatti suoi a mio avviso é necessario.
Altra cosa ancora, la speculazione non é ne buona ne cattiva, é soltanto.
Esiste su Bitcoin esattamente come esiste sul future sulla carne di maiale o sul succo d’arancia o su Apple.
E questa speculazione paga commissioni che pagano stipendi e va bene cosí.
Sulla defi ogni tanto qualche figata si vede, vedi prestiti collateralizzati con collaterale che genera interesse o i giochi play to earn.
Alla fine come tutte le cose non sono mai totalmente fantastiche o totalmente uno schifo.
Per quanto mi riguarda dalle crypto mi tiro fuori un secondo stipendio in modo costante, non faccio male a nessuno e sono felice delle opportunitá che questo mondo offre.
Mi dispiace se qualcuno si fa male ma se non si fanno male sulle crypto si fanno male sul forex o sulle microcap o i tulipani.
Da sviluppatore di software non comprendo tutto questo odio e aggressione che hai verso, non tanto le crypto in generale, ma verso Bitcoin. Tutti i governi hanno dimostrato nei millenni di non essere capaci a gestire il denaro e le forme migliori che hanno garantito la prosperità ai sistemi si sono da sempre appoggiate al concetto di scarsità e quindi difficoltà di approvvigionamento (oro per esempio). Mi dispiace che non comprendi la rivoluzione che bitcoin sta portando nel mondo, ma confido che quando acquisterai i tuoi primi bitcoin (e sono certo che questo avverrà) avrai l’onestà di dire che non c’avevi capito un granchè 🙂
Per il resto buona fortuna con il FIRE (che mi chiedo come penserai di gestire se dovesse arrivare inflazione al 10-20%? con le azioni? e quando poi crolla il mercato in iper bolla? facci sapere)
Buona fortuna a te e tutti coloro che hanno raggiunto il FIRE ed hanno “investito” in BTC qualche mese fa quando valeva IL DOPPIO ed ora stanno cercando lavoro 😀
Ciao Mr Rip non commento mai in genere ma ti trovo una pesona brillante e vorrei magari provare a fare due ragionamenti con te, procedo per semplicità di lettura in punti;
1-Nobody is “investing” in crypto because they think the value of their cryptos is going to be stable for the next 10 years. Potendo averne la certezza sarebbe un ottimo modo per avere la proprietà di qualcosa di stabile e non pignorabile. Avendone quindi la certezza perche no anzi…
2-No monetary policy is possible with limited supply. Le teorie monetarie attuali nascono e si sviluppano negli ultimi 200 anni forse? per gran parte della storia umana la cività ha prosperato con hard money. Le banche facevano il loro lavoro andando a filtrare in maniera accurata a chi prestare soldi e quale progetto finanziare. In un sistema hard money semplicemente ci sarabbe piu rigore e controllo. Prendendo esempio quello del covid ti faccio una domanda, siamo sicuri che il tenere a casa milioni di persone, potendolo fare stmapando moneta, sia stata una scelta corretta? oppure non avendo questa possibilità si sarebbe docuto optare per strategie divrse
3-No credit, no debts. Parte ho espresso i miei dubbi nei punti precedenti, ma in un ipetetico mondo in cui btc è unità di conto non è un grosso problema, io non guardo la variazione del prezzo del televisore in rapporto al prezzo dell’eneria elettrica o del petrolo. Quindi l’economia si resetterebbe solamente in fuzione della diversa unità di conto (l’euro varia in continuazione in rapporto ad altri beni e servizi)
4-transaction fee. Un non punto anche la gestione del denaro fisico e del denaro virtuale ha un costo solo che è un terzo soggetto che se ne fa carico, per quello fisico la fiscalità generale, per quello visrtuale società private. Solamente perche non i capo al consumatore finale non vuol dire che non esiste
5-Slow Transactions. Allo stato attuale si lawer 2 e nuovi sviluppi potrebbero risolvere il problema
6-Privacy. Ci sono metodi per rompere la catena che lega indirizzi come già detto, ma poter scegliere di avere o non avere privacy è meglio di non avere la scelta per nulla
7-A very crappy Store of Value. Dipende dall’orizzionte di riferimento 1 settimana è una riserva di valore inutile a 5 anni forse non male
8-Climate Threat, attualmente è green al 50% ma alcuni studi dimostrano che in alcune situazione puo aiutare a ridurre l’inquinamento come nel caso del gas flaring o aiutare a fornire energia in zone del mondo dove economicamente non sarebbe conveniente farlo
Ps scusa la lunghezza del commento, mi sono tenuto il più possibile ma eprimere un concetto in poche righe è complicatp