I think there are a large group of techies who hold similar opinions and never really bought into the hype, but still sit and watch with amazement (and maybe envy) at how something that they believe is fundamentally flawed has passed the test of time and recovered through many boom-bust cycles.
That's me. If there's one thing I've learned about it, it's that we'll never get rich quick as over logical people.
Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief). Wrong every time.
It doesn't pay to be the 'smartest guy in the room', as a figure of speech. It pays to be able to figure out how the everyman will act, no matter how much it pains you. And maybe those people who do are the real 'smartest people in the room.'
I think there's a difference between Bitcoin and Dropbox/Twitter. Even if you were skeptical about the latter products at first, with the benefit of hindsight, it's easy to make a retroactive argument for why they made sense (better usability, better network effects, etc).
But with Bitcoin, even with the benefit of hindsight, I still don't get it.
Bitcoin's success is extremely easy to understand.
Socially:
Some people don't trust governments to handle one of the most powerful collaboration technologies ever invented (money). All financial systems before Bitcoin were government controlled. Some have behaved in a trustworthy way, many have not. And over the longer term they all tend to mess it up eventually.
So these people set out to build an alternative that they believed governments couldn't control.
Technically:
The interesting key advance that made Bitcoin interesting and successful was coming up with an algorithm that solved the problem of getting parties that don't trust each other at all, to collaborate on maintaining a global ledger to everyone's benefits, without them having to even know about each other.
This is already a feature of money (I don't need to know about you to have indirect financial ties to you) but was not true of the financial system itself until Bitcoin.
> All financial systems before Bitcoin were government controlled
Company scrip, community currency, hawala have all existed for centuries.
Also Bitcoin is also government controlled. It lacks the anonymity required to protect participants making it trivial for nation states to influence. And it does nothing to prevent the centralisation of capital that causes so much manipulation in traditional currency systems.
> And over the longer term they all tend to mess it up eventually.
Over the long term the probability of failure of all systems is 1.
> Company scrip, community currency, hawala have all existed for centuries.
All of these have the problem of centralized and permissioned issuance, where one entity can arbitrarily inflate the supply without the knowledge or consent of others.
> Also Bitcoin is also government controlled
In what way?
> It lacks the anonymity required to protect participants
This is false and does not make it government controlled. I’ll concede that there are many ways for one to lose privacy when using Bitcoin though.
> And it does nothing to prevent the centralisation of capital
The ‘centralization of capital’ isn’t an issue Bitcoin aims to solve. One of the big problems Bitcoin solves is the unjust accumulation of capital via arbitrary issuance (IORB, RRP, loans via newly created bank deposits, etc.)
I wonder what it says about me that the only counterexample that came to me is the use of Nuka Cola bottle caps in the Fallout games. But that only works in a post-apocalyotic setting, when there's no longer any manufacturing capability.
Except it isn’t money at all; only suckers call it ‘money’.
It’s considered a security; a representation of value for sure. Move it around all you want until you’re blue in the face.
But money still has to come out of an exchange and through some sort of bank. So it’s all a shell game that’s decidedly not anonymous or protected at all.
That’s why so many have concluded that crypto is a scam; we might as well be smuggling Egyptian grave goods.
What organizes labor are the specifics. This is what math doesn't get, math isn't timeless, it's trapped in exact moments where it appears real. The arbitrary is simply a conduit metaphor, not only not real, but entirely illusory, prone to primate biases and exploitation. And all metaphors eventually fail, that's a bio-ecological certainty. Show me a currency from 700AD still traded on arbitrary markets. There are no limitless molecules or homeostatic climate. The system is already bust in numerous indexes, we're just riding the arbitrary fan out.
Also "banking the unbanked": giving financial infrastructure to anyone with internet access, even if local banking infrastructure doesn't exist or isn't accessible.
Which is great when applied to rural areas of underdeveloped countries. But realistically it's more about financial infrastructure for criminals, outcasts, scammers and rich people in counties with strict financial controls
Stablecoins are interesting, but they're closer to company scrip than to decentralised currency. Anyway, stablecoins are apparently becoming important financial infrastructure, so that's something.
Bitcoin is completely useless as a currency since its value does not decline with time, thereby making it an investment vehicle instead of a currency. An asset can't be good at being both a medium of exchange and an investment. Only criminals use bitcoin as currency, and they do it because the alternative for them is moving cash around in suitcases.
I think the success is completely logical, in hindsight, when you consider that the majority of the crypto traffic is bots (to hide the traceability, money laundering, scams), or linked to plain real-world illegal activity.
>, it's that we'll never get rich quick as over logical people.
Of course Dropbox is dumb when rsync exists.
It's neither over-logical nor "smartest guy in the room" to equate Dropbox with rysnc. Instead, it's a category error.
Consider that rsync syntax is basically : rsync <src> <dst>
Before that command is run, that "<dst>" has to exist somewhere that's reachable by all client devices that want to see the same files. That means creating that "dst" target such as arranging a $5/month VPS at Hetzner, or a self-hosted NAS at home with Tailscale/CloudflareTunnels VPN, etc.
Dropbox takes care of the "<dst>". rsync does not. That makes a profound difference in usability for non-techies.
(One could use rsync only as a peer-to-peer sync between client computers with no "server" but that doesn't work well for a 1-to-many file sharing setup to facilitate a "Single Source Of Truth".)
Some people are smart in the sense that they are very logical. Others are great predictors of how people will behave, I would call those smart, too. I'm not in that group, but feels wrong to dismiss it as "not smart". Just different smart.
I don't think the first group is smart as all. Understanding human behaviour is pretty basic skill. Missing a basic understanding on how humans work is just stupidity. Being able to build great lego sets, but not being able to have a basic conversation with other human beings, is not smart, but autistic.
But then if you travel along the autism line until you reach turbo autism, doesn't it just loop back around to being smart again? Like Kim Peek or Scott Flansburg?
Interesting cases, thanks for sharing. I didn't know what real-life inspiration the movie "Rain Man" came from. However, the two people seem to be worlds apart socially. While Peek seems to be extremely "stunted" in his social development, Flansburg appears to be coping well with his position as a speaker, which I always thought to be rather unusual for people with autism spectrum disorder.
I was thinking the same thing, but I was watching his human calculator video [0] and there are moments where his mouth moves quicker than his brain and he has to catch himself a few times. My guess is he's given this talk and rehearsed the mannerisms so many times that he's on auto-pilot.
Yes, although while being smart about bitcoin hasn't allowed me to predict its price at all, it has helped me not waste time on "what if we did this on the block chain?"
One of them is in the class of "if enough people believe it, it's true", the other one is actually subject to logic.
> Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief).
Twitter/Dropbox offer more convenience to people: Bitcoin offers _less_. That's why people are using Bitcoin for two things: crime and speculation. People aren't buying houses with Bitcoin, they don't use it as a store of value (because it has extreme deflation), and they aren't doing their books using BTC as the currency.
What features/improvements does Bitcoin offer over the financial system? So far, the differences to me seem to be
- It's easy (or at least possible) to get a bank transaction reversed by going to court.
- If you forget your password, your bank can reset it and you don't lose all your money.
- When you transfer money using your bank, it arrives immediately in the recipient's account. When you transfer money using Bitcoin, it takes hours. The bank checks that the name matches the bank account number beforehand.
- If you get hacked, and the hacker tries to steal all your money, your bank's fraud detection system will kick in and stop this.
- Banks are regulated, and the currency is stable. This means that you can quote a price in USD, and do your accounting in USD, whereas very few people do their accounting in BTC.
- People have faith in fiat currencies because they have state backing, which means that the central bank will intervene to maintain price stability.
This depends on what people mean when they say “Bitcoin is dumb”. Cryptocurrency as a speculative asset, regardless of whether it’s driven by the flocking of the everyman, is clearly capable of producing personal wealth the same way every other highly volatile speculative asset can. But usually people hawking cryptocurrency are talking about other applications than that, and those are almost always unrealized or just straight up scams.
Bitcoin is a negative-sum game. You can only get out what others put in and miners continuously have to pay for electricity and chips to keep the game going.
It is also a dump speculative asset. I'd even claim Tesla stock is better as speculative asset, at least it may be a positive-sum game.
Maybe seeing you’re argument as a template will have you recognize the weakness of your argument:
{{currency}} is a negative-sum game. You can only get out what others put in and {{entities}} continuously have to {{maintain infrastructure}}.
An actual argument could be derived from the last point by asking whether the cost of maintaining the infrastructure is worth it. This is something the market decides.
1. in terms of "proof", eg. "asset performance", it's proven its more capable
2. crypto as a whole is the riskiest investment on the market
3. speculative assets in general or in highly-notable abundance rn are performing abnormally well, better than assets have performed in the past by a few metrics, as though they're trying to compete or hopefully catch up with the anomaly of bitcoin's growth
Survivorship bias is significant though, it's hard to notice—or even find and enumerate—all the people who may have lost money or given up earlier with a similar business/product.
Exactly. History is written by the victors.
I call them success stories (when they're not straight lies) but the word survivor is stronger and seems to indicate that the others don't survive.
It's common knowledge that one shouldn't pay back a low-interest loan faster than is expected, because it's better to have liquidity or to invest.
But it's real easy to look at the past and say "oh I could've invested in that".
It's also very easy to look at success stories and forget that poverty is widespread and the poor don't talk about their misfortune.
Video games are interesting because you can count how many times your character dies before you actually manage to finish the game.
It’s because in investment it’s not about being right. Thats why I invested in it. Also gold is the same, makes no sense on paper, still works. Second effect is it made me lean left economically realizing how flawed are liberal economics basic assumptions about rational actors and efficient markets.
lol ArtForz was an engineer who single-handedly designed from scratch low-run book printing machines, built his house with CHP that he designed and created himself, created his own pick-n-place machines from parts he had laying around, reversed a hidden opcode in the AMD GPUs of the time, designed at the gate-level his own FPGA, manually soldered his own sASIC, and printed his own MOSIS chips. He was the smartest person in the room. By far. Many of the very early non-get-rich-quick people that didn't think anything would happen for decades but were interested in Bitcoin, were in fact the applied-science smartest people in the room. The people generally who thought it was digital tulips even a few years later were also people who thought they were the smartest people in the room, but were actually nowhere close.
Others who were very early (source: I was there and interacted with them) were extremely wealthy investment bankers with a track history of being able to make money, some kinds of cryptographers (Hal, Adam, etc) and others who were ultra-competent, often inventors of new technique in their own right.
It's a well-studied but unfortunately not particularly well-known result that the people most interested in Bitcoin are at the two ends of the expertise spectrum—highly highly financially competent, and financially incompetent people.
You will never hear from most of the highly-competent people because they also recognize that being noisy about owning Bitcoin draws a giant target on their backs. E.g. try and find ArtForz now.
I would offer that the late and very great James Randi's often-repeated comments on ultra high-skilled people being some of the easiest to trick are probably illustrative, and my personal opinion at the moment is that many of these people have been tricked long ago into thinking that Bitcoin is something bad.
Or perhaps there are important properties about these things that you're missing. Something that’s causing you to conflate similar use cases as alternatives to these projects. Maybe the perception of being the ‘smartest guy in the room’ is really just hubris.
"The market can stay irrational longer than you can stay solvent." True. But if you're invested in the market staying irrational, it can crush you when it abruptly becomes rational.
We may not get rich, but we may miss out on becoming poor, too.
Bitcoin is kind of brilliant in a way - the first secure decentralised currency. The white paper is a good read. Twitter and Dropbox were much more obvious things.
I think the issue is more that a lot of people weren't cynical enough. I knew Bitcoin was a shit currency when I first heard about it, and thought that was all there was to it. I didn't understand that while it was a shit currency, it was a great speculative asset. I thought people would look at it, go "that's dumb", and move on. Apparently I hadn't heard of, or understood the Dutch tulip mania and similar historical events. I presumed people would be better than they turned out to be, and that cost me a lot of potential capital gains.
It takes no imagination or insight to see reasons why something wouldn’t work. It’s the default mental pathway for every risk-averse beast. Skepticism is not born out of contentment and abundance but out of self-preservation. It’s not correlated with feeling enough, but with feeling bitterness and envy of those who took risks and gained an advantage instead of suffering consequences.
People who are content feel less need to take risks by accepting dubious statements without proof. They have what they need so why risk it for more?
Sceptical people will be grounded by what we know to be true. They will explore new ideas but will not be swept up by them. We need people like that or we'll waste our time on flights of fancy. But we need the irrational optimists to explore new ideas too. It's a classic exploration vs exploitation trade-off.
Many people who have risked their money by placing it on Bitcoin likely had enough, and they risked the extra money that they had lying around. Why not place bets on something you think might be probable? Is there something morally wrong in making some extra buck? Is it morally superior just to keep your money lying on bank account or what?
I'm pretty sure these peeps who hang out at /r/buttcoin are going to work like regular people to get some fiat currency to their beloved government blessed bank accounts. So I guess they don't feel like they have enough.
To be honest I don't think the skeptical people thought bitcoin's success was probable and that's why they didn't bet on it. It's not really anything to do with them being content with what they have.
But it could be this too in some cases.
Some people do things unless they find a reason not to but so a skeptical person will only do things if they find a reason.
People who really feel they have enough might not see any reason to spend their time or effort placing bets, even on things they think are probable. But I don't think many people think that way.
It’s not because crypto is useful for the average person. It’s because demand for a place to safely store illicit assets is practically inexhaustible. Had I the foresight to realize that criminals would turn to it as an alternative to traditional forms of hoarding and money laundering, I would have invested in it ages ago.
Baffling that people make blanket statements like these without any real world experience of living in high inflation, poor countries. All the contractors I’ve hired from Philippines or Nigeria or Vietnam want to get paid in USD stablecoins because their currencies depreciate 5-15% against the dollar every year and stablecoins help them protect their capital
Same for friends living in high inflation LatAm countries - crypto stablecoins are a way to escape rampant inflation
You could pay them in USD fiat currency and the benefit to them would be the same. Or, you can pay them in local currency and they can immediately exchange it for USD.
They want cryptocurrency because it helps them avoid taxes and trading fees.
Again, have you ever tried paying people via wire transfers in countries like Nigeria?
In a lot of these places, things like Paypal don’t work. So you have to send wires. You get an awful exchange rate + fees for sending it. And they get an even worse exchange rate when receiving it
You easily lose 5-10% spread for every payment
And the “avoid taxes” part is, again, heavily western biased where for all their ills, the governments actually work for the people. I say as someone from a third world country - taxes are largely siphoned off by politicians and bureaucrats. Everything from public schools and hospitals and roads are unusable. Avoiding taxes is perfectly morally correct if all it does is feed an oppressive machine
I saw that potential as obvious from day one. I just thought governments would care. Usually when someone sets up a money laundry ring, someone tries to stop it.
My best idea, that probably gives governments too much credit, is that it's pretty useful to have a transparent record of illicit money flows, and that you can be OK with a bit of crime to get it.
Governments do care, they have developed heavy regulatory frameworks for cryptocurrencies, such as MiCa in EU. I think central banks have been giving (negative) comments about Bitcoin since 2011 or so when it first gained modest publicity.
Governments are huge and consists of many different institutions. I guess many would like to see Bitcoin stopped, but how to do that without fondling with the basic human rights, such as the right to free communication? So far the governments have been regulating it, trying to reduce the illicit use, which doesn't really stop it but actually makes it more legitimate.
I think the reason is that Bitcoin et al were sold as having practical uses but their ‘success’ has been as a vehicle for speculation. Though the two things are linked (hype for the former drives adoption for the latter) and it’s possible to both hold that crypto currencies are of no practical use and a great investment opportunity. (FWIW, with a long enough time span I believe neither of these is true)
I could always see how useful it is for criminal enterprise. That doesn't mean I want in. I wish I could avoid it altogether. Alas even stocks in my ETF holdings are proxies for some cryptocurrencies.
I could never wrap my mind around the formation of the united states, over 200 years ago, based on people agreeing. There was basically no technology back then. Their "software" was the constitution.
The Continental Congress was famously held in secret. A small number of wealthy aristocrats waged war on their home country without the consent of the people they were governing.
I don’t remember the powhatan or Lenape (Virginia-MD-PA tribes that were exterminated in order to build the core of the US trade and political networks) being consulted on any of this.
I assume you're asking because there has only been one major crash of the financial markets since 2008, but there have been numerous cycles local to cryptoassets (eg the NFT/web3 driven cycle several years ago).
So, the answer is more or less "all of them," from dollar parity day to the latest all time highs.
It didn't take long before it became obvious that Bitcoin would revolutionize money laundering. I think this is more like the righteous vs. evil scale in D&D. Some people are OK with profiting off crime while others aren't. And techies are more likely to be on the righteous side, while bankers, traders, or CEOs are more likely to be on the psychopathic side. And if you look at how many times HSBC has been in the news for working closely with mafia, I'm not surprised that they're selling crypto ETFs now.
