Bitcoin-too late to the party?

[SharperDingaan]

Lightening network and/or sharding, etc make 100k tx/s fairly easy.  We are a long way from bitcoin being needed to buy a cup of coffee.  But technically it’s not a big problem

 

Yes, it is.  There have been hundreds of different coins created, none of which even comes within two orders of magnitude of 100K tx/s. It's certainly a big technical problem, even if it's a problem for which people have proposed solutions.

 

Richard

 

Fair enough...however my point is that it is disingenuous  to say "Bitcoin can't even process 10 transactions per second." While technically true at the moment, no reasonable person in the community (whether big blocker or small blocker) believes that in 5 years we will still be limited to 10tx per second.  This is still a new space and many teams are taking a precautionary approach to implementing new features (good thing).  That said, do you see any technical reasons why at least lightning network won't be able to add at least 100x improvement to tx rates (as well as doing transactions for a few pennies per tx)?  Its been in test net for a while and seems to be working fairly well.  Furthermore, I know many on here are anti ethereum, but I believe there's a decent chance that sharding ends up working.  I think the whole "tx limited to 10 per second and at $20 per tx" is a bit like yelling "where are my streaming movies over the internet?" in 1995.  You gotta give it time.

 

These currencies serve different markets.

When anonymity and security are paramount (Bitcoin), users could care less if a transaction costs $10 and takes 24 hours - as the intent behind the transaction is not to buy a cup of coffee. To pay for the coffee we would use a CBDC as transaction cost and speed are key requirements. And because that CBDC will be running on a database using a Cray mainframe at 30+ petaflop/second; transaction time will, at worst - be in the very low seconds.

 

Deadly to a bank, as like Bitcoin - the CBDC is ALSO a payment system.

There is zero value to paying via Debit Card, Credit Card, PayPay, or an Apple/Google Pay - as each will charge you for a payment that can already be done for free - and very likely takes longer than the CBDC to process the transaction. Owning the existing rails also doesn't help you - as the rails just got replaced with new pipe.

 

And none of this touches the smart contracts (szabo), or artificial intelligence, that can be used to automate these transfers in live time.

 

SD

 

[mattee2264]

Continuing my train of thought for me the dot-com bubble seems a better parallel than the tulip bubble. Right now you have a multitude of cryptocurrencies many of which will turn out to be worthless or exposed as frauds or fakes. Some could well turn out to have some enduring value as an asset class and form some sliver of a standard institutional portfolio as "digital gold". Just as some of the dot.coms would prove to have profitable business models.

 

  But it is not only a question of "if" it is a question of "when" and that is where things like the time value of money come into play and a high discount rate is obviously warranted for something like this. With the dot.com bubble some of the good businesses not only grew into their elevated 1999 valuations over time they actually surpassed them.

 

  Take Amazon. It took it 10 years to get back to its 1999 high but now it is 10 times that level. And its superiority as a business and dominance of their category did not save it from dizzying falls as the bubble burst. Those who correctly understood the trend of increasing penetration of online sales, the likelihood that Amazon would capture more than its fair share of this growing market etc as well as expand into new categories etc etc weren't saved from losing a lot of money in the short term.

 

 

 

 

 

 

 

 

[SharperDingaan]

Continuing my train of thought for me the dot-com bubble seems a better parallel than the tulip bubble. Right now you have a multitude of cryptocurrencies many of which will turn out to be worthless or exposed as frauds or fakes. Some could well turn out to have some enduring value as an asset class and form some sliver of a standard institutional portfolio as "digital gold". Just as some of the dot.coms would prove to have profitable business models.

 

  But it is not only a question of "if" it is a question of "when" and that is where things like the time value of money come into play and a high discount rate is obviously warranted for something like this. With the dot.com bubble some of the good businesses not only grew into their elevated 1999 valuations over time they actually surpassed them.

 

  Take Amazon. It took it 10 years to get back to its 1999 high but now it is 10 times that level. And its superiority as a business and dominance of their category did not save it from dizzying falls as the bubble burst. Those who correctly understood the trend of increasing penetration of online sales, the likelihood that Amazon would capture more than its fair share of this growing market etc as well as expand into new categories etc etc weren't saved from losing a lot of money in the short term.

 

 

 

Your choice here is not when to participate.

Yes it may be a lot safer to come in after the 'crash'; but you will be injecting NEW cash, and THINK you know everything - when in fact, you will have zero investment experience with the technology. Whereas your counterpart will be both using HOUSE  money, AS WELL AS their investment experience in the technology. Materially less risk, and significantly better prepared to deal with it - is this really the position you want to be in?

 

Yes in your early days there WILL be losses, it's why it is called tuition.

 

SD

 

 

 

[rkbabang]

Continuing my train of thought for me the dot-com bubble seems a better parallel than the tulip bubble. Right now you have a multitude of cryptocurrencies many of which will turn out to be worthless or exposed as frauds or fakes. Some could well turn out to have some enduring value as an asset class and form some sliver of a standard institutional portfolio as "digital gold". Just as some of the dot.coms would prove to have profitable business models.

 

  But it is not only a question of "if" it is a question of "when" and that is where things like the time value of money come into play and a high discount rate is obviously warranted for something like this. With the dot.com bubble some of the good businesses not only grew into their elevated 1999 valuations over time they actually surpassed them.

 

  Take Amazon. It took it 10 years to get back to its 1999 high but now it is 10 times that level. And its superiority as a business and dominance of their category did not save it from dizzying falls as the bubble burst. Those who correctly understood the trend of increasing penetration of online sales, the likelihood that Amazon would capture more than its fair share of this growing market etc as well as expand into new categories etc etc weren't saved from losing a lot of money in the short term.

 

 

 

You choices here is not when to participate.

Yes it may be a lot safer to come in after the 'crash'; but you will be injecting NEW cash, and THINK you know everything - when in fact, you will have zero investment experience with the technology. Whereas your counterpart will be both using HOUSE  money, AS WELL AS their investment experience in the technology. Materially less risk, and significantly better prepared to deal with it - is this really the position you want to be in?

 

Yes in your early days there WILL be losses, it's why it is called tuition.

 

SD

 

Good point.  Another thing to consider is that, while I think mattee2264 is exactly correct, I also think that we haven't even seen most of the bubble yet.  The institutional money has barely started to come in and we haven't yet seen the pension funds and endowments, nor central banks start investing and I think we will see all of that before this crashes.  You will see a mania that makes the tech bubble pale in comparison.  My prediction is that yes the bubble will pop eventually and we may see a 90% reduction in price, but that even after that 90% reduction in price it might still be higher than it is today.  For example BTC=$500,000 pre crash and $50,000 post crash (or even with a 95% reduction it would be $25,000) then taking another 10 years to reach $500,000 again.