A Bitcoin Battle Is Brewing(techcrunch.com)
techcrunch.com
A Bitcoin Battle Is Brewing
http://techcrunch.com/2014/12/06/a-bitcoin-battle-is-brewing/
46 comments
Blockstream's eleven (!) founders include the majority of Bitcoin's core developers—they're also the ones pushing most fervently for a fork of the Bitcoin protocol. Is there anything to be worried about here? (That is, besides the perplexing nature of a startup raising a $21 million “seed round” for its multitudinous founders to develop an entirely new and unproven technology stack.)
No if you mean people with commit bit, we have just two of the five active developers. The community of Bitcoin developers is much larger though and we come no where near a majority.
"I suspect most people who have heard of Bitcoin don’t even know alternatives exist." True.
In a world with fiat, bitcoin is king due to liquidity. In a world without fiat, it's much easier to consider alternatives. Personally I'd like to see a wallet that holds many currencies, and can do all the conversion automatically.
"priced in ___coin? okay"
"You want to pay with ____coin? sure!"
"You only accept ___coin? no probs!"
And apps like http://shapeshift.io can help with background conversions.
Thus, the long-tail of crypto becomes more relevant.
For me, it's not a battle of bitcoin, rather it's a battle of "either/or" (now) vs "both/and" (future.)
I also think the future is coming faster than we think. People will want bitcoin alternatives, especially people that want to make money and think there are better coins that can do that (and will give them a try.)
add:
to give an example of this war, I placed a link to http://snapcard.io in reddit-bitcoin for a shop owner in France wanting to accept digital currencies. Result: -1 downvotes, 4 hours ago. Why? I presume because they are a multi-crypto POS startup.
Bitcoin is full of the same people that were trashing it when it first came out. Now they are trashing any alternatives. I don't want to be part of that. They're neither cool, nor smart.
In a world with fiat, bitcoin is king due to liquidity. In a world without fiat, it's much easier to consider alternatives. Personally I'd like to see a wallet that holds many currencies, and can do all the conversion automatically.
"priced in ___coin? okay"
"You want to pay with ____coin? sure!"
"You only accept ___coin? no probs!"
And apps like http://shapeshift.io can help with background conversions.
Thus, the long-tail of crypto becomes more relevant.
For me, it's not a battle of bitcoin, rather it's a battle of "either/or" (now) vs "both/and" (future.)
I also think the future is coming faster than we think. People will want bitcoin alternatives, especially people that want to make money and think there are better coins that can do that (and will give them a try.)
add:
to give an example of this war, I placed a link to http://snapcard.io in reddit-bitcoin for a shop owner in France wanting to accept digital currencies. Result: -1 downvotes, 4 hours ago. Why? I presume because they are a multi-crypto POS startup.
Bitcoin is full of the same people that were trashing it when it first came out. Now they are trashing any alternatives. I don't want to be part of that. They're neither cool, nor smart.
>>Lest you think I’m taking sides already, let me stress that it’s not at all clear that AC is actually better than DC
No, it has been settled for almost a hundred years that AC, for long distance transmission, is the best. Too bad he included something like this. It diminishes his credibility and colors the entire article.
Edit: So I seem to be quite wrong. Well, at least now I know. I stand corrected.
No, it has been settled for almost a hundred years that AC, for long distance transmission, is the best. Too bad he included something like this. It diminishes his credibility and colors the entire article.
Edit: So I seem to be quite wrong. Well, at least now I know. I stand corrected.
No it hasn't.
AC transmission is nice for a few reasons, but the biggest reason for its use historically historically has been that you can step down from high to low voltage with a passive element (a transformer).
(Why step up and down? You want to transmit at the highest voltage you can to reduce conduction losses (higher V -> lower I for the same P, and thus lower I^2 * R losses).)
But long distance AC transmission is ugly in a bunch of ways. For one, over very long distances a power line becomes a reasonably efficient 60 Hz antenna, which means radiated losses in addition to conduction losses. For another, AC generators want to produce 3-phase power; transmitting this directly means more wire, balancing phases, et cetera. Further, AC transmission suffers additional conduction losses when reactively loaded because of circulating currents (this is why people care about "power factor"). In practice, the complexity of managing the reactive loading of HVAC transmision wires is substantial: transformer nonidealities turn a resistive load on the secondary into a slightly reactive load seen at the primary, which introduces circulating losses. And let's not forget that an AC grid requires that all the generators feeding the grid are precisely synchronized, while a DC grid has no such synchronization issues, which simplifies the task of bringing power plants up and down.
By comparison, DC transmission requires complexity at the sender and receiver: generation is for the most part a fundamentally AC process (i.e., electrical generators), and of course homes are built for AC power, so the receiver must switch DC back to AC. But as power devices become better and cheaper, and the power grid's load increases (without commensurate increase in copper to handle higher currents), long distance DC transmission is becoming more commonplace. (And since modern AC transmission requires some power factor management anyway, the choice really isn't between "dumb transformer" and "massive inverter" anyhow.)
For example, when I lived in Boston it received a substantial amount of its power as HVDC from somewhere in Canada. Three big (like, BIG) inverting stations around town were responsible for turning this DC into AC for local transmission. This setup ostensibly saved substantially on conducted and radiated transmission losses, according to the folks who gave us a tour of one of the inversion stations.
Wikipedia has more on this topic. http://en.wikipedia.org/wiki/High-voltage_direct_current
AC transmission is nice for a few reasons, but the biggest reason for its use historically historically has been that you can step down from high to low voltage with a passive element (a transformer).
(Why step up and down? You want to transmit at the highest voltage you can to reduce conduction losses (higher V -> lower I for the same P, and thus lower I^2 * R losses).)
But long distance AC transmission is ugly in a bunch of ways. For one, over very long distances a power line becomes a reasonably efficient 60 Hz antenna, which means radiated losses in addition to conduction losses. For another, AC generators want to produce 3-phase power; transmitting this directly means more wire, balancing phases, et cetera. Further, AC transmission suffers additional conduction losses when reactively loaded because of circulating currents (this is why people care about "power factor"). In practice, the complexity of managing the reactive loading of HVAC transmision wires is substantial: transformer nonidealities turn a resistive load on the secondary into a slightly reactive load seen at the primary, which introduces circulating losses. And let's not forget that an AC grid requires that all the generators feeding the grid are precisely synchronized, while a DC grid has no such synchronization issues, which simplifies the task of bringing power plants up and down.
By comparison, DC transmission requires complexity at the sender and receiver: generation is for the most part a fundamentally AC process (i.e., electrical generators), and of course homes are built for AC power, so the receiver must switch DC back to AC. But as power devices become better and cheaper, and the power grid's load increases (without commensurate increase in copper to handle higher currents), long distance DC transmission is becoming more commonplace. (And since modern AC transmission requires some power factor management anyway, the choice really isn't between "dumb transformer" and "massive inverter" anyhow.)
For example, when I lived in Boston it received a substantial amount of its power as HVDC from somewhere in Canada. Three big (like, BIG) inverting stations around town were responsible for turning this DC into AC for local transmission. This setup ostensibly saved substantially on conducted and radiated transmission losses, according to the folks who gave us a tour of one of the inversion stations.
Wikipedia has more on this topic. http://en.wikipedia.org/wiki/High-voltage_direct_current
DC is better over long distances than AC. The problem with DC is that generators and many engines operate on AC and that was more important at the beginning of electricity use.
The other big caveat being that for both AC and DC, you want to do long distance transmission at very high voltages. DC transmission has been put to real world use (converted back to AC into the grid), and it tends to be on the order of 100,000 to 1,000,000 volts.
Historically, AC was much more feasible to do this with because you can change the voltage with transformers, which are basically paired coils of copper wire. These days we have the capability to convert between AC and high voltage DC, but it's still requires comparatively complicated equipment and isn't as reliable.
Historically, AC was much more feasible to do this with because you can change the voltage with transformers, which are basically paired coils of copper wire. These days we have the capability to convert between AC and high voltage DC, but it's still requires comparatively complicated equipment and isn't as reliable.
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The story here is: "we have to post bitcoin related articles everyday to keep the price of BTC up"
Nothing stops alt-coins from continuing to exist independently as they do today if sidechains are implemented.
I liked the VoIP analogy, although other examples abound where an initial network effect was supplanted by competing implementations (e.g. search engines, social networking).
I liked the VoIP analogy, although other examples abound where an initial network effect was supplanted by competing implementations (e.g. search engines, social networking).
> Nothing stops alt-coins from continuing to exist independently as they do today if sidechains are implemented.
Network Effect does.
Network Effect does.
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no comments, yet trending. its a complex subject, i was hoping for some HN commenters to shed some light
Ah, the weekly Bitcoin hype thread. That there is still future for BTC other than a specific niche. The make believe story. In case there are still people not fooled yet. Don't get me wrong, I like BTC. But this speculation driven value investment is not the right way.
Replace bitcoin in what you just said with internet, VOIP, airplanes, ipod and you got a pretty solid template for historic underestimations of technology in the long run.
All the things you mention have value. But what is the value of using Bitcoins for the average person? Where are Bitcoins so obviously better than a credit card that switching is a good decision?
Bitcoin is awesome for anybody who needs to send money to family back home. And there are a lot of people who do that - and it's very expensive.
I think this is a great observation. Middle men make big money off of migrant workers.
They are good for a range of things including cross-border and micro txns.
Bitcoin transactions are cheaper than credit card transactions. Using the card networks exposes merchants to chargeback fraud, but since the internet now has cash, many merchants can transact with wide swaths of the globe that they previously avoided. Remittances. Capital controls.
No one's telling you to switch to Bitcoin, but it's clear that lots of people are going to use it.
No one's telling you to switch to Bitcoin, but it's clear that lots of people are going to use it.
Bitcoin transactions are way more expensive than you think, currently between 10 and 20 dollars.
Let's say I'm buying an Overstock rug with bitcoins. I do an instant buy with Circle and and send the bitcoins over. Am I paying $10-$20? Is Overstock?
Block rewards have no effect on whether people will use Bitcoin, especially since there are other digital currencies that don't have that issue. Inasmuch as it's a problem, it's fixable.
Block rewards have no effect on whether people will use Bitcoin, especially since there are other digital currencies that don't have that issue. Inasmuch as it's a problem, it's fixable.
Who do you think pays for the electricity bills needed to keep a 250 PH/s network online?
Bitcoin speculators. The folks who hook up their bank accounts to the Bitcoin network don't hold bitcoins or pay the block rewards.
250 PH/s, 1 W/GH/s, 0.1 $/kWh and you get 219 million dollars per year to run the Bitcoin network. At 75.000 transactions per day this yields 8 dollars per transaction. And these are real costs somebody has to pay for. Maybe most of that is currently covered by the influx of new money but this is not going to last forever. And once the block reward is gone this has to be covered by the fees. Neither lowering the hash rate nor reducing the the mining costs is an option because it undermines the security of the system. The only option is to process more transactions per block and this is not without problems on its own.
Of course you have also done the calculation for the current system right?
Hundreds of thousands of people involved in making the current system work. Legislation and so on.
Hundreds of thousands of people involved in making the current system work. Legislation and so on.
Does it matter? My point was that Bitcoin transactions are not cheap, that only looking at the transaction fee is misleading. The electricity costs per transaction are currently 200 times larger than the transaction fees, not accounting for hardware costs or any profit for miners. So the whole thing has to change a lot if you want a sustainable system with transaction costs close to transaction fees.
Yes it matters as thats also part of the cost.
So your position is that no one is ever going to figure out how to make cryptocurrencies sustainable? Bitshares is already doing it today, and any strategy that proves itself can easily be added to Bitcoin. It's a bad bet, but good luck with that.
Huh? The current fee is about 4 cents.
Not the fee, the costs, block reward divided by transactions in the block. Miners will use that to cover their electricity bills and you are paying for this indirectly when you buy Bitcoins.
That's irrelevant to the people conducting the transaction.
If I send $100 worth of bitcoin to someone, they receive $100 worth of bitcoin and I pay 4 cents worth of bitcoin to send it to them. There is no $10-20 transaction cost on either end of the exchange.
The value you're referring to is created by the block reward. It's additional value that did not previously exist, not value taken from someone else.
If I send $100 worth of bitcoin to someone, they receive $100 worth of bitcoin and I pay 4 cents worth of bitcoin to send it to them. There is no $10-20 transaction cost on either end of the exchange.
The value you're referring to is created by the block reward. It's additional value that did not previously exist, not value taken from someone else.
Bitcoin mining does not create money out of thin air. Running the Bitcoin network costs a lot of electricity and somebody has to pay for that. Right now it may still be mostly covered by the block rewards together with the influx of new money but the day will come where block rewards will no longer pay the bills and then you will have to pay for it with fees.
"Right now" is when you're quoting a $10-20 transaction cost.
There is no such cost for a given transaction, and it's simply incorrect to state that there is.
You're talking about something completely different and stating that it's the same. It is not.
There is no such cost for a given transaction, and it's simply incorrect to state that there is.
You're talking about something completely different and stating that it's the same. It is not.
I added the math to another comment and the electricity cost per transaction should be on the order of 8 dollars per transaction. Part of it is payed by the spread between buying and selling Bitcoins, part of it is payed by the influx of new money keeping the spread narrow. The point is that Bitcoin transactions are not cheap, you are just kind of lucky that other people will pay some of the costs for you right now. But this is obviously not sustainable. If the influx of money stops, miners selling their block rewards to pay for electricity will just drive the price down and you pay all the costs with the spread.
I'm no bitcoin apologist, but off the top of my head:
1. Due to Bitcoin's cash-esque nature, you don't hand over your account keys when you make a transaction. Every time I hand my credit card to a 16-year-old waiter I'm trusting that he's not going to take a quick picture of it with his cell phone to go shopping with online later. Since a Bitcoin transaction encodes a specific transfer of a specific amount from one address to another, I don't have to worry that that transaction is going to get leaked down the road (/stolen at an ATM/gas station/POS terminal) and end up putting my entire financial stability at risk.
2. Credit card processing fees inhibit a lot of services that could be microtransaction-based from becoming reality, because they aren't financially viable to run once you consider transaction fees. Bitcoin opens opportunities for a huge range of services that are only viable with minimal transaction fees to become reality.
1. Due to Bitcoin's cash-esque nature, you don't hand over your account keys when you make a transaction. Every time I hand my credit card to a 16-year-old waiter I'm trusting that he's not going to take a quick picture of it with his cell phone to go shopping with online later. Since a Bitcoin transaction encodes a specific transfer of a specific amount from one address to another, I don't have to worry that that transaction is going to get leaked down the road (/stolen at an ATM/gas station/POS terminal) and end up putting my entire financial stability at risk.
2. Credit card processing fees inhibit a lot of services that could be microtransaction-based from becoming reality, because they aren't financially viable to run once you consider transaction fees. Bitcoin opens opportunities for a huge range of services that are only viable with minimal transaction fees to become reality.
Not sure about the situation elsewhere but here in Germany credit card usages usually requires a PIN or a signature. And the credit card company will pay for abuse if you are not responsible.
With transaction costs currently between 10 and 20 dollars per transaction and with a record of close to 100 dollars it does not really look like a good way to implement micro transactions.
With transaction costs currently between 10 and 20 dollars per transaction and with a record of close to 100 dollars it does not really look like a good way to implement micro transactions.
Where are you getting the transaction costs of between 10 and 20 dollars? For bitcoin? If so I think you need to take another look at your numbers.[1]
[1] http://i.imgur.com/DgQk0og.png
[1] http://i.imgur.com/DgQk0og.png
Not fees, transaction costs. See one of my other comments, I don't want to type it out once again.
They didn't have value for the average person they GOT value with time.
Who ever needed TCP/IP besides the governments? Well as it turns out the whole world did and not in any way it was originally intended.
The difference between short term hype and long term implications are always hard but I think when it comes to bitcoin I think its fair to say that we haven't even begun to see the implications.
Who ever needed TCP/IP besides the governments? Well as it turns out the whole world did and not in any way it was originally intended.
The difference between short term hype and long term implications are always hard but I think when it comes to bitcoin I think its fair to say that we haven't even begun to see the implications.
I was trying to think of a good answer but you're right.
The key advantages are decentralization and anonymity and to the average person who just wants a simple secure payment solution a credit card has all the advantages.
The key advantages are decentralization and anonymity and to the average person who just wants a simple secure payment solution a credit card has all the advantages.
Bitcoin is not anonymous and not meant to be. It never will be and shouldn't be to gain widespread adoption.
For the average person, I can list a few reasons: - near immediate transfer of money across international borders - close to zero fees or greatly reduced fees when transferring money internationally - safe and secure store of value (for the unbanked)
Then there are the future killer apps that will be created - tipping on the internet (changeTip / Coinbase) - programatic money - smart contracts - pure play digital banking - ??
It's hard to see how bitcoin could apply to the general public sitting at your computer in a first world country. But keep in mind there are nearly 5 billion unbanked or unserved people in the world where bitcoin (or similar) will change their life.
For the average person, I can list a few reasons: - near immediate transfer of money across international borders - close to zero fees or greatly reduced fees when transferring money internationally - safe and secure store of value (for the unbanked)
Then there are the future killer apps that will be created - tipping on the internet (changeTip / Coinbase) - programatic money - smart contracts - pure play digital banking - ??
It's hard to see how bitcoin could apply to the general public sitting at your computer in a first world country. But keep in mind there are nearly 5 billion unbanked or unserved people in the world where bitcoin (or similar) will change their life.
Fast transfer, agreed. Cost per transaction is currently between 10 and 20 dollars and has been close to 100 dollars. I don't know what a wire transfer costs but I don't think the advantage is huge if you are only transferring a couple hundred or a few thousand dollars. Safe and secure store - taking malware, hacked exchanges, price fluctuations and the like into account, I am not sure it looks really bright. Future killer apps - let's talk again, when they are real. And tipping, for example, does not look like it could work - transactions are way to expensive to be used to tip a dollar. And when it comes to unbanked people I am not sure that it would be better or easier for them to adopt Bitcoin instead of a traditional banking system.
Bitcoin is a duality, something with utility while being traded. All of your examples provided a utility which drove revenue; Bitcoin tends to be reversed.
The article:
* people are beginning to take bitcoin more seriously.
* there are multiple cryptocurrencies
* bitcoin is the biggest
* namedropping for blockstream
* namedropping for stellar
* ¯\_(ツ)_/¯
* maybe the real competition between cryptocurrencies is still to come
I'm not sure of the message or the point here. My guess would be to namedrop blockstream, but the whole thing is unfocussed and confusing to me.