Dear Bitcoin 'Wealth Preservers", You're Doing it Wrong

Vince Lanci's picture

The Point

by Fay Dress for Soren K. Group

Can you, the reader, substitute Bitcoin for Gold in this statement made by a pre-sellout Alan Greenspan?

?

We  cannot. 

Bitcoin is Not Money ( and Neither is FIAT)

Here is why we cannot:  Bitcoin is a medium of transfer. It is not money yet. It will likely NEVER  be money.

While it shares one excellent characteristic with Gold right now, that being it is a borderless  currency, it will not sustain that quality as envious governments, banks, and corporations will demand it be reeled in. And as such, it will NEVER  be a substitute for Gold. And we are aware that the use of superlatives is ALWAYS a sign  that an argument is specious.  So be it.

Bitcoin shares with Gold for the moment the ability to unshackle people's economic freedom, but it is ludicrous to think it could satisfy the other requirements needed to be called money let alone the other qualities that make gold the best example of the definition of "Money" itself.

  1. Medium of exchange: Bitcoin satisfies this. It is used as a means to transfer your Rubles to Dollars without being "watched". Not unlike how the USD is used to convert your chicken sales into a purchased cadillac. But different in the sense the Government is watching that trade and will not let you sell your chickens to that guy in Haiti even though he is offering a higher price. 
  2. Unit of account: Bitcoin is too volatile, and not "commonly accepted" as a standard - although that may change as it evolves. just know that volatility undermines confidence in a currency (Zimbabwe, Reichmarks etc)
  3. Store of value: Bitcoin does not hold its value over time. Yes it is growing in value, but that is precisely what we mean. It is also NOT a convenient way to store wealth. Just ask the guy expatriating Yuan to Australia to convert it to  USD and his Bitcoins drop 20% in 5 minutes. Stability is key. And Bitcoin has none of that.

FIAT is a horrible long term store of value. Bitcoin is a horrible short term store of value

Do a Sharpe vs Sortino ratio comparison on both BITCOIN and all FIAT to make our volatility point. We are sure the Sharpe ratio will show up as lower in both  Bitcoin and FIAT than their Sortino ratios. And the Sortino ratios will show most volatility in Bitcoin is to the upside, while all FIAT will show volatility to the downside.  

The USD:  slowly sucking you dry.

?Sharpe Ratio says "Low Volatility!!" ; Sortino Ratio Replies: Yea but it is all to the downside Post Bretton Woods 

Bitcoin: All upside, unless of course you store your wealth in it today and are fine with it being +/- 20 % when  you go to buy lunch with  it.

We are not going to even show you a BTC chart because it will be obsolete by the time  you read this. Suffice to say, until recently, it was alsmost all upside volatility if you mearued it in months. Now it is also showing some downside volatility. But overall, it is more than likely that BTCs Sortino ratio is awesome over its life. Lets put our savings in it. I'll buy Christmas presents with it in 6 months. What could go wrong?  Ok Fine. Here is a chart. It's what you all came here for  isnt't it? The shiny new thing?

CRYPTO CHARTS and  Prices HERE

Both FIAT and Bitcoin are Fraudulent Money

Thus based on volatility analysis Bitcoin would be a new hedge fund with a short tremendously positive reason to invest. FIAT is a hedge fund that loses money every year. Yet we keep allocating our assets to it. Both are poor investments for different reasons. Neither is a store of value. 

Assuming it does become stable over time, do you think a government will permit Bitcoin  to be money? Any central banker who does not abuse his dictatorial privilege, whether rationalized b/c of some monetary dogma (Yellen) or  being just plain self-interested (Any Leftist LATAM dictator survival)is not worth his salt as a CBer

It would be easier for China to print 1Trillion Yuan, buy Bitcoins with it, then sell those same coins. This is how easily it would be to destroy confidence in a new currency that is just a medium of transfer so far. Who cares if China loses money on the exit? And they have ways to make sure they do not lose money we are sure. Bitcoins are currently capped. FIAT is not.

To the extent that Bitcoin rallies it is probably a good  proxy for demand to leave a country. But what do you do after you've gotten out of your Venezuelan Bolivars? You put them in the FIAT of the country you deem as having a more stable currency. To keep your wealth in Bitcoins would be like remaining in a doorway between  universes. Sure you could spend them but you'd be hostage to the 100% volatility if you used it as a store of value instead of a transitional medium of exchange from one FIAT to another. Those who buy and hold Bitcoins are likely the speculative class inadvertantly betting on collapse of economies and wealth moving around. That is fine. But do not tell us it is money. At least not yet anyway.  It is used practically as a pipeline to some other asset. And that is a medium of exchange.

We'd suggest you take your expatriated Venezuelan wealth and on the other end change it to gold. For when you look at it, No FIAT currency is a store  of value. The  volatility of FIAT may be low, but by no  means does it hold purchasing power.  

Gold on the other hand does. So if you are buying BTC as a subsitute  for Gold because it is enjoying the rallytaht you'd hoped Gold would get when the world figured out FIAT was fraud; then  your premise is wrong. Money is a store of wealth with stable buying power  over time. If BTC collapses with your wealth and you've bought on  this premise, then  good luck. Not only will you have confused a Nasdaq stock  with a store of value, you will have no wealth left to actually buy something that protects your  buying power.. you know GOLD.

So, Where the hell is blockchain product with the Gold front end? To  be fair, if a good one even existed ( we haven't done the work yet) do you think the financial powers and their lackey media shills would discuss it as a viable store of wealth and a liquid  medium of exchange? Not likely.

Short of a trade indexed USD, Gold is the best way to hedge your buying power whether it be inflation or deflation you are scared of. Diatribe over.

-SKB

 

Recco - Read

Yet more proof we have much to learn below. This is scary to us and a wake-up call to our own naivete on our hope for even the technicological ability to remove a human intermediary in Blockchain exists. It may not.

Blockchain: Almost Everything You Read Is Wrong

Blockchain needs no 'Human Trust Intermediation' - so long as you confine yourself to Bitcoin.- Steve Wilson

Introduction

by Soren K. Group

The article is worthy for reading whether you are a Blockchain  wonk or not. It explains why Blockchain is NOT going to cure cancer. For us, as semi-wonks we agree.  But the last part of the article was new info  to us. We had labored under the assumption that Blockchain itself was a catalyst for a banking revolution for 2 reasons. 1- Ledger technology lowers clearing turn-around time and thus makes double transactions all but impossible. (Still true) 2- Its ledger tech obviates the human centralization needed for "trust" verification. (Not so much). Now we need to re-examine. And that is the reason for our headline. To examine what we've assumed in the context of this new white-paper:

First: Blockchain May Need Bitcoin- In the last part of the author's article, he describes that Blockchain without Bitcoin as its front-end does NOT eliminate the need for "trustee" type oversight. We do not claim to know if this is true or not. But it does force us to examine everything we thought we knew about the Blockchain ledger mechanism and our thought that it alone removed the need for centralized "trust" in human form.  We do know that corporations are now creating their own products using Blockchain. That fact tells us the Banks are looking to co-opt the tech for cost reduction for sure. But now we must add into our calculus that they might not be disintermediated by their own success at all when their branded products are implemented

Second: We Feel Bitcoin is Doomed in the U.S.- one of the two things that make Blockchain attractive to us is its ability to remove a need for human/ corporate centralized "trustees". (The other quality is its removal of clearing risk and potential  "double dipping" transactions). If Blockchain's disitntermediation ability is intrinsically tied to using Bitcoin as its front end, then all may be lost in this  "Banking revolution".

For we "know" Bitcoin will not be allowed to prosper here. We feel strongly that once Bitcoin is seen as a threat to the US banking industry (and/or they do not have their own product up and running thereby ring-fencing their own client base) the paid for politicians will be ruthless in stopping it. Banks will reject money for Bitcoin  transactions on the grounds of "know your client". The Government will back this up.  Lawmakers and Fed shills like Ken Rogoff will use "But the criminals are using it!" to ban its use. Trust JPM's Blockchain product! etc etc. 

If what Mr.  Wilson says is true, and additionally  there is no future chance of a front-end asset that uses Blockchain as its pipeline being completely non-dependent on  centralized "trustee" oversight in design; then Blockchain is going to be a corporate tool for branding and  lowering cost and increasing profit margins for them only. And Bitcoin will crash on the rocks of the U.S. if it attempts to supplant Banking's most important franchises. 

 

Author  Steve Wilson for constellationr.com

Almost everything you read about the blockchain is wrong. No new technology since the Internet itself has excited so many pundits, but blockchain just doesn’t do what most people seem to think it does. We’re all used to hype, and we can forgive genuine enthusiasm for shiny new technologies, but many of the claims being made for blockchain are just beyond the pale. It's not going to stamp out corruption in Africa; it's not going to crowdsource policing of the financial system; it's not going to give firefighters unlimited communication channels. So just what is it about blockchain?

The blockchain only does one thing (and it doesn’t even do that very well). It provides a way to verify the order in which entries are made to a ledger, without any centralized authority. In so doing, blockchain solves what security experts thought was an unsolvable problem – preventing the double spend of electronic cash without a central monetary authority. It’s an extraordinary solution, and it comes at an extraordinary price. A large proportion of the entire world’s computing resource has been put to work contributing to the consensus algorithm that continuously watches the state of the ledger. And it has to be so, in order to ward off brute force criminal attack.

How did an extravagant and very technical solution to a very specific problem capture the imagination of so many? Perhaps it’s been so long since the early noughties’ tech wreck that we’ve lost our herd immunity to the viral idea that technology can beget trust. Perhaps, as Arthur C. Clarke said, any sufficiently advanced technology looks like magic. Perhaps because the crypto currency Bitcoin really does have characteristics that could disrupt banking (and all the world hates the banks) blockchain by extension is taken to be universally disruptive. Or perhaps blockchain has simply (but simplistically) legitimized the utopian dream of decentralized computing.

Blockchain is antiauthoritarian and ruthlessly “trust-free”. The blockchain algorithm is rooted in politics; it was expressly designed to work without needing to trust any entity or coalition. Anyone at all can join the blockchain community and be part of the revolution.

The point of the blockchain is to track every single Bitcoin movement, detecting and rejecting double spends. Yet the blockchain APIs also allow other auxiliary data to be written into Bitcoin transactions, and thus tracked. So the suggested applications for blockchain extend far beyond payments, to the management of almost any asset imaginable, from land titles and intellectual property, to precious stones and medical records.

From a design perspective, the most troubling aspect of most non-payments proposals for the blockchain is the failure to explain why it’s better than a regular database. Blockchain does offer enormous redundancy and tamper resistance, thanks to a copy of the ledger staying up-to-date on thousands of computers all around the world, but why is that so much better than a digitally signed database with a good backup?

Remember what blockchain was specifically designed to do: resolve the order of entries in the ledger, in a peer-to-peer mode, without an administrator. When it comes to all-round security, blockchain falls short. It’s neither necessary nor sufficient for any enterprise security application I’ve yet seen. For instance, there is no native encryption for confidentiality; neither is there any access control for reading transactions, or writing new ones. The security qualities of confidentiality, authentication and, above all, authorization, all need to be layered on top of the basic architecture. ‘So what’ you might think; aren’t all security systems layered? Well yes, but the important missing layers undo some of the core assumptions blockchain is founded on, and that’s bad for the security architecture. In particular, as mentioned, blockchain needs massive scale, but access control, “permissioned” chains, and the hybrid private chains and side chains (put forward to meld the freedom of blockchain to the structures of business) all compromise the system’s integrity and fraud resistance.

And then there’s the slippery notion of trust. By “trust”, cryptographers mean “out of band” or manual mechanisms, over and above the pure math and software, that deliver a security promise. Blockchain needs none of that (Edit: Human Trustee mediation- Soren] - so long as you confine yourself to Bitcoin. Many carefree commentators like to say blockchain and Bitcoin are different things, yet the connection runs deeper than they know. Bitcoins are the only things that are actually “on” the blockchain. When people refer to putting land titles or diamonds “on the blockchain”, they’re using a short hand that belies blockchain’s limitations. To represent any physical thing in the ledger requires firstly a schema – a formal agreement about which symbols in the data structure correspond to what property in the real world – and secondly a process to bind the owner of that property to the special private key (known in the trade as a Bitcoin wallet) used to sign each ledger entry. Who does that binding? How exactly do diamond traders, land dealers, doctors and lawyers get their blockchain keys in the first place? How does the world know who’s who? These questions bring us back to the sorts of hierarchical authorities that blockchain was supposed to get rid of.

There is no utopia in blockchain. The truth is that when we fold real world management, permissions, authorities and trust, back on top of the blockchain, we undo the decentralization at the heart of the design. If we can’t get away from administrators then the idealistic peer-to-peer consensus algorithm of blockchain is academic, and simply too much to bear.

I’ve been studying blockchain for two years now. My latest in-depth report was recently published by Constellation Research.

Read more by Soren K.Group

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jabhagsb's picture

Besides the obvious benefit of life-changing investment gains, cryptos are also a moral investment for those seeking to transact outside of the fraudulent banking system and corrupt governments:

https://steemit.com/cryptocurrencies/@jabha/the-moral-case-for-investing...

Weirdly's picture

The word money is outdated.  We are now in times where we no longer need to accept the good and the bad of whatever money is chosen by the market.  We can design a store of value that is perfect.  We can design a unit of exchange that is perfect.  We can design a unit of account that is perfect.  Arguing what is money and what is not money is a pointless excercise for goldbugs with too much time on their hands.  Currency or not, Bitcoin is not the debt of another party. This makes it a better store of value than any national currency out there.   

thurstjo63's picture

Good to see more idiots piling in trying to convince themselves that bitcoin is not money. And let's see what they use to prove that it's not a store of value, the US dollar!?! As though the US dollar is a store of value!?! Oh bitcoin is volatile in relation to the US dollar because the US dollar gets printed ad infinitum (how many trillion since the financial crisis in 2008?). So of course the US Dollar is valuable and bitcoin is not! THERE'S A GOOD WAY TO DETERMINE WHETHER SOMETHING IS A STORE OF VALUE!?! Since of course only gold which the government was able to confiscate back in the 1930s and like cash nowadays which they confiscate like candy from a baby (have you heard of civil forfeiture idiot!) is going to be used for people as a medium of exchange!?! And then they start attacking blockchain. They might as well attack the whole IT industry because what is blockchain but a way to do programmatically with money what has been happening to just about every other industry on the planet (hey clowns, have you heard about robotics?). But of course, it's WAY TOO COMPLICATED TO DEVELOP PROGRAMS TO DISINTERMEDIATE THE OVERWHELMING MAJORITY OF PEOPLE IN THE FINANCIAL INDUSTRY!?!  So therefore, BITCOIN AND BLOCKCHAIN HAVE NO VALUE!?! And for their final argument, they say that the US government is going to outlaw bitcoin because, of course, THAT HAS WORKED SO WELL IN OTHER COUNTRIES LIKE ... WAIT FOR IT... ZIMBABWE!?! You cannot make up the profound levels of stupidity from people who believes themselves to be rational civilized folks nowadays. Chalk this up to another clown who doesn't know what he is talking about.

OCnStiggs's picture

The issue no one has yet explained satisfactorily about cryptocurrency is the supply-side dynamics...

If there were only three or four cryptos out there I could see some stability if the market grew where demand for crypto met the supply of those offered. But there is no limit on how many can be created! As a thought experiement, lets say 1000 industrious computer software writers decided to roll out their crypto currency. That would kill the pricing as it diluted demand. This is why precious metals have lasted; you cannot simply "make" more of it. There is only one "brand" of gold.

I find it very hard based on the above analysis to see unlimited crypto offerings as anything other than technical Ponzi (or AMWAY!) schemes where by the value rises as people essentially get paid by divesting blocks of their crypto to those willing to pay a higher price for entry. And, in turn, those people want to do the same. That is, until everyone runs to the next crypto because it has better security or better utility or whatever.

Sorry... I am still not sold.

 

 

atx_0110's picture

New cryptos "dilute" the supply side in the same way the Snapchat IPO diluted the share price of Apple. Or how Zimbabwe's quadrillion dollar note dilutes the USD. Or how the price of lead dilutes the price of gold.

ali-ali-al-qomfri's picture

'Happy face nigga never seen me smile
Whip dat mainframe
I'll explain
A nigga like me is goin' insane

Insane in the blockchain.
Insane in the brain!'

-CyHil

Why Bother's picture

Vince, I don't think bitcoin is a fraud...one bit! I do own more gold and silver than all my cryptocurrencies, however. I come from the cryptography trenches. I know some stuff about blockchains and sending and receiving. And I am studying (on the side) several smartphone apps to see how they broadcast transactions (payments or "send" actions). This is important information the layman needs to become aware of because nodes are all over the planet, and more mesh nodes are popping up. Also these applications are open source software in the github network, so they are verifiable that they are not hacked before you download them to your phone, if you have that technical know-how.

So I laugh at those alarmists who say the government will regulate cryptocurrency out of existence unless it's their own fedcoin.

Cryptocurrency is here to stay. I have the ability to make sure it will be. Anyone with technical skills can make their own smartphone apps - and that is what will it takes. The last cryptocurrency meetup I went to, it was two weeks ago, had more than 80 people show up. A record attendance. There are probably half a dozen such meetups like that monthly in my area. This is growing and decentralization is a train that cannot be stopped.

Vince Lanci's picture

Ok. Let me clarify and fess up. Bitcoin is fraudulent as money is our opinion poorly stated. To self-critique and clarify further.

1- Crytos do not meet the ( somewhat subjective) criteria of money

2- Cryptos can become money in every sense of the word - but over the incumbent governments' dead bodies.

3- Crytpos are not a place to preserve wealth. they area place ot create wealth. The exception is of course of you are prohibited form getting your venezuelan Bolivars converted to USD, but can get them into BTC and then change them into something more stable

We stand by 1 through 3. Here  is where we are being a bit sensational:

4- fraud is wrong. it implies intentional deception. False is more like it.Further, the cryptos do not profess to be money. the shilling brokers do. So we were being a little cheap there. Point taken

5- if we gave the impression that cryptos are going away then that was wrong. Blockchain aint going anywhere. Bitcoin will not disappear. These doors cannot be closed. What is likely next is an arms race as governments and banks try to disparage, prohibit, co-opt, and create their own version of these products.By arms race i mean : the gun was invented, armor is useless.. Forts are invented. Guns get bigger.. forts change  design to star forts to deflect newer guns etc. There will be an economic, technological, and regulatory war waged. Meanwhile, incumbents everywhere  will seek to ring fence their clients whle simultaneously slagging cryptos and secretly creating their own.

No ,this is big and posibly does what revolutions could not; level the playing field for people. The question is, how will they try to co-opt it and if they do notsucceed, what kind of world will we live in. Kind of cool. I feel they will succeed, and here is why. They will just change the  law if all elsefails. That said, winning will be losing. The barter/ black market will grow as more people wake up and the technology is more proliferative. shut down bitcoin? then bobcoin will pop up . obviously all conjecture. But regardless, this genie aint goingbcak i nthebottle. Does that help?

Why Bother's picture

Well yes that helps.

Note that the blockchain(s) is far more than cryptocurrency. Smart contracts are in use now. I have a Shapeshift Prism portfolio and it is based on Smart Contracts on the ETH blockchain. The Prism api will also be able to be put on the Bitcoin blockchain via the RSK smart contracts for Bitcoin.

The blockchain will decentralize our lives more and that means more of the power returned to the people. That means less tyranny, and it will also reduce the incentive for wars and the tendency for collectivism. I know I'm sounding too positive but I'm seeing this from 15 years of cryptography. The world is going to change radically in the next five to ten years, and for the better - unless some psychopath decides to use nuclear weapons before then.

disagreeableness's picture

I'm up over 1000pc w/Litecoin since early April. With the current state of things I think the author is correct, none of the cryptos are money. Any more than say AMZN. Which brings me to my next point, likely the death of fledgling cryptos (BTW incl) will be Amazon Coin or something similar. Block chain does what it's designed to do, and all things considered it does it very well. Having said that, the (R) evolution continues. There're many hurdles yet to be overcome. BTC will survive August 1, but no matter what it won't be pretty. I'm completely out of it until I see how UASF resolves. There's no way I'm alone in that conclusion, I'm not all that sophisticated there are many wiser and more invested than I. Watch the BTC sails go limp, third week of July. 

jpot34's picture

Why not buy BTC, ETH, LTC, Gold, and Silver?

glitzcity's picture

I am going to report you to Max Keiser. He and Stacy will probably devote whole show calling you all sort names.

Vince Lanci's picture

wait.. ismax on the BTC bandwagon? i have stopped listenting to him year ago

AustrianJim's picture

The author is right on most, maybe all of his points.

Let the downvoting begin.

Vince Lanci's picture

ill get it started. ;)

and thank you. But is Steve Wilson right? That just pisses me off if he is. Adn it means thebanks have no fear of disintermediation for now

GodSpeed_00's picture

What is this drivel? These idiots were talking about Bitcoin being a failure since it came to be and they're always wrong.

Vince Lanci's picture

where does either author call it a failure? It is a home run as an investment. It is a wealth creator. You sound like just the person who might be long averaging in if it goes to 25 and puke at 23. Your angry while profitable...  that is a recipe for demial when you are losing money.

PumpherDumper's picture

The author has a point.  I wonder if he thinks that the 17 monster boxes of silver that I purchased with bitcoin last year is doing it right.

Regardless of what the author thinks, cryptos have made and will continue to make me absurd amounts of MONEY.

Vince Lanci's picture

amen to both points. Bitcoin creates wealth. Take that wealth on a regular basis and  adjust your risk into  a less volatile asset.

SILVERGEDDON's picture

Pumper - you are the only Bitcoin fan boy who is doing it right. 

Use it or lose it.  

aminorex's picture

You spent two years studying this technology and the best you can come up with is this basket of half-truths and misconceptions?  Any fool who buys your report is an incompetent headed for a trainwreck.

Vince Lanci's picture

To clarify: Steve Wilson spent 2 years studying it. His  credentials are quite solid. So if you disagree wiht his assessment. We are keen to hear where he is wrong on  the concept that only Bitcoin offers true disintermediation  and"trustless" use of blockchain.

We are looking for faults with his logic and are reasching out to him to learn. Which stateent does he make that is a halftruth?

But if you have an explanation by all means share it.otherwise STFU.

thedespised's picture

LOL. Checks portfolio and growth for the year... I'm 440% in crypto investments. Go fuck your advice.

Vince Lanci's picture

Yes and that is good.

It is also called Wealth creation.We are not saying  BTC isnt a means ofwealth creation. You may be rich but you are wrong

God help you if you need that money to spend and at that moment BTC has a mini swoon.

You could be the guy who goels al in with 4 aces who gets  crushed when  the otherplayer has a royal straight flush.Bankroll mgt, VaR,  Wealth preservation.. Similar concepts.

lets see how long you stay rich

Wanna play poker?

1.21 jigawatts's picture

Sorry but gold WILL NOT be money again until that narrow window of time before the zombie apocalypse. 

I got 3 words for y'all:  ETF

Vince Lanci's picture

the moment gold is money again ill be sellign it For  a gun to "buy" my corned beef on rye at a deli - cheers

SILVERGEDDON's picture

Gold never was money - the value of gold backed a currency which was used for monetary exchange.

This was based on the fact that you could exchange your worthless filthy little fiat bux for real value - gold, at any time, to take your store of value into your own possession and control at any time, by law.

Said laws still exist - the FED and government conveniently ignore laws governing currency in the USA, and do what they wish - and the sheeple let them do so based on ignorance, and the desire to be led to the slaughter as long as it is easy and convenient.  

Gold is personal control over your efforts to stay ahead of government, taxation, the theft imposed by inflation, and the theft imposed by the devaluation of our worthless fiat currency. 

cheech_wizard's picture

>Gold never was money? <eye roll> Why make a statement you know is inherently false?

Your lack of historical knowledge is terrible.

Quick examples...

http://www.ancient.eu/gold/

http://numismaster.com/ta/inside_numis.jsp?page=history-gold-coins

 

Vince Lanci's picture

salt never was money too! lol

Vince Lanci's picture

this may be semantics. But to us, Gold was (is?) money. The Paper is the currency.

So our money is now GDP based possibly? but our currency is theUSD.

Happy to be wrong here.

stitch-rock's picture

Gold is one of the core metrics of normalcy bias for the fiat system.
It will never see price discovery until the system its bound by initiates a shift of paradigm.

Jubal Early's picture

"Medium of exchange: Bitcoin satisfies this."

Sorry, this is not true.  A medium of exchange transacts immediately.  Bitcoin merely places your "exchange" in a pool where it swims until some miner picks it up and writes the block into the chain.  This occurs at about 7 transactions a second.  This is laughable and will remain so even if they successfully double  the block size in August.  In any kind of a crisis or rush to buy/sell BTC there will be a complete collapse of the system.  Coindesk has already shown that it cannot cope when things heat up.

jabhagsb's picture

There are several cryptocurrencies with immediate, anonymous, nearly free transactions. Try that with the banking system.

Vince Lanci's picture

Thanks. And we did nto consider that. So it sounds like you are describing  the old level 2 ECN where the marketmaker  with Level 1 had time to say yes or no to your  hitting his bid... not the same mechanics, but certainly the same effect risk

PumpherDumper's picture

Litecoin will take care of this problem.  Pro tip:  get some now for a ten-bagger.

jimijon's picture

Hey,,, let's compare it to gold since BitCoin is the cybercrypto equivalent of it now. How long does it take you make a transaction of say $50 in gold to buy a product on the Internet?

 

 

Vince Lanci's picture

"Never buy gold with  BTC.. You buy Gold with theproise of sending acheck  i n 3 days. This way, if it goes up you pay. If it does not, you just reneg- Hillary Clinton for Tyson  Foods

thedespised's picture

This scaling solution will be running by end of summer, rendering your points moot. You aren't dealing with central banks, expect innovation and fixes to the weaknesses.  Moving on from the stupid people and their 1900s assessments...

quesnay's picture

Aren't they just doubling or quadrupling the block size? While an improvement, that hardly seems like 'solving the scaling problem'. Instead of 7 transactions per second it will go up to 14, or 28 transactions per second. This is still nowhere near high enough to be considered as 'solving' the scaling problem. This is a "duct-tape and bailing wire" fix that does not address the fundamental architectural problems that prevent Bitcoin from scaling in a continous and non-disruptive way.

Vince Lanci's picture

not so sure of that. Some evidence points ot people beingthescalingsolution obstacle. As in "We dont want to increase scale because we cannot adn our own little fiefdoms will suffer" Not tunlike the member- floortraders who delayed  exchanges from going electronic for years.

There may be a technological solution for scale coming. The solution for the people problem will be solved by demutualization.

At least we thing that

Jubal Early's picture

Changing the block size is not going to solve this problem, the design is fatally flawed.  There is no way a major "medium of exchange" for the world is going to be able to scale up anywhere close using this turkey.  The transactions would be coming so fast and just the network latency of a majority of the miners around the world confirming a block would be way too inefficient.

And this is even before Bitcoin really starts fragmening.  As time goes on each btc is being split into mili-coins and santoshi's. This will also dramatically increase complexity, errors and bog down the system.

Now compare that to paper or coin based medium of exchange.  Every person on the planet could make an exchange simultaneously and guess what?  All those transactions would compelete in a milisecond.  Image Bitcoin at 7 transactions or even 7000 transactions per second.

 

Vince Lanci's picture

My response intened to say technology MAY solve thproblem  of scale. Fro example would not quantum computinggo a long way towards alleviatign the problems you describe? My main point is that people will be the problem, incumbents in all forms. Orphaned block chains, closed blocks. ( if im using the terms remotely right). Stuff that an amazon would use to keep you on their site like coupons.Without scale, smealler closed systems would havea better chance of scaling with all thebenefits to the intermediator (no clearingrisk), and none to the user ( they will still play the float on you). If this doesnt scale it will largely be a tool in the hands of incumbents.The concept of aglobal  monetary system where economic freedom is protected and true price discovery wonthappen.

if this were paralelled with politics it woulde best be implemnted as a leftist anarchic revolution o nthepath to communism (not a negative point) . Or atleast a trotskyist tool for democratic rule.

Am i missing something?

ShorTed's picture

PMs only have value because you believe they do, just as crypto, just as fiat paper currency.  

Granted gold/silver have served as money for 5000 years, doesn't mean it's not based on a belief that others willing to accept it.  I agree that it is difficult to walk into any retail establishment and spend crypto, but tell me, how many places do you spend gold or silver?  and what do you take your change in, if not fiat?

Anything that the CBs can't control is = freedom.  As of now it seems obvious that CBs are manipulating PMs outright ( or at least allowing to be) so how does that =  freedom?