Topic: "Failure to Understand Bitcoin Could Cost Investors Billions" (Bitcoin's flaws) - page 13. (Read 43230 times)

I am not arguing that Bitcoin won't go up in price (although it is remotely possible it could be entirely defeated by an altcoin, the more likely future is Bitcoin prospers while an altcoin might also due to a bifurcation on the principle of strong anonymity).

I am arguing that we will lose our decentralized currency and anonymity.

Bitcoin : The Digital Kill Switch

You might accrue large capital gains, but I am also arguing the government is going to confiscate our gains any way. See this post, the Mad Max and the Economic Devastation threads.

In my opinion our biggest problem is financial survival going into a coming horrific global sovereign debt implosion (2016ish running for a decade or more of hell) that will force the governments to confiscate everything they can get their hands on.

And we need decentralized currency and payment in order to prevent the internet from being dominated by an advertising funding paradigm and few large corporations. See the MtGox demise as a prime example of how centralization leads to failure and/or government control.

In short, I argue we are threatened with losing freedoms we gained with the internet and worse...

And I am not going to let that happen.

For example did you know there is a government push towards mandatory Facebook accounts, and that Facebook is even recording your pattern of typing so they can identify you even when you are not logged in!

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We concluded in upthread discussion that for Bitcoin the easier attack vectors are regulation (since anonymity can easily be universally broken ex post facto with coin taint) and taking control over the few large pools.

Designing defenses against the 51% attacks is more relevant to the proposed altcoin that would be more impervious to regulation and pool centralization.

The above is what I have been sort of thinking about.  If bitcoin reaches astronomical prices (which I assume most of us hope), so does the incentive for the 51% attack.   I believe I heard Andreas talking about when the market cap goes up, so does the cost of the equipment and networking power needed to actually accomplish the attack.   I guess in theory, it would be idiotic to spend that kind of money just to disrupt a network and squash their own investment.  Wouldn't put it past the US government to throw away tax payer dollars like that...

Ok, I'm not going to debate what the powers that be may do or not do, but Visa is still worth something, yes? 

If Bitcoin, in any form, effects the sort of large scale change on the financial system that it is capable of, even to the point of grabbing  any substantial market share whatsoever from traditional payments people, Visa, PayPal et al, that is still going to be worth a good pile of cabbage.

Perhaps this OP did not make my position clear enough. I am not arguing that Bitcoin will be shut down.


The government and the financial powers-that-be (who own the government) are not going to allow any decentralized crypto-currency that they can't tax and effectively control.

The powers-that-be will allow Bitcoin because they are already taking control of it (and some of us speculate they even created it). I explained in the OP that they can take control with regulations such as AML and KYC laws, which enable them to identify all (even formerly anonymous) users and tax them. The mining is centralized in a few mining pools thus the financial powers-that-be can eventually take control of the mining.

The point of my OP is that Bitcoin will end up essentially analogous to another VISA, i.e. a fiat compatible system that is top-down controlled a.k.a. centralized.

Yes:  There is a lot of improvement that needs to be done to the protocol and the ability to use it that will allow for increased use.

No:  The op-ed piece's fundamental underpinning seems to be based on the supposition that government simply won't allow it.  While I can see the logic behind that, it is a far from settled issue.  We'll see regulation, yes, but outright quashing?  I doubt it, except for a handful of places like China, Russia, where you'd kind of expect it in the first place.

You've attributed accusations to me which I did not state. My position is that the number of serious (i.e. frequent use or maintaining a level of balance worth remembering) Bitcoin users may still be below 1 million, i.e. 1 in 7000 people, which lends some credence to the notion that it is still (if only remotely) possible for an alternative to overtake Bitcoin or at least establish a lower but significant market share, and notwithstanding yet especially if the market bifurcates to a government-compliant coin (i.e. trending towards fiat) and an anonymous darknet coin (i.e. maintaining decentralized currency).

No where did I state that Bitcoin had to reach 7 billion users in order to succeed or go up in price. And no where have I stated—in fact I emphatically warned the opposite last year—that Bitcoin's adoption curve allows a lot of time for altcoins to catch up. I doubt altcoins even have 5 years to make their move.

I enumerated Bitcoin flaws which did not include "a lack of users".

Is this guy serious? He sets up a pattern of facebook succeeding all the other social websites before it, and then blasts bitcoin with the assignment of "We have a long way to go to 7 billion." So we need to go to 7 billion? What currency is used by 7 billion people, and why do we have to exceed that number in order to be the next standard? Bitcoin will surpass a billion users within five years, and something tells me the value might go up during that time.

The thread which I started in October, includes most of the data and reasoning behind the 2.0 million number. As perhaps the person who has put the most energy and talent to finding this out (over the last 4 months anyway), I am open to answer your questions for example if you want to define "user" in a different way, how it would affect the total.

Definition used there is "Person who directly or knowingly beneficially owns at least BTC0.001 at the time of census."

If Mt.Gox never pays out, there will be a dent in # of owners...

I have sent a post to Ethereum (not Etherium the game) summarizing my concerns with their technical design, and praising their vision.

MoonShadow, precisely my point is we don't know if there are 2 million "Bitcoin users"[1] and so we shouldn't cite that as a certain fact. Note your claim about a doubling in Coinbase accounts has been added to that thread so that could alter the speculation.

[1] What is a Bitcoin user? A Facebook user is someone who creates an account and returns to use it 1x per day, per month, per year, or never?

Unlike yourself, I didn't claim to know of any relationship between any particular claims and the real number of bitcoin users.  I honestly don't know if there are more or less than 1 Million users.  I mentioned it to highlight your lack of evidence.  Referencing the logic and "data" of others, who don't have any evidience of their own, doesn't constitute evidence either.  You do this a lot, make grand arguments that you cannot support.  I'm surprised you're not either a lawyer, a politician or a preacher.

No I referenced and clarified the logic and data of others from the thread and clarified that there is less basis for concluding with great confidence that the number of users is greater than 1 million (an account is not a user for the reasons I stated in the linked post).

The likely number of users was 1 million or below based on the data I quoted in the linked post. The original figure used was 488,000 Coinbase accounts. I have posted your claim and some analysis to that thread.

This quote is attributed to Einstein:

"“Two things are infinite, the universe and human stupidity, and I am not yet completely sure about the universe.”"

Funny how no one metions that you referenced your own opinions about the numbers of users.  Coinbase alone has almost 1 million accounts, not addresses.  Truthfully, we can't know how many users there are, which is kinda the point.

I am uber excited. I owe my gratitude to rpietila, for it is he who woke me up out of my slumber about Bitcoin March 2013. He had mentioned a couple of times before that going back I think to 2011, but it was early 2013 when he pounded the table to me in a private chat session. This demonstrates the value of the Supernodes.

I had noticed Bitcoin early on, like many of us I ignored it.

I had been working from 2008 onwards on trying to figure out how payment systems could work backed by gold and silver. I eventually came to the conclusion that they couldn't work because the physical gold and silver always has to be stored some where, and thus it is a centralized paradigm. I tried to think of ways to decentralize it, but the problem was always the transfer of the physical metal for transactions.

For some reason I didn't connect this problem to the solution of Satoshi's proof-of-work. (I think the reason was primarily emotional) I didn't have the epiphany until mid-2013 when I realized the key insight that only PoW had this expansive entropy which I have explained upthread.

When I started to look at Bitcoin in March, I realized immediately that the declining coin rewards was a fundamental weakness, that had been marketed as a strength.

As I dug deeper, I realized all the issues which culminated in the OP.

So now, it is time to sign off.

Quote from the OP:


Appears the number of Bitcoin users is still below 1 million.

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That wasn't my premise in the OP. That was the premise of Alex Daley (this thread's title quotes his article's title), and I stated his understanding is myopic and incomplete.

I suppose that was you that just voted "No" increasing the total votes from 106 to 107.


No where in this thread did I assert that Bitcoin will have no value any time soon.

I have argued that if Bitcoin can't scale its transactions as fast as its price growth, then it will have a collapse in price when the investors leave and it collapses to its currency use value. But that won't happen soon and it is not certain that transactions might start scaling faster than price. I linked to a chart which shows transactions are currently growing much slower (and much of that might be SatoshiDice dust then much of the rest investment trading, coin mixers, etc).

I disagree with your premise that flaws will cost investors "billions".

The bitcoins aren't going to disappear, and in order for governments (really the people behind them) to want to have them they have a vested interest in making sure they have value.

You are missing the point that the only reason governments would want bitcoin is because it has value. No value = no interest from the government.

If your argument is that some investors will lose a lot of money, then congratulations you've described just about every investment instrument that there is.

Some will lose a lot, others will gain a lot.  This isn't anything new.

The big picture. Where we are headed. Why this is important. Why only PoW is decentralized, positive-scaling, enforceable structure.

https://bitcointalksearch.org/topic/m.5208846

Adios forum. I need a break.

If the society of Iceland is homogeneous in its appreciation of the importance of crypto-currency, nationalism, and replacing their central bank, perhaps we could see a different outcome. But I am extremely skeptical that the distribution concept of Auroracoin would work where the population is not so aware, for the reason I stated in my prior post.

You are right to point out that it was me who showed that such has never worked in the past. But now we have much improved technology, so I am interested to see what happens this time.