Topic: Some good concerns against bitcoin (Read 1215 times)

basically those protocols maybe be seen as an altcoin right now, just good tests to be implemented in bitcoin, like some good altcoin as monero and other

and bitcoin is still in beta...so it does not make sense to think that it can be surpassed, when bitcoin itself is not even finished

Whatever it does, Bitcoin can be upgraded to be do it too. This is why people should not be worrying about competing protocols but rather welcome them. Their features can always be implemented in Bitcoin if they seem decent enough.

I must admit that I don't really understand Ethereum but it gives me the impression that it's extremely ambitious and doesn't pose a threat only to bitcoin but to a whole part of the internet. Now what does it actually do that bitcoin doesn't? What would be the pros and cons of using ether against bitcoin? Because now, as was said before, bitcoin has a huge advantage, which is that it was by far first on the market, so ether will have to be really good, if it is to take bitcoin down. Is it that good, now?

There's nothing in your list that signals the end of the world. Even four and seven aren't anything to worry about. Businesses will mine even without any block reward because they're making money from Bitcoin in another way. If another protocol becomes the leader then let's all switch because we want the best decentralized bank crushing money to win. Sometimes I think this forum is made up of a bunch of old women looking for something to worry about. Go have a beer and relax.

Counterpoints- 1) Almost all of the community agrees that disinflation and 21 million cap is intrinsic to the properties that define Bitcoin. Any divergence on this principle would be a betrayal to earlier investors. This can never happen in practice because we define bitcoin as having these properties and any change in distribution would simply be considered an Alt being forked off and unlikely to attract many followers wanting to purposely lower their value of savings.

Counterpoints- 2) Any attacks on the network can be dealt with by developers rolling out a quick change to regain power to the users. I.E.. If a miner controlling over 51% of hash power attacked the network we could roll in PoS with PoW to lower the influence of mining alone. This is just one solution among many. Additionally, I would rather deal with a hypothetical potential attack on the network rather than a continuous attack (bail ins , bail outs, ect...) that we currently have with fiat.

Counterpoints- 3) While it is true that LN and sidechains will handle many of the txs in the future and absorb some of the tx fees, the main blockchain will still rise correspondingly because every other chain will be dependent upon it due to the security of having most of the hashing power. Additionally, caching layers like LN could add an incentive to increase node count and decentralize nodes by paying full nodes to process tx's.

Counterpoints- 4) Difficulty is self adjusting so efficient miners will always be profitable. If tx fees don't adequately replace block rewards than more efficient ASICs will be rolled in and used which require less electricity. There is already an incredible amount of hashing security- 1000x + all of googles servers and even a slight drop in difficulty would be fine. The greater concern is a balanced distribution of hashing power... and there are incentives that will decentralize this in the future.

Counterpoints- 5) The Chinese Firewall is porous and it is trivial to use a relay network to get around any restriction. To suggest a few days split when Chinese miners are technically savvy and have extremely strong incentives due to narrow margins to get around any restrictions is naive to say the least. It is quite likely that all large Chinese miners have multiple redundancy plans and automatic checks in place already.

Counterpoints- 6) While it is true that contentious changes are extremely slow to be resolved, there are many improvements which don't effect economic aspects that are quickly deployed. It is a good thing that economic changes (such as deciding upon the block size and fee market) are slow to be decided upon as it allows for careful scrutiny and time to come up with better solutions.

Counterpoints- 7) The network effect will make any competing alt extremely unlikely to overtake bitcoin. Additionally, any advantages found in alts can be adopted by bitcoin, thus removing any competitive advantage they have over bitcoin.

Counterpoints- 8 In the extremely unlikely scenario that governments pull a 180 and outlaw bitcoin on the white market, bitcoin can still exist on the grey and black markets and be extremely successful. Lets make the wild assumption that every country outlaws bitcoin and imposes extremely stiff penalties discouraging grey market use. If bitcoin would simply encompass a very small marketshare of 5% of the blackmarket than each coin will be worth over 100k usd.

Counterpoints- 9) Bitcoin is international , so isn't effected to such a degree as single fiat currencies by regulators. A few countries imposing regulations upon bitcoin won't necessarily slow its growth either but increase it as can be found in Russia right now. Bitcoin offers regulatory arbitrage and thus is superior than any fiat currency with government regulations.

Counterpoints- 10) People who make risky decisions with their investments aren't unique to bitcoin and can be found with any commodity, currency or investment. Bitcoin is becoming less volatile , year after year, and will continue to stabilize with greater market cap and adoption. Bitcoin has plenty of intrinsic value because of utility and doesn't even need to succeed as a currency to be wildly successful because it is an excellent immutable ledger , uncensored protocol, payment rails network, ect...

The part OP posted was the second of a series of 3.
Therefore here 10 arguments to invest in Bitcoin.

http://www.forbes.com/sites/laurashin/2015/12/11/should-you-invest-in-bitcoin-10-arguments-in-favor-as-of-december-2015/#2715e4857a0b2e58f79d540e

1. Fixed supply

2. Assuming Bitcoin is adopted for number of practical applications, the value will rise significantly.

3. More and more people and businesses seem to be using Bitcoin.

4. A higher price could increase transaction volume, which would then further boost the price.

5. Bitcoin has a first-mover advantage among the other digital currencies.

6. So far, the attitude of most government regulation toward digital currencies has been, on the whole, cautiously positive.

7. A comparison to gold suggests Bitcoin could be undervalued.

8. Comparing Bitcoin with a technology company also suggests it could someday be quite valuable.

9. On pure trading metrics alone, it looks like a buy.

10. More investors are taking it seriously and using it as a portfolio diversifier.


And to complete it anynone who is interested can also read part 3, which is mostly an introduction of how to invest in Bitcoin.
http://www.forbes.com/sites/laurashin/2015/12/31/want-to-own-bitcoin-heres-how-to-buy-invest-in-and-store-it/#2715e4857a0b1d5e364d781c

I will answer the points without reading the article so that my answers do not get affected (after which I will read it).

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Technically they can't. The parameters can only be changed if everyone agrees to this change and I'm pretty sure that it is within everyones interest that the current parameters stay (or to adopt better ones if possible). Nobody is going to harm themselves this way. I'm going to assume that they are talking about the supply. The second that the current supply gets changed Bitcoin loses all credibility and the experiment is over. I doubt that major players (that have a working brain) would even consider this.
That's the possibility with anything that is connected to the internet. Various services including banks get attacked and often breached.
There's nothing wrong with transaction volume moving to sidechains and/or lightning network/other.
As already said, this could be problematic.
I don't think that it could be split and not be noticed for that amount of time. With so many experts involved in Bitcoin someone is bound to notice pretty quickly. Didn't we had a split back in 2015 because of SPV mining? This didn't cause any significant damage IIRC.
I could both agree and disagree with this. One of the major benefits of Bitcoin is being trustless but as we have seen with the block size debate, sometimes it would be useful if there was someone who would decide.
I don't think this is going to happen unless that protocol was exponentially better than Bitcoin. However, Bitcoin can always be upgraded.
I doubt it.
No.
People should not see it as an investment then.

What most people don't seem to understand or accept is that bank deposits are virtual currency with no intrinsic value. They are also managed by organisations that have been convicted and fined for fraud and malpractice.

I would like to hear your opinion, I think it is a very large topic

The reason that mining attracted so many smart people is just the thought in that image: If I could get as much as x% of the total money supply at early days of mining, then in future when this system become widely used, my holding will worth x% of the value of this whole ecosystem

However, with lower and lower block reward every 4 years, the hope of acquire x% of the total money supply quickly diminish. People are not stupid, because the participation is voluntarily, they won't join a system that give early adopters too large advantage

Of course it is still better than fiat money, which everyone continuously lose their share of total money supply every day. But if you can make the system more balanced, e.g. anytime you can mine 25-50 btc per block, then it is much more long term sustainable and can defeat any other cryptocurrency competitors, people won't suspect this is a pump and dump game where early adopters trying to push mass adoption just to dump their coins mined at very low cost, like most of the other alt-coins

I concur. I don't see the other points as problems (e.g. volume moving to sidechains). I also think that point 4 is more of a problem than 7. I might make a longer post about it later.

Mining will likely keep itself profitable or near profitable for many years still. The block rewards will still be there in 10-20 years and with the speed technology is advancing, we will likely see more effective miners, a higher bitcoin price and more transactions.

The transaction fees will cover part of the missing block value. The higher value will keep up profitability even with smaller block rewards and the increased efficiency of miners will reduce operation costs.

I think mining income is the most important incentive that has to be maintained, all the bitcoin frenzy started from the following:

Some very valid points OP. I would like to see what happens if 7 happens and if we could adapt or change to neutralize that threat. Will people reach a consensus quicker if they were forced into a corner? Who will know. While Bitcoin is the strongest Crypto currency, we can fight over petty nonsense, but things might just change when a better protocol threatens it's survival. 

These are all new to me but 4,5,6,7, pose a great concern to all bitcoin stakes holder but I would like to see what the experts would say on this it's true that not all bitcoin holders are educated on how the all these works as bitcoin becoming mainstream it should be also propagated offline i guess we need an offline magazine for this

The last one here shouldn't be a factor--people have gotten burned by a lot of investments and those things are still around and thriving.  Look at the stock market.  People lose their shirts daily, yet this doesn't permanently sour folks on stocks.  For a while it might, maybe, especially after a crash but then it rebounds.  Bitcoin has already been through that, too.  Good analysis as always, my man.

6. The lack of a central authority prevents the protocol from progressing.

“Bitcoin has this one thing which is both a blessing and a major hindrance to it as a technology,” says Hudson — and that is its decentralized nature. “The fact that it’s decentralized has allowed it to develop, but it also means when problems happen, it’s hard to see how they’ll be resolved,” he says.

Jonathan Levin, cofounder of Chainalysis, a Bitcoin compliance company, says that this leads to some inertia, even around uncontroversial changes. “It [took] ages to get all the miners to upgrade their software to protect themselves against transaction malleability [which made it possible for people to perpetrate fraudulent transactions]. You need human consensus, to distribute software all over the world, to go through what has to be a rigorous governance process to get these changes made and you’ve got tons of people using the Bitcoin network and making sure that the changes are a value add for everyone.”

The challenge that governance poses for Bitcoin was evident in 2015, when one question roiled and divided the community: how should the network capacity be increased to accommodate more transactions? Currently, each block of transactions, which gets processed every 10 minutes, can contain up to 1MB of data, which allows it to process seven transactions a second. (In contrast, Visa’s network is capable of processing 65,000 transactions per second.) Blocks need some sort of limit because otherwise, the network would be flooded by spam transactions, but the Bitcoin community — which consists of actors with roles as varied as miners, core developers, full-node operators (who propagate the transactions to be placed into the next block), Bitcoin companies as well as others — has been divided over whether another method could be used to increase the number of transactions processed on the network, or, if the block size is increased, how to increase it and what size would be appropriate.

Whether this one debate gets resolved — and if it does, how — could give a glimpse as to whether the currency will be able to resolve problems in the future. While it hasn’t been very promising so far — “There’s been lots of fighting and very little progress,” says Hudson — if the community not only settles the block size debate but then also comes up with a process for dealing with future questions, that would bode well for the continued growth (and therefore increase in value) of the currency. However, it’s not yet clear whether or not the larger question of governance will be worked out or if only the narrower question of the block size will.

“Open source is extraordinarily good at replicating on the existing design pattern, where everybody can see what it is that they’re supposed to be building,” says Hudson. “[Such projects] tend to stall more when they have to do something new, and especially in this case, where lots of participants have a vested financial interest in the outcome of what’s done, there doesn’t seem to be a good approach being taken by almost any of the participants.”

For instance, he says that a good engineering practice would be to build simulations of the system that would allow the developers to change various parameters to see how it would affect the network.

“Unfortunately, the things that’s very surprising is that nobody seems to have stepped up to make that happen,” he says. “The core team seem to have spent far, far more more time arguing about how they’d like things to work rather than actually trying to find a framework that everybody could actually do their work within, to try running what-if scenarios … It is very disappointing from my perspective that there is no concerted effort to try to resolve this by doing things that would be considered good engineering practice anywhere else.”

So far, he says, when there have been minor forks of the software, “that’s generally been resolved by people having to get in touch with some of the mining consortiums, some of the larger ones, and basically saying, please put this back the way we want it.” However, no process has been established for preventing or dealing with such issues in the future.

I don't think 7 to be a real threat, it takes time and resources to build value. Any other cryptocurrency, no matter how technology advanced, are in a very disadvantage position when it comes to store of value. Since biggest advantage of bitcoin is its limited supply thus anti-inflation, investment in other cryptocurrencies unavoidably result in inflation, e.g. added money supply in total crypto currency ecosystem. So even technically it could be interesting to invest in another cryptocurrency, but economically it is wrong

And also a worth reading white paper from ARK

http://research.ark-invest.com/bitcoin-network

The only from that list that I'm concerned about at all as realistic problems for the long term success of bitcoin are 4 and 7.