You can safely store data using any number of technologies, e.g. the traditional data stores that hold bank accounts and other critical financial information. Every day, trillions of dollars in wealth are moved around using these systems, and they run the everyday lives of basically everybody on the planet.

Blockchain doesn't guarantee a server on the network can't change anything--it absolutely can--it merely creates a consensus among nodes that you do not trust.

In other words, if somebody was able to simultaneously hack most of the Bitcoin nodes all at once, they would effectively control all of Bitcoin. The reason Bitcoin (and other broadly used cryptos) are safe from this attack is that they have so many nodes that such an attack is extremely unlikely.

This is what blockchain is for. Now you can understand how ridiculous that is to use for two known and trusted entities to communicate with each other.

As for whether a government could implement some sort of solution for very low volume transactions, well, I guess if you throw enough money at a problem you could do almost anything. But I suspect the people working on the project will wonder why they are wasting their time like this. And the project would get bogged down when they discover that their project has all of the other safety and security challenges of a financial project like this in addition to dealing with blockchain.

For me, the CBDC silence right now is deafening: no major country has achieved any sort of ubiquity with their CBDC, they are all currently in the exploratory phase, or in a pilot phase, or adopted very sparsely.

I predict there will not be a mainstream CBDC until countries figure out they need to drop blockchain.

Fair enough. I don't object to people being hopeful, or optimistic, or even arrogant (I'm probably all of those things on any given day).

But framing it the way you do, you point out that the Bitcoin community could drop the ball and fall behind (not respond quickly to market changes), and it's possible that Bitcoin could diminish in popularity in the future. That's a sensible position.

Edit:

When we analyzed software technologies in the past, the primary factor in determining a technology's longevity is cost of switching. In other words, how much would it cost a user of the technology to switch to using another technology?

In the case of something like the Java programming language, or the Windows or Linux OS, or other software that provides a platform, the cost of switching is basically infinity: we will never get away from those things unless there's a major paradigm shift for all computing.

Other technologies like say RDBMS software can have an extremely high cost of switching for many customers, but for others more reasonable. Here one can imagine a company shifting away from (say) Oracle to Postgres in order save money.

Other products have a conceivable cost of switching, but still very high because of network effects: Facebook, Twitter, etc. Users can switch away from these platforms if there is a lot of reason to do so, but there is still a (temporary at least) cost in terms of reduced functionality while the network effects equalize on the new platform.

Still other products have almost zero cost of switching. An internet search engine is like this: it's as easy typing in a new URL on your browser, and using a new product.

So in this context, what is Bitcoin's cost of switching?

Here we need to look at two kinds of "users" of Bitcoin.

First there are "end users", e.g. somebody who uses some brokerage or app to buy and sell Bitcoin. For these users, the cost of switching is essentially zero: they just click a different button on the app's UI, and they move their holdings from Bitcoin to something else.

The other kind of user is B2B users, e.g. those using the API to integrate Bitcoin into their app. Here the question is how long would it take your average app provide to offer a new product to their users. In the specific case of Bitcoin, it would depend on the complexity of the API of the new product, but (since I have very direct experience with this), I would estimate that development cost here is comparatively very small. (This is also demonstrated by the very high number of products that most of the end-user apps support).

So in short, if the market is compelled to switch from Bitcoin to something else, the cost of switching is, on the whole, insignificant.  That's an important factor when looking at a product's potential longevity.

Thank you for pointing that out.

Governments make stupid technical decisions all of the time because they are decided by committee. They will change their mind when they discover that blockchain doesn't scale and doesn't add any features they are interested in.

Blockchain does not, "increase the level of trust between the participants" any more than having a simple database would. Blockchain is relies on a consensus between many untrusted nodes to create a collective trust. Having just one (logical) node on either side wherein the trust is implicit (e.g. like any ordinary B2B connection) makes the use of blockchain superfluous--and blockchain has a ton of overhead in terms of system complexity, usage complexity, code complexity, and so on--and all of those factors reduce system security because they add unnecessary new things to fail, add places where the system can be breached, add new untested code and practices, and so on.

Once they figure out that they can do exactly what they want without blockchain and the system will be faster, cheaper, safer, and easier to maintain... then the committee will eventually change its mind (and given the speed at which governments work, this will probably take them about five years ).

In the mean time, governments who actually want a solution for their people with a CBDC that actually scales to handle the country's everyday transactions, they will choose a centralized architecture, not blockchain.

I don't know how you would have gotten that impression. I wasn't talking about the market price at all.

Joe Biden did not lose his primaries. Maybe try another source of news that isn't run by the Republican party.

That's exactly what I had said, but others seemed to disagree very strongly.


Software-based technologies move very, very fast because there's no physical limitations.

Regardless, Bitcoin is a specific product and not a general concept. I believe digital currency in some form will be around forever, but Bitcoin is just one possible way of doing that, and blockchain is just one possible architecture as well.


Most people I know only hold Bitcoin because they think it will go up in price. Almost all holders of Bitcoin use a broker or the ETF and don't physically hold their own private key--and probably don't even know what that is.

For most investors in Bitcoin, they are investing in the word, "Bitcoin". Maybe they aren't speculating like those looking for 1000x returns on the next viral meme currency, but they are still just speculators looking to buy low and sell high.

No, it's just plain false.

People really shouldn't believe all of the lies a political party makes up about the opposing side.

The current administration conceded all demands from Republicans and made a deal that passed the Senate with tons of Republican votes. Trump then ordered his party to kill the deal, which is why the border is still a mess.

If Democrats get the majority in Congress next term (or even if they don't, and Trump simply goes away), then the situation at the border will be vastly improved.

So in that analogy, what is Ethereum? There are not thousands of competing products with the Internet, which is not a specific product but rather a concept.

Bitcoin is a very specific product with a technical infrastructure and specific data associated with it. It is one specific thing, not a general concept describing a collection of technologies like the concept, "internet" is.

I can be quite sure the concept of the Internet--computing entities being connected to one another through some kind of network--will be around in 100 years. I cannot be sure that Cisco Routers will still provide its backbone, or even if the very notion if a "backbone" would even still apply in the year 2124.

I can be pretty sure that digital currency will be what we use in the year 2124 for everyday transactions, but specifically Bitcoin--or anything else that exists today?--who knows.

I know Bitcoin quite well. I know the architecture, and I know a fair bit about the implementation. I would probably be qualified to be a core dev with a little bit of ramp-up, for instance.

What, specifically, am I missing about Bitcoin such that I don't understand that, unlike every other technology that's ever existed in the history of mankind, it is so special that it will never ever be replaced by another technology? That it not staying around until say the year 3036 is an utter impossibility?

To be clear, I am not saying anything related to the market price of Bitcoin, which I personally have absolutely no knowledge of. But the market price and the technology are two completely different things, and in this case aren't even related since there are many other technically equivalent or even superior platforms that have only a fraction of Bitcoin's value. People invest in Bitcoin (as opposed to say ETH) because it's called "Bitcoin" and for no other reason.

Yes, but you understand that story is false, and that's just a bunch of political hooey ginned up by the Republican party, right?

We had a deal that would have fixed the border crisis and Trump killed it because we wants to the border to be as bad as possible because he thinks that will help him get elected. Just like his phony "wall", all he's ever cared about is meaningless gestures, and not actually solving any real problems.

If you want the problems at the border actually fixed, then vote Democrat...

You can buy the GLD ETF at whatever fraction you want, and this is all done on the Internet. But sure, if you don't like gold, there are millions of other investments you can try (and you can buy REIT shares if you want to expose yourself to real estate, for instance). Some instruments will go up in value, some will go down. The reasons for each instrument's performance will always be very complicated.

If you are convinced Bitcoin will go up in value, then by all means invest. I'm not here to tell anybody Bitcoin is a good or bad investment per se, only that it stands along side every other investment out there, and nobody can perfectly predict the future.
 


Lots and lots of investors have been burned throughout the years by being convinced, "it will never go down" when discussing their favorite thing to invest in. I guess all I could say is, be careful with that, and keep a diverse portfolio. No financial instrument is "invulnerable".

I've been around the tech world for a long time. I've heard this same exact form of a question many times:

1980: Does any other computer architecture have the ability to challenge the IBM mainframe?

1985: Does any other database architecture have the ability to challenge hierarchical key-based data stores*?

1990: Do Unix-derived operating systems have the ability to challenge proprietary operating systems?

1992: Do PCs have the ability to challenge terminals for dominance in the enterprise?

1995: Does the Internet have the ability to challenge internal networks for dominance?

1998: Does Google have the ability to challenge Yahoo dominance.

I could go on and on. In every one of these situations people thought these technologies would dominate FOREVER AND EVER.

I remember telling an audience in about 1997 that one day Microsoft would no longer be the dominant player computing. People almost got violent when I suggested this. The idea that Microsoft would one day not be the dominant player was absolutely unthinkable for many years--until it wasn't.

Technology changes, people. And it changes fast.

As for the current state of Bitcoin, it's important to understand that in actual reality, Bitcoin is just another meme coin, it just so happens to be the most popular one right now.

Right now.




(* That's what they used before RDBMSs/SQL for you young ones ).

If you want an investment instrument that is not effected by monetary policy, there are literally millions of such investments. Gold, stocks, commodities, land, betting, and hundreds of other categories. Basically any investment instrument that is not the particular currency that is effected by monetary policy is a hedge against that monetary policy. In other words, the only investment that is exposed to monetary policy is cash. Everything is a different instrument that may have some relation to said policy (or no relation at all), but is not itself an investment in that currency.

From the standpoint of investment, "US Dollars" is just another horse to bet on, as are Euros, Pesos, gold, land, soybean futures, Bitcoin, Legiteum, or whatever.


I'll take "censorship-resistant" to be a synonym for what I wrote Bitcoin was designed to do: thwart government oversight into transactions. That is, and remains, blockchain's only appropriate application.


The formula for Coca Cola and Viagra hadn't changed either, it's just that mainstream users used them for something other than what they were invented for. Bitcoin is still the same system it's always been, but people mostly use it for something the inventors didn't anticipate. (And for the thing they actually did anticipate, people had to build upon their invention to fully accomplish what they wanted to do e.g. Monera et. al.).

And Satoshi was talking about a numerically delineated value transfer system that scaled to the levels necessary for him and his friends who had the very specific need of being government-resistant, not as a mainstream means of transacting, which I am sure Satoshi would concede is impossible using the blockchain architecture.

So in summary, today Bitcoin is not used for what it was intended by almost any of its users. The reasons for this are twofold:

1. Technical: Bitcoin has been "figured out" by authorities making it unsafe to use for those wishing to evade a government, so it is not, specifically, the right choice for that purpose (although the blockchain, generally, can still support that and does in the form of other products e.g. Monera).

2. Popularity: 99% of the additional users beyond the ones from the original times use the product for something different, e.g. speculation.

Given our advancement in science, we understand today that Coca Cola doesn't help with a cold, and Viagra doesn't lower your blood pressure--or maybe they do a little bit, but not as well as new products made for this purpose. But both are wildly popular for other reasons. Bitcoin is in the exact same situation.

I'd take that a step further and point out that Bitcoin's transformation into a speculation instrument has effectively killed it's original purpose in popular lore because for most its users today, decentralization not a value to them (e.g. they invest in Bitcoin through a broker or the ETF). And the only reason the blockchain architecture even exists is because of decentralization--centralized blockchain is a waste of time and resources.

Today, in actual reality, Bitcoin is basically a meme investment instrument: people investing in the brand name, "Bitcoin".

Satoshi et. al. created Bitcoin as a boutique means of value transfer for those who could not safely use a means of value transfer accessible to the government (and it's worth noting that Bitcoin mostly failed in this goal because of the public ledger can be triangulated by the authorities). It was never meant as a mainstream everyday means of transacting since the architecture makes such scale absolutely unthinkable. It was not created as a "get rich quick" scheme. It was never meant to be used the way it's used today wherein most people keep their Bitcoin holdings in a centralized database just like any other investment.

Coca Cola started off as cold medicine. Bubble Wrap started off as wallpaper. Viagra was a treatment for high blood pressure. Bitcoin was a p2p numerically delineated value transfer mechanism made to evade government oversight.

These things happen...

The largest meme coin, by market cap, is Bitcoin.   

While my business is probably in the bullseye of this new ruling, I don't have a problem with the notion in theory. My marketplace is a stable one free of BS because all of our coins are treated exactly the same and every coin has the same fixed amount minted, so people can't play games with the coin valuation using share dilution.

In other words, if altcoins are required, as public companies are, to publicly divulge through filings when then dilute their shares, then I'm fine with that and anybody who wants to invest in a stable marketplace free of shenanigans should welcome that.

Heavy caveat here that regulations can be stupid sometimes, but the safer and more transparent they can make things for investors, the more people will invest.

Exactly. So the idea that he US would give Ukraine nuclear weapons is absolutely nonsensical. You might as well have said that we're going to relocate Arlington National Cemetery to Kiev.

If you are going to make something up to help Russia, you should try to make things up that are at least remotely plausible....

I am not as apprised how every institution handles crypto, although I know PayPal allows you to buy crypto, and are a mainstream financial player.

Of course all of this is moot now, since you can bet on Bitcoin using any major brokerage in the world using the ETF. As I said, I suspect much of the market will move to that if they haven't already (is there some way we can tell how much has been moved to the ETF?).


I thought we were talking about serious investors, who will buy large quantities, i.e. Michael Saylor. Not "average consumers".

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Well, I guess there's a continuum of investors from "large" to "small" and sophisticated to less so. Lots of people with, say, $1m+ to invest may well be unsophisticated investors. Probably the ones in the billions can afford their own infrastructure, but as I said before, this infrastructure is not at all cheap to create and maintain.



Again, I agree with today's brokerages (as far as I know, and with the above caveat about PayPal), but the ETF changes this conversation entirely.



That's a good next step, and would probably thwart a next level of attacks, and it might be safe defending on other factors e.g. the dollar amount in question, the determination of the attackers, and probably the overall crime environment (e.g. in the US you are probably a lot safer than say a third world country).

But can we just skip ahead in this discussion a few steps to the point where you are describing the security governance infrastructure of your average large financial institution? What you're doing here is building a business case for a truly safe and dependable institution to store your crypto investment (and if I were in investor scrutinizing such a plan I would say sorry, too late, there are ETFs now so this need has been drastically reduced if not almost eliminated).




If the bank guarantees your deposit (e.g. like an insurance company), for instance, then you don't care because you are made whole no matter what happens (and surely you'll pay higher fees for such a service).

Although I don't know how all of the contracts work, I know that brokerages are on the generally on the hook to provide a certain level of diligence lest they be sued for the stuff they lose (and again we're talking traditional brokerages, not the new crypto brokers).

And as a side note, while you are probably right about the state of the pure crypto brokers right now, I would have to think, with tens of billions of dollar in prize money waiting for them, that some companies with trusted brand names will step up and solve the problem. (Again, with the caveat that about the ETF already solving the problem notwithstanding).