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Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme
@Nassim Nicholas Taleb:
WHAT WE WANT CRYPTO & CURRENCY FOR:1) Currency w/o a government2) Stable/reliable for contracts3) Inflation indexed store of value -- basket of items representative for me.4) Rapid transactionsCan we do it? #BTC failed to be currency, open-Ponzi speculative game. 1/n
I was a Bitcoin early adopter, when it was a cool mathematical toy and maybe an answer to the problem of excessive private data collection on financial transactions. I'm now convinced that Bitcoin is a disaster for multiple reasons, not least that:
It's an entropy engine. The algorithm is intentionally inefficient to preserve the entire blockchain, in ways that don't serve the purposes of a store of value and encrypted ledger. The energy costs of transactions are asymptotic to their utility, and this is only going to get worse.
Bitcoin is an inequality engine. Early adopters have such an insurmountable advantage in energy investment versus token quantity that people getting in now are vastly disadvantaged.
Bitcoin prices in other currencies are easy to manipulate and mining pool control is opaque.
Bitcoin's only advantage is that it was the first verifiable cryptocurrency to market, and a stable ecosystem of tools.
I think Bitcoin right now is good for one thing and one thing only: money laundering.
Crypto transactions lack an audit trail and are key for the criminal underworld to move money around. From a consumer standpoint creating your own wallet, remembering a highly encrypted password and processing crypto transactions goes way past the heads of even basic computer users, let alone the computer illiterate.
On top of raising electricity use massively, mining crypto has also done irreparable damage to the PC gaming and GPU market. It's largely the reason why new graphics cards are often sold out due to both miners and scalpers seeking to resell them at incredibly marked up prices.
Did I forget to mention that BTC is volatile as hell? Valve stopped using it for Steam payments due to that reason, and the fact that processing fees were costing them upwards of $20 per transaction.
Maybe when the coin rush finally ends and either the last bitcoin is mined or it becomes unfeasible to continue mining will BTC finally be viable as an online payment method. Or maybe governments will finally wise up and criminalise it.
Oh, it gets better. Check out how Chia does its mining. The storage market is about to encounter the exact same market forces, and at a time when semiconductor shortages are already making a mess of everything.
At least storage is a tangible good and ostensibly useful, and not just an arms race to burn electricity as fast as possible.
I wish regular currency had that kind of tangible usefulness: $1 = 100 calories, or something like that.
I looked into it a bit. It looks like you need to devote at least 100GB of storage to it and it can't be used for anything else while it's being used to "farm" Chia blocks. (You also need more temp space while setting up, and they don't recommend using a consumer-grade solid-state drive for the setup phase due to the amount of wear.) But apparently it will run on a Raspberry Pi, and you do get your hardware back if you stop doing it.
I think it's a reasonable attempt to improve on proof-of-work. They claim it's better than proof-of-stake, but I can't evaluate that.
Honestly, 100 GB in a RAID 1/10 and perhaps some backups (at least filecoin was going to penalize for losig data) is not very much at all. While it would have been nicer to use 10 GB chunks, I suspect the real target market is enterprises, where things like backups and cold storage can easily run in the TB/PB range.
Plus, storage-based crypto has inflationary potential and not just deflationary. Excessively dumping storage on the network will tank the prices because the coin's value is only worth as much as it costs to buy storage on the network.
Edit: Also has potential to revitalize small-scale entetprise datacenters. If you can easily re-sell your unused storage, when you do upgradesit reduces the cost for over-provisioning storage.
I don’t think Chia is storing any useful data like Filecoin is supposed to. The storage space being used serves no purpose other than to guarantee consensus on Chia’s blockchain, and the only penalty for dropping out is that you no longer have a chance of winning a blockchain award. But sure, it might be a way to make money from unused disk space.
From the business white paper, they are pre-mining 21 million chia which will belong to the company and they have a target schedule for chia issued by the network:
So the inflation rate has nothing to do with the amount of storage being used. The amount of money divided up by “farmers” will depend on chia’s market price. I don’t think it’s being traded on any exchange yet, so it doesn’t really have a price.
(Which makes it odd if there really are people in China buying up hard drives. With no price yet, how do they know it will be profitable? Maybe the disk drives are being bought for some other reason?)
It all seems rather sketchy in the way of other crypto coin companies.
Personally, I think it's not been a major contributor. It likely contributed some, but the bulk of the price increase on the 3rd party market has been from gaming demand.
For one, if you're a crypto miner, it's a pretty simple equation; there's a bunch of calculators you can go where you can plug in the price of the card, the price of electricity, and you can see how long it takes to break even. At most of the scalper prices, it just does not make sense to buy them. Crypto miners had a much bigger impact likely in the beginning, when they were being sold at near MSRP from retailers; there were probably a bunch of miners who placed large orders or pulled strings to buy large orders.
Secondly, from the Steam hardware surveys, we know that there actually are quite a few people with 30x series cards. The 3070 is the 15th or so most popular card - which is quite something, because most of the top cards are much cheaper, like the 1050ti, the 2nd most popular, or the 1060, and so forth. I doubt all of these people somehow bought them at MSRP; I bet many, many gamers spent $1000+ on scalped cards on ebay.
You can also see this in many at-home hobbies. No one's mining with PS5s. The price of timber has also gone up like 10x - 2x4s might help with mining actual ores, but not so much with repeatedly doing SHA hashes.
All this leads me to believe that most of the price increase is a the general trend that at home hobbyist activities have had a very sharp increase in demand, and for computer hardware, a stagnated supply from the chip shortage.
I will say, that when Bitcoin mining really started ramping up hard, the used market for GPUs got flooded with miners trying to unload their now-obsolete hardware. Yea, some were wreaked, but I've got a buddy still running a top-end card from that era that they got for < $150.
Former CIA director Praises Bitcoin Technology as ‘Boon for Surveillance’ (Except Monero):
https://sputniknews.com/science/202104141082629964-former-cia-acting-director-praises-bitcoin-technology-as-boon-for-surveillance/
Not gonna comment on the site itself, but the news they present (in this article) is correct, verifiable straight from the horse's mouth: https://www.thecipherbrief.com/column_article/my-experience-with-bitcoin-and-challenging-conventional-wisdom
Crypto is basically just one big, inefficient audit trail. The only unknown is who owns what wallet. And big intelligence organizations have a lot of resources to figure that out.
Not really anything new. Most governments and retail investors treat bitcoin as a digital commodity rather than a currency.