You mean like the cascade sveinn debt crises something like this could cause? This is a problem for states, central bitcoin and treasury officials. This is the critical point chart the chart of using Bitcoin is not the alternative. Sveinn Do Bitcoin Transactions Work? A vast, vast majority of today's bitcoin market valuation is due to speculation, and valfells do well to keep that in mind. MimbleWimble bolted on top valfells Bitcoin bitcoin not. But one thing that's clear at this point is that LN will not work if blocks are full and LN is heavily used.
Grin may fix fungibility an alt-coin. The ETFs and institutional money have barely started yet, and historically gold price was influenced by the introduction of ETFs http: What you linked to is not really significant. If you have ideas for the remaining BTC, see here for more info. Sending stolen coins to an address does nothing to "taint" the UTXOs already controlled by that address. If quantity of coins ever becomes an issue the obvious consensus among bitcoin owners will be to allow increased divisibility to additional decimal places, which will not debase their bitcoin holdings. There is no real difference between a "fork" and an "altcoin" except the UXTO set.
If the USD is valfells competitive, and we actually sveinn free chart money markets, chart will become less and less relevant. I'd certainly agree that it's unethical to seize property from someone who was bitcoin knowingly involved in a crime. People buy gold bars and diamond rings for cash all the time without a title transfer, and all of those things are easily sveinn from a home. Some relevant p revious p redictions:. Valfells currencies can store and transmit value. Hackers make great bitcoin bankers! Joe Sixpack hates waiting for confirmations too so Joe will want to live on Layer 2 leaving on-chain for the "big money people".
Aug 27, at Bitcoin firm digitalBTC has announced a multi-year hosting and power supply agreement for an Iceland-based mining centre. May 28, at One year ago, the Pembury Tavern became the first London pub to accept bitcoin. CoinDesk revisits Hackney to celebrate. May 1, at I would like to receive the following emails: Blockchain — What is bitcoin?
Bitcoin What is Bitcoin? How Can I Buy Bitcoin? How Does Bitcoin Mining Work? How Do Bitcoin Transactions Work? How Can I Sell Bitcoin? Blockchain What is Blockchain Technology? How Does Blockchain Technology Work? What Can a Blockchain Do? What is a Distributed Ledger? Why Use a Blockchain? Ethereum What is Ethereum? How Do I Use Ethereum?
Pretty much the single most important thing that is needed in Bitcoin right now is to open up for mass consumption. For something to happen a realistic alternative has to exist. The LN guys are almost done, its going to be a fantastic with LN deploying left right and centre. We need few years to have enough open channels to actually be considered a currency for everyday use.
Fiat money is a currency without intrinsic value established as money by government regulation or law. The term derives from the Latin fiat "let it be done" used in the sense of an order or decree. It was introduced as an alternative to commodity money and representative money.
Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange such a good is called a commodity. Fiat money is money printed by a government with nothing of intrinsic value backing it, only the word of the government that the money is good. All the world's major currencies are fiat currencies.
Ln is the lightning network, it should provide faster payments with less load on the blockchain. I love that chart. I don't want to misinterpret any commenters here but it seems like most think hyperbitcoinization has to be a hostile type of event against multiple governments at once.
It could turn out that way, but there are other possibilities. There are scenarios where this will be beneficial to governments. This is how it can grow peacefully until some kind of singularity event. The cultural value of people increasing their savings and investments can lead to all sorts of policy changes where Bitcoin is welcomed and encouraged on a global scale.
This is all a pretty optimistic exploration of what could happen, and I think all but the most crazy optimistic see fiat co-existing. Most people with managed investment portfolios are currency diversified, so maybe it's another diversification and super optimistically Bitcoin becomes the new world reserve currency displacing the dollar.
There are some crazy optimistic people who think fiat may become nearly obsolete, displaced by Bitcoin through a hyerbitcoinization event, and perhaps there are some precedents for a predominantly commodity money world from the centuries where gold was the global commodity money, but the Greece issue with economic policy vs a fixed external currency seems to create similar problems with Bitcoin also - what happens to local economic policy when currency cant devalue to deal with more or less effective policy, and differing raw material advantages or other factors.
One thing that can give is fiat remains and Greece leaves the eurozone. Or another thing that can give, a different potential outcome is government policy fades in relevance, with eroded influence of fiat and so economic policy control - my favourite outcome, the snow-crash scenario https: Another man duck-walks across the flight deck He's about sixty, with a dirigible of white hair that was not ruffled in any way by the downdraft.
Then, when no one seems to react, he jogs their memory. Another bitcoin-relevant Neal Stephenson near sci-fi this one a short story is https: I don't agree here. This is a problem for states, central banks and treasury officials. Individuals will not care about this if they are allowed to choose between bitcoin and "we-devalue-your-wealth-for-your-own-good". Note the "If they are allowed". What's about people who have government jobs? Will they not care if they are fired and become unemployed?
Bitcoin is only removing one function: All the other functions of the states remain untouched. There is a couple of side effect on how will those state operations will be funded: Eventually the state will have to rely on charging their own services and tax only registered property real estate, cars, permits, etc.
I personally think taxing property is much more progressive than taxing income. I suspect taxing income is an invention of the elites. Taxing property is a form of slavery. Tax something just for existing. Progressive taxation is a bad thing, not good. But taxing capital forces those that have it to be productive with it.
Payroll taxes, corporate taxes, estate and excise taxes would likely be the similar or even easier to enforce. Income taxes would need to be looked at. Presumably, only taxes whose collection can be automated may make it.
The net result of all of this may well be a more efficient way of collecting taxes, quite possibly completely automated, alleviating the need for some It could even be argued that if a tax cannot be automated, it should not exist in the first place, as otherwise it creates loopholes etc. Few modern taxes were created as deliberate attempts to "profit".
Most are created a desperate attempts to keep the lights on. When govts are flush they tend to cut taxes, few sustainable governments tax exponentially As for enforcement of income tax, I don't really get how BTC is different to cash in this context?
I can get my employer to pay me "off the books" but if I get audited, the govt is going to be all "how are you paying for this house and those two cars and those two kids and all these consumer goods? You find out the amounts and the time they were supposed to have been paid, you examine the blockchain - you find a You have a point with traceability of bitcoin in its current state. I just hope somebody smarter than me is taking care of this. Your real income will be invisible. Kind of using your k for paying for your vacations, gardener, hairdresser, restaurants, netflix etc: Tax will have to evolve as you describe for an additional very powerful reason: Bitcoin isn't an FDIC insured balance in someone else's computer.
Bitcoin is hidden gold. It must stay hidden. Any person known to have bitcoin is at risk for kidnapping and burglary. If you must keep it secret for your own health then you cannot possibly account for tax paid on it with employees of government. You just put a target on your back for any lowlife in government or finance who might ever see that information.
Tax evasion penalties start with a letter in the mail. That's a hell of a lot better than waking up blindfolded in the trunk of someone's car. They can't confiscate it from you.
You must give it to them. They can steal your cash, property, gold, etc. Also, government are the bad guys, just FYI. So there is reduced demand for goods and services. A lot of people are fired from their jobs and become unemployed, simply because there's no demand for what they are doing. Government's income is also reduced. So if it's unable to print or borrow money, it has to fire people.
But you already have a lot of unemployed people in the country, and now former government workers are competing for the shrinking number of vacancies. On top of that, government will have problem funding social policies, like feeding unemployed people.
So the problem here is that you have a positive feedback loop which makes things worse and worse. I'm quite sure people will care when they have no job and are starving. So claiming that this is only a problem for state is disingenuous.
Yeah, it's their job to solve this, but they are very likely to fail, so this will affect people. I understand that this can be bad for people. There will be economic downturns, there will be people losing jobs, companies bankrupcies, and all that. Unless you want the state to forcefully prevent people using cryptocurrencies. And that is worse than economic downturns consequences, is a restriction of one of the most basic freedoms: If Bitcoin changes how the monetary system works, it will also change the economics, and thus warrants new policies.
Currently, it seems that most bitcoiners' political thought is, basically, "Fuck you, I've got mine! If you're fine with a large portion of population getting fucked, then they will have no sympathy for you either. If people want Bitcoin to succeed, they need to start thinking how it will work in future. And no, "free market solves everything! Don't take it personally.
I don't even own a sizable bitcoin position, sold most of it at the wrong time. Because people not bitcoiners, all people including the Pope, you and Dalai Lama will chose to save in the deflating currency instead of the inflating one.
In today's world it's obvious why fiat exists. It's much more convenient than cryptos because it's accepted everywhere and the infrastructure is more mature e. Visa is very convenient, online banking works well, dollar bills are accepted everywhere , but presumably those types of things can exist and be even better for Bitcoin.
When that happens, what's the point of having fiat? It really would have no advantage that I see. What about a scenario where in light of a truly competitive and free currency market enabled by bitcoin , existing fiat currencies will be forced to become better.
Fiat currencies are already mostly digital. In addition, what would give a user confidence that the economic policy of a centrally issued currency would be better than a decentralized cryptocurrency? The former is based on trust and poor incentive structures the latter is not. Competition is good and some of that may happen - but it often seems like yesterdays era folks cant adapt, there can be structural or inertia, special interests, and regulatory capture etc that hold them back even if they had intent.
I can think of many businesses that don't embrace new technology and even show an aversion to it. They still continue to operate for now, but there is no way they can compete at the same level as their competition. They will eventually lose. The same will happen with countries. If the USD is not competitive, and we actually have free flowing money markets, it will become less and less relevant.
We are seeing this happening in China, Many Chinese people are wise to the fact and actively trying to protect their wealth. Chinese solution to this is restricting capital outflow.
It looks like they may be attempting to restrict this further with bitcoin regulations. When this doesn't work, what option will they have left? Just wanted to address the Greece fixed money vs free float. Nothing is stopping a country from Greece to create its own currency based on something much like the Ethereum ERC20 tokens.
This would be tantamount to the gold standard, but allowing for inflation and deflation of their currency depending on what was needed. Crypto does not need to work only on bitcoin, bitcoin can be used at the "peg", or part of a basket of currencies.
A crypto country like Greece is less of an issue to a Euro Greece. I share your optimism, but For now it's only a theoretical solution. It's very promising, but definitely not proven yet. Given that Bitcoin lacks fungibility this event is unlikely to happen on an extended timeframe unless hidden actors wave the hand of stimulated adoption to fulfill their particular ulterior motives.
WannaCry ransomware coins are worth less than newly minted block rewards. This was never supposed to happen -- an extraordinarily serious problem, far more disastrous than the block size debate, and it will keep Bitcoin from becoming the eCash that has been prophesied for so many years. No one is talking about the fungibility problem with great volume because there is not a solution.
Bitcoin is the Orwellian Nightmare. Do you have a link for that? Who is paying more for those "tainted" coins? Everybody can see where every Bitcoin has ever been. There are a growing number of services that are blacklisting coins that are sensitive to addresses through extortion or other illegal means.
This isn't really a sustainable blacklist as the coins get spread out and laundered, but because it's a public ledger, any Bitcoin that has ever been in the same wallet as those stolen by the wanna cry malware may be considered more or less tainted now depending on how far back a service is willing to blacklist illegally obtained Bitcoins.
For better effect, maybe send a random amount. Instantly they could taint hundreds of thousands of dollars of bitcoin, and quite possibly hundreds of millions as many of those addresses connect to places like bitpay, exchanges or mixing services.
Some day, the only clean bitcoins will be those held in cold storage since before or so, or newly mined coins. There are too many simple things that can be done to use those coins against the whole system. The exchanges have weaponized those coins. If I don't like that senator that's accepting bitcoin donations l can shutdown his money flow just by sending him tainted coins.
And that's just the first use that occurred to me. What I said is true, but it doesn't have the result you think. While many merchants will continue to blacklist some addresses, obviously it will not be practical to refuse payment from every address ever touched by coins known to be obtained illegally.
Eventually, I'm sure there will be a criminal case in one or more jurisdictions where the state tries to recover bitcoins from a person who sold something for tainted Bitcoins.
I wouldn't even be surprised if it won in some jurisdiction, sending Bitcoin into panic for a year or two. But ultimately, nobody claws back every cash bill that was ever used in a crime. Sure, they're serialized and those from Bank robberies do get tracked, so maybe that will be attempted in this ledger that is so easy to track.
However, it's even more complicated because each transaction can have multiple inputs and multiple outputs, making it unclear where each specific coin actually went unlike a serialized bill that is unique. Anyway, this is a good reason that I am so fond of Monero, because the private transactions can't have this problem. That's a very strong statement! I'd certainly agree that it's unethical to seize property from someone who was not knowingly involved in a crime.
At the same time, I'm not unsympathetic to the victims of thieves who want to get their property BACK. The point here is that law needs to take the new properties of cryptocurrencies into account, and that almost certainly won't happen until it gets litigated and we see how courts interpret current law.
It doesn't help your case that the law rarely considers cryptocurrency to be actual currency. Either way, Monero removes the issue entirely by removing the ability, and thus the temptation, to track coins and compel new owners to turn them. Bitcoin might , at least in some cases, be an exception to that rule.
But normally that's the rule. Most things don't have a registered title. People buy gold bars and diamond rings for cash all the time without a title transfer, and all of those things are easily stolen from a home.
Pawnbrokers are required to keep these kinds of valuable items for a couple weeks, and if the police come by looking for it, the pawnbroker loses the item and whatever they paid for it even if they purchased it in good faith.
You don't understand how bitcoin works. Sure that is tainted, but the original UTXOs remain separate. Sending stolen coins to an address does nothing to "taint" the UTXOs already controlled by that address. Because bitcoins can become "tainted" depending on how they were used in the past. There are multiple cases you may search for these cases on the internet where Coinbase and other Exchanges will refuse specific bitcoins that were used in illicit deals in the past.
Oh, but this Bitcoin was used in a drug deal so we won't accept it. On the same note, I have one of the first Bitcoins mined by Satoshi himself, which means there are people who will want to pay more than the market value for this coin since it has "special" properties.
This is a concept called fungibility and I recommend looking for it on the internet search engines of the world. This enables complete fungibility without precluding the ability to selectively disclose information as needed.
Grin's being built as an altcoin, but I would imagine it's not impossible to do a version of it that begins with bitcoin's UTXO set. In that scenario, sure, all past movements would remain traceable forever since the bitcoin blockchain contains all that data, but as those UTXO's get spent they become untraceable. Anyone that's worried about traceability can just move their funds.
Such an implementation would require a radical protocol overhaul in comparison to the recent fork. The current network appears unable to adopt even minor protocol changes. To believe a radical protocol overhaul could be implemented before an alt-coin surpassed the core network in market cap is wishful thinking.
There is no real difference between a "fork" and an "altcoin" except the UXTO set. Atomic swaps will solve fungibility. Decentralized exchanges like bisq can significantly improve it too. Atomic swaps will help people who want to leave the coin which lacks fungibility, but will do nothing for the person holding the non-fungible bag. I'm looking at fungibility from a privacy point of view, from a person engaging in economic activity that the state frowns upon.
A peaceful marijuana grower may need to convert the bitcoin he's earned to USD. But by doing so, he may reveal that he's a large marijuana grower, causing him many problems. With cross-chain swaps, he can convert his bitocin to Monero, then convert it back to bitcoin.
He can deposit onto Coinbase, convert to USD and there are no problems. What you linked to is not really significant. I don't care if some noodle wants to buy a freshly minted coins at a premium. This has no significance on the market. He's likely trying to do this because he has tainted coins from a drug sale. Cross chain atomic swaps would solve his problem.
But you are ignoring the scenario in which Coinbase refuses the Bitcoin that have been received by the MJ grower via the atomic swap. In such a scenario he will then have to swap again, hoping for untainted coins the 2nd, 3rd, or 4th go-around.
In this case, as has always been the theory with regard to Bitcoin, the grower will cut out the middle man, holding the fungible coin directly. Just as was always theorized -- that people would forgo holding USD and instead hold Bitcoin due to its ease of use and technical superiority, the same will occur with whatever fungible coin becomes the new normal.
He wouldn't get his original coins back. He swapped out his "tainted" coins for other coins. By having instant, trustless atomic swaps available as an option, coins will always be capable of being sufficiently mixed throughout the network. If you look far enough back in an output's history, output will be "tainted" at some point. So what is Coinbase going to do, ban bitcoin?
Yes, I agree that coins that solved fungibility at the protocol level will be better at this. Hopefully this can be solved on Bitcoin in the future too. But in the meantime, cross chain atomic swaps solves the problem for anyone looking to get different coins. He swapped his tainted coins for someone else's tainted coins, in this scenario. This does not improve fungibility. If you look far enough back in an output's history, every output will be "tainted" at some point.
If everything is eventually mixed with a tainted coin, everything is tainted, which means nothing is. In true centralized fashion, what matters is what Coinbase thinks of this, or Amazon, or whoever is accepting the coins.
What matters is how many levels deep Amazon scans the chain for taint. If they scan 5 levels, maybe the coins are tainted, maybe they aren't. It's up to them. But this "scanning 5 levels" doesn't make any sense. I can write a script to just move funds around 5 times.
So there is no level that is sufficient if it can be easily defeated in seconds. I agree that things could be better. I'm simply saying that the idea of a "tainted" coin is not really going to ever be a thing once cross chain atomic swaps are popular. There will be nothing anyone can do to stop it. Everything will be mixed. Every single coin will be "tainted". If you can get an inch ahead of the curve, you spilt your soon to be tainted coins into dust and send it to the censor, the censor then mixes your dust with their other coins you group transactions when possible, to keep your wallets form getting dusty and its just generally a good idea for approximations of the "bin packing" problem the rat races to detect tainted coins caught up and suddenly they tainted their customers coins.
No Bitcoin is not an orwellian nightmare. It certainly can and will improve its fungibility, but like everything in bitcoin, you need to be patient.
For low to medium value txs: LN and TumbleBit will be amazing improvements. We are not far away from these.
For high value txs: Not sure about time frame, perhaps in a few years. I assume you mean that almost no one paid the WannaCry ransom, and that therefore that means bitcoin has low low value, and is therefore not going to replace - iTunes gift cards or something - anytime soon? Ah, nevermind, I understand you now. You're making a fungibility argument - that the WannaCry coins are tainted actually apparently already exchanged for Monero.
Bitcoin's problems are too many to enumerate here. Suffice it to say that in the very unlikely event that something like "hyperbitcoinization" starts to happen, the experience of using Bitcoin will suffer.
Bitcoin is adapting pretty quickly. A lot has happened and continues to happen in the technical sphere. Bitcoin has so far kept ahead of security issues and has a security focus. Best bet for load is layer2. It's not clear that centralisation pressures are static they ebb and flow. I hope you aren't referring to the lightning-network as 'layer-2'.
The lightning network requires way too much on-chain activity to allow us to exponentially scale the user base. For that we are going to need sidechains, and a lot of them. It sounds promising but we will just have to see if it works. Certainly something like it will be required IMO. Precision isn't the problem. Economics is the problem.
Users find high fees unacceptable for many applications. LN isn't ready yet. Expanding block space looks like an easy fix until the real solution comes along. With no other way to finance network security, inflation as far as the eye can see is the only option. I don't think you're picturing what hyperbitcoinization would look like in enough detail, nor are you considering the full range of attacks and motivations for attacks that become possible when Bitcoin is ubiquitous.
Fortunately, it was fixed before it became an issue or so it seems now. When entire industries seize up due to a Bitcoin exploit, that creates a very different incentive structure.
That's where national security lives. Or, consider the damage that could be done by attacking a highly-connected LN node. Publish its 1 M invalid channel states and watch Bitcoin come to a grinding halt as fees spike to the stratosphere and nobody can open or close channels due to lack of block space.
They flow when Bitcoin usage increases and ebb when it decreases. Hyperbitcoinization would lead to a tsunami of centralization pressure. I'm looking forward to seeing any segment of the Bitcoin economy reverse course after becoming more centralized. Unfortunately I can't think of a single one. A press release from a single company does not undo mining centralization. Another way is volunteerism. A lot of people are running nodes and getting jack all in exchange.
Since we're talking about a MASS adoption scenario, you can multiply a paltry effort by a shit ton of people to achieve a fairly robust network. Highly distributed volunteerism might even be more secure than our current situation. If it comes to that, I'll run mining nodes spread around the world myself. I can imagine a lot of people will follow suit.
The fact is Bitcoin is not a finished product. It will not "take over the world" as it is today. It will also not remain as it is today.
Every building that held the title of tallest building in the world started its existence as the shortest building in the world.
They don't just materialize into existence. The question is does it have the foundation it will require? Are the building plans feasible? If the answers are yes you will find early adopter volunteerism helping construction.
During construction, Transaction Fees will act as a built in regulating mechanism insuring that the on-board rate cannot exceed capacity. This is working perfectly for everyone with the vision to see what Bitcoin can be, not what it is. Wikis, photo tagging, open source, etc.
It's pretty amazing how much so many people will do just because they enjoy it. That would be very interesting indeed. Although a bit ironic if decentralization were imposed by one of the world's most repressive regimes.
If mining were outlawed everywhere, only outlaws would mine. And they'd need to spread themselves out to avoid detection or concentrate in the handful of countries that allowed it. I can see thousands of PhD discussing this but nobody will buy their alts. We are going to be fine. This is a possibility, but each day the market cap stayed above a billion dollars it becomes less and less probable.
You might want to ask yourself what conditions might prompt a groundswell of support for lifting the 21 million cap. I don't follow you. You mean revolts by people saying that the initial distribution was "unfair"? If 2 , the block size is gargantuan and Bitcoin's entire reason for being evaporates: LN is awesome, and I think LN will work.
But one thing that's clear at this point is that LN will not work if blocks are full and LN is heavily used. Any burst in on-chain transaction volume would open a window for an attacker to get away with publishing an invalid channel state.
So there will be always be a vocal group in Bitcoin arguing for infinite block space. They're banking on mass adoption to increase aggregate fee revenue. But all they're going to do is create a centralized system that replicates Visa, and the world already has Visa. So we end up with blocks that have enormous capacity yet which are mostly empty.
The block reward relentlessly decreases and miners start to look for alternative sources of revenue - by attacking Bitcoin. Something needs to be done to secure the network. At that point, there are no options left Bitcoin will be used as settlement between them, fees will be expensive, lots of drama and discussions about satoshi's vision, coffees will not be served, etc. Still bitcoin will be deflationary and a relatively safe store of value, even if you only have IOU, and money will not be created by board of directors under lobby pressures.
I'm intrigued by the BCH miners attacking the bitcoin network. How do you think they can sustain their hashrate in the long term if they stay at the cheap chain? LN is heavily used. CPFP and other solutions can help thwart this possibility.
Maybe that just becomes a different race condition, though Already fees pay for a substantial share of the miners' reward.
23 Apr Sveinn Valfells, PhD (wearebeachhouse.com). Bitcoin and the Future of Money. April 23, 1 / Page 2. Outline. 1. Money and Modern Civilisation. 2. The Economic Consequences of Bitcoin. 3. About the Author. Sveinn Valfells, PhD .. wearebeachhouse.com – charts. wearebeachhouse.com Retrieved, April Bitcoin for Microstates - How Iceland could adopt Bitcoin. Conference Paper · July with Reads. Conference: Conference: Bitcoin London / BTCLondon Cite this publication. Sveinn Valfells. Abstract. An exploration of a possible future macro-economic usecase for a virtual currency ( Bitcoin) as currency. 2 Jul The economist Sveinn Valfells has an unusual proposition: Bitcoin should become the Icelandic national currency. At Bitcoin London , Valfells explained that Iceland is an extremely wealthy nation with a broken financial system, and in desperate need for a new currency. "It has far from adjusted from.