# The problems with Bitcoin



## Brendan Burgess

Philip Kinlen who works for AIB's Research and Innovation, presented a paper at this conference run by Hibernia Forum.  It was entitled "Blockchains and Distributed Ledgers" 

*Conference 27 April 'Blockchain - a new frontier for freedom, tech and investment.'*

It was a great summary of the problems facing Bitcoin 

Here is the key slide 






It might be that some new crypto will emerge which will solve all these problems.


----------



## TheBigShort

Where is the bit about it being bag of hot-air?

It seems that some are identifying problems with bitcoin. And that the challenge is to resolve those problems, or alternatively another crypto emerges with improved technology. 

Im just wondering, when the Wright brothers flew the first aero flght, did anyone think it was all a bag of hot air because flights from London to New York were still a problem?


----------



## Brendan Burgess

TheBigShort said:


> another crypto emerges with improved technology.



This could well happen. There is nothing special about Bitcoin except the extent  of  its problems.  It doesn't have a patent or any other form of exclusivity.   So anyone could develop a better crypto currency which resolves all those problems.  Maybe that has to happen for you to realise that Bitcoin has no monetary value whatsoever.

While the idea of an alternative community of CypherPunks developing a universal currency is appealing to some, the reality is that the vast majority of people would prefer a Central Bank backed or state backed crypto currency without all the problems listed out by Philip.

Brendan


----------



## Gus1970

Brendan, these are not problems for bitcoin, they are problems for the banks that want to implement blockchain.

1) Have 1,000 times the number of transactions (resolved)

2) Delete old data (risible, history and immutability is one of the most important qualities of blockchains)

3) Give people privacy (this is outrageous, banks lose their customers data all the time and in bitcoin only with a private key you see data. Privacy perfected)

4) recover funds when private key is lost (with bitcoin we are our own bank, i have a system in place for that, the bank can’t)

5-6) block and revert ( this is exactly why bitcoin exists so that banks and governments cannot block, cannot freeze, cannot revert anything that is of a citizen’s possession)

7) regulate it (enjoy yourself in trying to do that, bitcoin lives with and without regulation)

8) reduce trans fee (done, orders of magnitude lower than banks fees)

9) get transaction conf within 1 sec (bch has zero conf instsnt transactions)

10) reduce power consumption (understand how non collaborative systems evolve, hint, Game Theory)

11) reduce price volatility (not sure i want that, for now)

This is the typical banker that adds blockchain to his title and knows zero about it.

10/11 nonsensical claims, this is real fun


----------



## Gus1970

Brendan Burgess said:


> There is nothing special about Bitcoin except the extent of its problems



care to discuss some with me? I hope you don't mean the fake ones in the slide.



Brendan Burgess said:


> So anyone could develop a better crypto currency which resolves all those problems. Maybe that has to happen for you to realise that Bitcoin has no monetary value whatsoever.



Do you still think that all this is about bitcoin and its price? The crypto ecosystem includes all the other coins, it is a revolution happening right now if you haven't noticed.
If you care about the future you don't care whether bitcoin or ethereum or brendancoin is the most valuable, you care about the problems that they resolve for humans.
All you seem to care is being right about your bet


----------



## newtothis

Brendan Burgess said:


> It was a great summary of the problems facing Bitcoin.



From a completely disinterested independent party, right?


----------



## Duke of Marmalade

_Boss _I don't like that slide at all.  The basic premise is that bitcoin is a valid competitor currency and then it proceeds to list its weaknesses. Some of these seem churlish like "we're much faster than you nananana".  Others point out problems with its "bearer trustless" nature, but this is the essence of what the bitcoin community are craving.  Others like data retention are problems for the regulator and whilst society as a whole should be on the side of the regulator, this is another key plus for the BC.

If I was making a presentation at that forum, I would have only one slide:

Bitcoin is Worthless​


----------



## TheBigShort

Duke of Marmalade said:


> Others like data retention are problems for the regulator




I don’t really get the point about data retention, or as the slide shows “delete old data”…who? why? what? data should be deleted?
Who is holding this data? Should the internet delete all its data too?


----------



## tecate

Leo said:
			
		

> Well, I won't but I'm not in law enforcement, but let's not pretend it's impossible or not happening regularly as your point suggested


Let's not pretend it has to be possible.  If you leave your house unlocked, anyone can walk in.  If you store crypto on a centralised exchange or simply hand over the private key, then - and only then - your crypto can be accessed by another party.

With regard to volatility, I do agree that it's an issue and that its unlikely to be resolved in the short/medium term.

With regard to transaction volumes/scaling, I don't really care if it's off-chain so long as it solves the problem.  You say that there are nevertheless problems with LN. I'm struggling to get a grasp on that.  Can you expand on these flaws?


----------



## tecate

Duke of Marmalade said:
			
		

> If I was making a presentation at that forum, I would have only one slide:
> Bitcoin is Worthless​


Go right ahead. I'm sure there's a place on the speaking circuit for you.  There must be if they can get a guy from a bricks n mortar bank to diss bitcoin.  I mean it's not that he doesn't have a vested interest right?


----------



## Leo

tecate said:


> Let's not pretend it has to be possible.



And I didn't, that wasn't the assertion I was replying to.


----------



## tecate

Leo said:


> And I didn't, that wasn't the assertion I was replying to.


No problem Leo.  However, relating it back to other posts above, bitcoin can only be seized by another party if the holder leaves it unsecured.


----------



## Leo

tecate said:


> No problem Leo.  However, relating it back to other posts above, bitcoin can only be seized by another party if the holder leaves it unsecured.



In most cases yes, and I've stated as much in other threads. In addition to users leaving them exposed on on exchanges, there have been cases of court orders forcing users to hand over their keys so that their holdings can be taken over, usually forming part of plea deals. 

I'm not sure the FBI ever released exactly how they seized Ulricht's holdings, but from reporting at the time he resisted handing them over, then challenged their authority to dispose of them only to drop his case later on. Again, not clear why he agreed to drop that claim when he wasn't able to secure a plea deal.


----------



## Protocol

A blog post on cryptocurrencies

https://johnhcochrane.blogspot.ie/2018/04/basecoin.html


"Cryptocurrencies like bitcoin have to solve two and a half important problems if they are to become currencies: 1) Unstable values 2) High transactions costs 2.5) Anonymity............................

It is interesting to me how the cryptocurrency community seems to be painfully re-learning centuries-old lessons in monetary economics.................."


----------



## tecate

Leo said:


> there have been cases of court orders forcing users to hand over their keys so that their holdings can be taken over, usually forming part of plea deal.


No doubt such individuals felt pressured but at the end of the day, they were not forced but chose to hand over the keys.


----------



## Gus1970

100% tecate


----------



## Gus1970

Also, tecate, these same things have been said about bitcoin since 2010, bitcoin died over 140 times https://99bitcoins.com/bitcoinobituaries/

It is exhausting when somebody new jumps in after reading 1/2 a blog post on bitcoin written by some marketer and decides that he knows bitcoin will die because energy, because transactions, because anonymity, because scam, because tax, because regulation, because hot air, etc..


----------



## Firefly

Gus1970 said:


> It is exhausting when somebody new jumps in after reading 1/2 a blog post on bitcoin written by some marketer and decides that he knows bitcoin will die because energy, because transactions, because anonymity, because scam, because tax, because regulation, because hot air, etc..



I am curious to get your opinion on why so many people think these things about Bitcoin? Given that Bitcoin is around for 7 years now surely if it was all fine and dandy people would know by now?


----------



## tecate

Firefly said:


> Given that Bitcoin is around for 7 years now surely if it was all fine and dandy people would know by now?


I don't think that's a correct assumption.  Firstly, we are talking about one of the most fundamental cornerstones of human activity which has undergone little in the way of disruption.
Secondly, bitcoin (& crypto generally) is a tech solution/development.  How long did it take for internet related technologies to mature?

It's quite clear that crypto is far from reaching maturity so you can't possibly say that the results are in on something that has not reached its final form.


----------



## tecate

Firefly said:


> Not sure if this was directed at me, but feel free to answer the questions I have already asked you.


Both of your questions asked and answered;

1.  Why hasn't BTC reached mainstream usage already?
- Because it is being continuously improved/developed and has not reached maturity/it's final  form.

2. Insufficient tx volume/throughput.
- Being addressed through LN, bigger block sizes and other ways.
Furthermore, Gus1970 makes the point that it will be brought on as needed.

How then have your questions not been answered?


----------



## TheBigShort

Brendan Burgess said:


> So anyone could develop a better crypto currency which resolves all those problems. Maybe that has to happen for you to realise that Bitcoin has no monetary value whatsoever.



You mean new technology replacing old technology, rendering the old technology worthless? 
Thats being happening since the invention of the wheel...what gives?



Brendan Burgess said:


> While the idea of an alternative community of CypherPunks developing a universal currency is appealing to some, the reality is that the vast majority of people would prefer a Central Bank backed or state backed crypto currency without all the problems listed out by Philip.



Somewhat of an outlandish statement to purport to speak for over 50% of global population. But that aside, why cant I in my own insignificant way, choose to be part of one or both?


----------



## Brendan Burgess

TheBigShort said:


> You mean new technology replacing old technology, rendering the old technology worthless?
> Thats being happening since the invention of the wheel...what gives?



Your first mobile phone is worth nothing just as your Bitcoin now is worth nothing.

Brendan


----------



## TheBigShort

Brendan Burgess said:


> Your first mobile phone is worth nothing just as your Bitcoin now is worth nothing.
> 
> Brendan



Why? Has Bitcoin been replaced?


----------



## Gus1970

Firefly said:


> Apologies. I was referencing your post above (93). Still, the question stands....why do so many people think these things about Bitcoin? If it was all fine and dandy wouldn't people know by now?



We are in a very early stage of the technology. It will take at least a decade until we will be able to appreciate it completely. I can’t help that. I was selling internet connections in the early nineties, all the objections i hear today about botcoin i heard about the internet.


----------



## Brendan Burgess

Gus1970 said:


> This is the typical banker that adds blockchain to his title and knows zero about it.
> 
> 10/11 nonsensical claims, this is real fun



I was thinking a bit more about this.

The seminar last week where these ideas were presented, was attended by many holders of Bitcoin and experts like our friend Julio. 

They did not challenge the claims.  Julio was quite happy to say that Cashaa was untrustworthy so, it's not that he was too shy to speak. 

Or is that the rule of the Blockchain community - at meetings, it is rude to challenge nonsense? 

Brendan


----------



## Gus1970

Brendan Burgess said:


> Or is that the rule of the Blockchain community - at meetings, it is rude to challenge nonsense?



It is rude to attack a speaker using foul language, in any environment, would you not agree?

Did Julio swear and then brag about it? Was he reprimanded by the chair of the conference? 
I didn't think so


----------



## Firefly

tecate said:


> Firstly, we are talking about one of the most fundamental cornerstones of human activity which has undergone little in the way of disruption.


The exchange of FIAT currency has undergone massive change in the recent decades, from the introduction of ATMs to POS machines, to the introduction of e-commerce and the new entrants such as Stripe. 



tecate said:


> Secondly, bitcoin (& crypto generally) is a tech solution/development.  How long did it take for internet related technologies to mature?


I note Bitcoin was released in 2009. That's almost 10 years which is a lifetime in the modern era where technology is concerned. 




TheBigShort said:


> Im just wondering, when the Wright brothers flew the first aero flght, did anyone think it was all a bag of hot air because flights from London to New York were still a problem?


The Wright brothers flew their first flight in 1903. 11 years later planes were used in the First World War and for commercial flights. Where are we with Bitcoin?


----------



## Firefly

Gus1970 said:


> We are in a very early stage of the technology. It will take at least a decade until we will be able to appreciate it completely.


Is Bitcoin not out almost 10 years already?


----------



## tecate

Firefly said:


> The exchange of FIAT currency has undergone massive change in the recent decades, from the introduction of ATMs to POS machines, to the introduction of e-commerce and the new entrants such as Stripe.


Some change yes but I don't think that has in any way challenged the status quo in terms of the traditional banks. Banks have gone online and such but they have managed that transition in-house.  The same with POS and ATMs for the most part.

Stripe competes with other c.c. processing companies rather than eroding core banking revenue streams.
There has been some competition for banks on FX transfer from the likes of transfermate, etc.  However, having done a few wire transfers recently, the old guard are still protecting this.  On one transfer earlier this year, the receiving bank rejected it because I had used transfermate! It took a few days, there was no electronic tracking/confirmation and they still charged me heavily.
As regards ATMs, I'm getting screwed on FX and withdrawal fees royally here in South America.



Firefly said:


> I note Bitcoin was released in 2009. That's almost 10 years which is a lifetime in the modern era where technology is concerned.


Go back and check how long the development of the internet took from the very beginning.
The move from cash to plastic took 40 years to take hold.



Firefly said:


> The Wright brothers flew their first flight in 1903. 11 years later planes were used in the First World War and for commercial flights. Where are we with Bitcoin?


Sure but you are talking about mass adoption.  When my parents and grandparents emigrated, they didnt fly whether that be the US or UK and that was still many decades after your Wright brothers flight.
You can still use bitcoin right now but it hasn't fully evolved..and it may not be one of the successful crypto's ultimately either - we'll have to wait and see.


----------



## Gus1970

Firefly said:


> Is Bitcoin not out almost 10 years already?



Exactly, for comparison, the internet is 49 years old (https://en.wikipedia.org/wiki/ARPANET)


----------



## TheBigShort

Firefly said:


> The Wright brothers flew their first flight in 1903. 11 years later planes were used in the First World War and for commercial flights. Where are we with Bitcoin?



Fair point. Bitcoin is nowhere near launching its first commercial flight.
On the otherhand, scepticism of the Wright Bros acheivement was prevalant in some quarters at the time.



tecate said:


> Go back and check how long the development of the internet took from the very beginning.
> The move from cash to plastic took 40 years to take hold.



Even fiat currencies like the Euro have their origins from the late 1960's, with calls for a 'European currency' dating back to 1920's. 

Despite that, within 6-7 years of its notes and coins circulating it was bankrupting nations and threatening to implode european economies.


----------



## Duke of Marmalade

TheBigShort said:


> Despite that, within 6-7 years of its notes and coins circulating it was bankrupting nations and threatening to implode european economies.


Do you think Tsipras is just waiting for bitcoin to sort out a few technical problems before Greece adopts it as its national currency?


----------



## tecate

Duke of Marmalade said:


> Do you think Tsipras is just waiting for bitcoin to sort out a few technical problems before Greece adopts it as its national currency?


I don't think anyone is suggesting that BTC will be adopted as a national currency.  That doesn't mean that the euro project isn't without its flaws - which is the side point TBS was making.  For the purposes of staying on topic, his main point being that discussion on a European currency goes back many years. Therefore, it's not true to say that if BTC was of any consequence, it would have made a mass market impact by this stage.


----------



## Duke of Marmalade

tecate said:


> I don't think anyone is suggesting that BTC will be adopted as a national currency.


Mr. PayPal no less thinks that bitcoin will be the World's single currency, possibly within 10 years.


----------



## tecate

Duke of Marmalade said:


> Mr. PayPal no less thinks that bitcoin will be the World's single currency, possibly within 10 years.


I'm open to correction but my understanding is that Peter Thiel stated that BTC would become the online equivalent of gold.  He also stated that the outlook is high risk and that there is a 50-80% chance that BTC would end up having no value.  I don't think he ever stated that it would be the World's single currency.  As regards national governments implementing it as a national currency, you know that's not going to happen as it's not what governments do.


----------



## Duke of Marmalade

tecate said:


> I'm open to correction but my understanding is that Peter Thiel stated that BTC would become the online equivalent of gold.  He also stated that the outlook is high risk and that there is a 50-80% chance that BTC would end up having no value.  I don't think he ever stated that it would be the World's single currency.  As regards national governments implementing it as a national currency, you know that's not going to happen as it's not what governments do.


Ok wrong guy.  It was some other genius, whom I forget.


----------



## TheBigShort

Duke of Marmalade said:


> Do you think Tsipras is just waiting for bitcoin to sort out a few technical problems before Greece adopts it as its national currency?



That has already been explained to you im sure, that bitcoin cannot be adopted as a national currency.



Duke of Marmalade said:


> Mr. PayPal no less thinks that bitcoin will be the World's single currency, possibly within 10 years.



I doubt it.


----------



## Sarenco

The world's highest-profile cryptocurrency jumped 10.5% to $23,655, taking its gains this year past 220%.








						Investor interest sends bitcoin to peak past $23,000
					

Bitcoin rose to a record high today, just a day after passing the $20,000 milestone for the first time, amid surging interest from larger investors.




					www.rte.ie


----------



## Brendan Burgess

Sorry guys. We closed the other thread.  Pending a " balanced review"  being produced. We are still waiting on it.

Brendan


----------

