In the big rally in 2017, the talk of the town was whether or not bitcoin could become a useful payments system with the aid of the Lightning Network, which has since completed development and has seen release.
Anyone who's up on crypto know if bitcoin is actually usable for sending payments now? If a local coffee shop or something accepts bitcoin, is there any chance I can go in and pay quickly + without a massive fee using LN?
Or is bitcoin still treated like a risky asset and nothing more?
> Or is bitcoin still treated like a risky asset and nothing more?
I always find this sentiment a little funny, because I think payments are the least interesting thing about Bitcoin. Fast and easy payments will come in time with crypto, but in most developed countries the credit card system is a safer and easier consumer alternative anyway.
Crypto is way more than payments, it's an entirely new financial system outside the control of existing governments and corporations. If you don't understand why this is way more important that being able to buy a coffee easily, you haven't been paying enough attention. There's only so many options for long term wealth storage, and crypto represents an entirely new class, so from a hedging perspective it makes sense for all high wealth individuals to have a small allocation. We're reaching the point where you're at a greater long term risk not holding any.
As more money is stored in crypto and more trust placed in it, there will naturally be more desire from those users to be able to easily use it for consumer purchases, so give it time. But again, the most interesting stuff is what's being built out now, which is an alternative to the legacy financial system, not a Visa competitor.
“Crypto is way more than payments, it's an entirely new financial system outside the control of existing governments and corporations.”
And yet, Bitcoin and other cryptocurrencies, are valued in US Dollars or other established currencies, and traded/exchanged for “real currencies” to spend as you’ve dismissed the importance of transactions.
Governments can regulate crypto, and corporations will form to control them.
And yet, Bitcoin and other cryptocurrencies, are valued in US Dollars or other established currencies…
This is no different than a dollar being priced in gold terms or the pound sterling being priced in terms of silver when paper money was relatively new.
A dollars were originally redeemable for $20.67 [1] and then later $35 per ounce of gold [2]. This ended when we got got off the gold standard in the 70's.
As bitcoin becomes the dominant non-sovereign store of value, we’ll slowly start to reprice things in terms of satoshis (sats), the smallest denomination of bitcoin [3].
Sats are already the standard on Cash App and other apps and services that exchange fiat for BTC. It's just a matter of time before all fiat is priced in terms of sats.
Why would people refer to prices in satoshis rather than dollars/euro/etc, if the technology and culture to price and conduct normal transactions with crypto currency.
I don’t tell people my car is worth 20 gold coins....
Nevertheless, I don't currently have a significant amount of wealth to manage so my interest in a
> new financial system outside the control of existing governments and corporations
would be to utilize its basic functions for something fun and cheap - such as buying coffee, or integrating it into a chatbot that sends my friends pictures of my cat in exchange for a fraction of a coin, or something silly of that nature.
If I can't do any of that feasibly, then I have no use for bitcoin at this time, personally.
would be to utilize its basic functions for something fun and cheap - such as buying coffee…
Think of bitcoin as digital gold.
If you owned blocks of gold, it wouldn't make sense to scrape some off to buy coffee. Coins, then notes were created because walking around with gold is inconvenient, to say the least.
There's no reason why these everyday purchases shouldn't continue to be done using dollars or another fiat currency. It makes more sense to use the continuously inflated dollars which will are losing purchasing power the longer I hold on to them.
Bitcoin is expected to continue rising in value… for example, it doubled ($20k to $40k) is 3-weeks. So the $5 worth of BTC I spent on coffee last month would be worth $10 today and probably a lot more in a few months. Why would I do that?
Sure, it's been 12 years but in terms of being a monetary good, bitcoin is brand new. It's going to be a while before there's enough people who own bitcoin to make payments make sense. Lightning Network is great, but it's still essentially a beta product and some of the UI/UX issues are still being worked.
Lightning is where the internet was back in the 90's before Netscape and broadband networking were available. Early adopters were fine but it wasn't a mainstream thing just yet.
> so from a hedging perspective it makes sense for all high wealth individuals to have a small allocation. We're reaching the point where you're at a greater long term risk not holding any.
Couldn’t have expressed my thoughts any better. And to add to this, the more that one comes to understand the machinations of central banks (particularly the behavior of the US Fed), and the limited long-term viability of the dollar-centric monetary system, the more one sees it from this perspective.
Another comment below notes how Bitcoin and US equities are correlated. I could see many reasons for this, but one of them is very likely that both are an effect of quantitative easing policies, but for very different reasons...
> And to add to this, the more that one comes to understand the machinations of central banks (particularly the behavior of the US Fed)....
I have a pretty good idea of the way the Fed works and I have no interest in holding bitcoin. The Fed seems to be doing a really good job targeting the inflation rate even in times of financial crisis in the past couple of decades.
Bitcoin prices are too unstable to be anything more than a crypto lottery.
> and the limited long-term viability of the dollar-centric monetary system, the more one sees it from this perspective.
If anything the dollar has become stronger since we got off the gold standard and has become the unofficial currency of the world. China may be eventually be the other -- that is, if you ignore things like the mysterious disappearance of Jack Ma.
If anything the dollar has become stronger since we got off the gold standard…
That's absolutely not true. Getting off the gold standard removed the pretense that there was a limit to the amount of dollars that could be printed. The purchasing power of the dollar has continued to drop since then—https://howmuch.net/articles/rise-and-fall-dollar
There's also no guarantee the dollar will remain the reserve currency, as China, Russia and others are creating ways to get off the dollar standard [1].
I wasn't talking about price since inflation guarantees the price of the dollar will drop over time, so technically you're right. I was really talking about trust.
And much of that trust is that the dollar is that the price is the same from day to day for the most part. Sure there's inflation, but if I own $1M I don't expect it to be worth 10% of that tomorrow.
> There's also no guarantee the dollar will remain the reserve currency, as China, Russia and others...
So, would you really really trust Russia and China with their currency? Where the hell is Jack Ma? Huh?
> If you don't understand why this is way more important that being able to buy a coffee easily, you haven't been paying enough attention.
I don't dispute the relative importance, but sometimes the unimportant is important. When you've got a horse and a cart, the contents of the cart may be much more important to you than the horse. But that by no means means that it makes sense try and push the cart down the road and hope the horse will sort itself out. That approach will only work until you get to the bottom of the hill and lose your gravity assist.
More BTC is transacted on the Ethereum network in the form of tokenized Bitcoin than on the Bitcoin lightning network. In fact, about 140K BTC are locked up and tokenized on ETH now: https://defipulse.com/btc
Personally, I am bullish on the use of crypto for decentralized finance: https://defipulse.com/ That is product/market fit for crypto, and this past year has proven out some of those smart contract models.
https://badger.finance/digg is working on an elastic supply pegged wrapped BTC product called DIGG that is backed by a DAO.
Already has over $600m TVL into the project in just about 5 weeks. The movement in this area is phenomenal. The team is great. The community is strong and active. Super interesting times.
> I also don't understand the use of some of these. You can borrow crypto against other crypto?! What is the use case for that?
I am sure eventually you'll be able to borrow / lend / put as collateral not just other cryptos, but tokenized assets as well. That's why Ethereum is so exciting to me personally.
>How do the oracles work with these kinds of smart contracts?
It depends. Many exploits are based on asymmetric oracle data, or asymmetric trades using flash loans. Mainly oracles will be used for aggregated price feed data from centralized exchanges, thus making the prices an average across the board. This keeps it even for everyone involved that integrates the same oracles that everyone else does, and a proper oracle network will keep bad actors at bay by mitigating excessive arbitrage opportunities. Well-meaning oracles are critical for these kinds of decentralized finance opportunities.
>You can borrow crypto against other crypto?! What is the use case for that?
If I put my tokens up for borrowing, I'm providing liquidity into a pool. It allows me to leverage my own money into a series of "IOU's" from smart contracts that pay out dividends by collecting small fees from people who borrow from this pool as a payment for providing this utility.
To answer your second question: The use case is ultimately adding liquidity to the market, and getting paid for doing so, while also being able to leverage the IOU's (in some scenarios) into more dividends payouts.
It sounds more complicated than it is. Boiling it down looks something like this:
Provide - ETH-BTC to a pool || Receive - aETHBTC tokens (an IOU)
Provide - aETHBTC to a pool (an IOU) || Receive - aETHBTC tokens (an IOU)
Provide - yaETHBTC to a pool (an IOU) || Receive - yyaETHBTC tokens (an IOU)
... etc.
It's interesting and affords a lot of opportunities, but you should be careful to read every contract and only enter positions that have none or little "impermanent loss". I'd recommend you find the fee structure for a pool, find the market demand and study what the pros/cons are of lending your money. You may lend out a token and it may drop in value while those IOUs become worth less while you're trying to cash them out. Or, you may borrow an asset against your assets to market sell and effectively short the borrowed token, only to be liquidated when the token rises and you need to pay back your loan.
Just be careful of your gas bill while you're learning :)
Thanks a lot for the detailed answer. I'm presently not interested in using any of these services, but I am trying to keep up with the developments of crpytofinance.
Absolutely. It is the digital version of a gold dealer where you go to exchange your currency for local money. Imagine you travel to Vietnam, you can get local currency from your ATM and get a terrible rate... or you can take USD to a gold dealer and buy the local currency "on the black market". They give you a rate, take a cut, use it to hedge against their gold. Almost always a better rate than the banks.
Now it is happening online for people who want to say switch between various ETH tokens. This is what DeFi is all about. $20b is locked up into this stuff already and growing. Things are moving insanely fast.
If you want to dip into the more regulated version (CeFi), take a look at BlockFi or Celsius.
LN situation is not perfect, but improved greatly last year.
With wallets like Breeze & Phoenix initial onboarding of new users to LN is quite painless because they offer in-flight inbound channel creation (for a tiny fee). So you can install and accept payment right away. Strike mobile app allows to easily fund your LN wallets with smallish amounts of money ($1-$1000) very quickly - just plug in your debit card.
I have been kicking tires paying for my coffee in LN-accepting Palo Alto coffee shop before the lockdown and it worked OK. But in other situations LN payments did have some problems (usually lack of receiving liquidity on the receiver end).
Another road to Bitcoin scaling for payments is using sidechains like Liquid. I haven't tried it myself yet.
But generally I agree that payments on Bitcoin are not critical right now, as it is becoming a trust-less collateral and saving device for bigger institutions for who $10 tx fees are irrelevant. It might however force smaller investors to try out sidechains/LN for casual payments.
I'm an early adopter of bitcoin, jumping in when I saw the original Slashdot post, so I've been following it and using it for a long time.
The flaws with using bitcoin as a currency today are:
1) It has a delay. When you send money it could take them literally over an hour to get that money. (Usually within 5 minutes though.) This is not ideal for a business. There are bitcoin services that smooth this over, giving them cash immediately, and automatically transferring it to USD so the company never touches a bitcoin. To the business it's basically a credit card.
2) Transfer fees. While not the end of the world in the early days, they're worse than credit cards today. Expect to pay a lot to buy a latte, almost 1.5x due to fees.
The bitcoin community for a while has been strongly pushing for BCH or Bitcoin Cash. It addresses these two issues, reducing fees significantly and accelerating transfer. It's the alt currency the bitcoin community has been pushing. However, I admit I have zero experience using it to buy items.
My understanding is that the entire goal of the LN project was to alleviate these by taking individual transactions off-chain by setting up collateral upfront. Was it not successful?
My understanding is that the entire goal of the LN project was to alleviate these by taking individual transactions off-chain by setting up collateral upfront. Was it not successful?
I've been involved in Bitcoin since 2011. Very few use the LN, most payments are still using the blockchain. There are lower cost options to BTC, but adoption has been slow due to the politics of crypto.
I don’t see Bitcoin being used directly to purchase coffees. It might be worthwhile to settle your credit card at month end via btc, but not for small payments.
Bitcoin has reached product market for for money laundering and avoiding capital controls. It doesn’t really need more to hit these valuations with inflation expectations and near 0 interest rates.
Not an expert by from my understanding bitcoin doesn't offer any reasonable transaction confirmation times and as such is of limited value as a currency. Instead it's being used as a commodity.
The point of bitcoin is NOT to make payments. That's not what it's for.
Bitcoin is a STORE of VALUE, like gold or Bonds.
We're currently in an age of unprecedented Fiat currency devaluation the likes of which we've never seen before in such a developed country. And we're only going to see much much more of it as the younger generations have made it clear they want much more from government in the way of fiscal and stimulus than they want taxes. Hence deficit spending will continue to expand and expand. The Fed will keep printing money until inflation runs super high: 2 to 4%, they said they would be happy with! and lets not forget the CPI is undervalued by at least 1%.
the monetary supply this year has expanded at a record pace, just look it up. Assets have been exploding over the last 10 years, both in the US and worldwide.
What all this means is that there is an unprecedented need for a stable STORE of value. It's not about bitcoin. It's about having a store of value that's guaranteed to not be inflated and the world has a huge burning need for it. this is why bitcoin will expand from 700Billion today market cap, up to 10Trillion or 20T or more over the next 5 to 10 years. maybe not in a straight line but it will get there and even exceed it maybe. Bitcoin may be the new bonds, in about 30 years time from now.
The FEDs of the world, that pump up the monetary supply have all agreed on the same game plan: It's call UP is the only way out. The only way to deleverage the economy is to inflate away all the debt. The Governments of the world are all on board with this policy. Why do you think they're all so desperate to create high inflation (3%-4%)? That's how you reduce the debt burden. 10 years of 5% inflation can reduce your debt almost in half, right along with anyone's savings. And by keeping interest rates at 0 or less, they want to make saving as painful as possible, so people will go out and spend their entire retirement savings on consumables to keep the economy going in the short run. the only way to protect yourself from this is to own: Stocks, real estate (not scalable or viable for most), and Gold. That's all there was. Until now. Now there's bitcoin, another way to diversify and not put everything into super high stocks.
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution"
There's what Satoshi thought Bitcoin was going to be and there's reality 10 years down the road.
Give the man a break: he was a visionary but he could not predict the future exactly, and in hindsight, something that takes 10mn to confirm a transaction was likely never going to be used as a currency, at least not until layer 2 tech (lightning) delivers.
payments = replacing bank wires and ACH payments, not buying coffee
He/she/they meant bitcoin is a bearer instrument like gold and not something that has to be redeemed. It doesn't represent debt the way a federal reserve note (a.k.a. a dollar) does.
Most of the white paper could have been boiled down to this:
Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally.—@Travis_Kling
If you think that supply side inflation can cause CPI inflation in a demand starved economy then you are dead wrong. As long as there are foreign investment opportunities you are going to see very little inflation. As long as unemployment or underemployment stays high you can keep printing forever without having an impact on the value of the currency.
>The FEDs of the world, that pump up the monetary supply have all agreed on the same game plan: It's call UP is the only way out. The only way to deleverage the economy is to inflate away all the debt. The Governments of the world are all on board with this policy. Why do you think they're all so desperate to create high inflation (3%-4%)? That's how you reduce the debt burden.
You know, if the central banks actually did their job properly you wouldn't want to hold BTC at all because the income of workers would rise faster than the value of your BTC. They are not desperate just incompetent (well, in theory they are unable to solve the problem).
You know, if the central banks actually did their job properly you wouldn't want to hold BTC at all because the income of workers would rise faster than the value of your BTC. They are not desperate just incompetent (well, in theory they are unable to solve the problem).
Beanie babies have lower liquidity. Also, you may not be aware because is a relatively recent development, but in mid-2020 there was a fundamental perception shift in the way that Wallstreet viewed bitcoin. nearly all the major the hedge fund managers and institutional investors now believe in bitcoin. so the world's 200 Trillion $ worth of bonds and equities will slowly flow to BTC.
somehow i don't think they're going to spend trillions of dollars for beanie babies.
Technically it's always been usable; it's just the benefits don't outweigh the cons to make it worthwhile. Nothing has changed on that side of things.
BTC will never be a widespread payment for things like coffee, as it makes no sense. It will always have to be pegged against a local currency (and that currency shown) so what's the point of using it to buy coffee?
At present, Bitcoin still an extremely risky asset. If it stays that way, who knows.
At present, Bitcoin still an extremely risky asset. If it stays that way, who knows.
The financial guys have declared that bitcoin has been de-risked now, since insurance companies, hedge funds and publicly traded companies have invested many billions of dollars for the long term.
Nano (nano.org) is the cryptocurrency that could actually work as a means of payment. The transactions are fully confirmed in under 1 second, there are zero transactions fees, it's scalable, and there is no mining. It achieved this by using a block lattice where each account is its own blockchain.
Lightning is usable for sending micropayments. Lightning and Bitcoin make a perfect pair for implementing 402s for machine learning API calls, as one "killer use case" example.
Anyone who's up on crypto know if bitcoin is actually usable for sending payments now? If a local coffee shop or something accepts bitcoin, is there any chance I can go in and pay quickly + without a massive fee using LN?
Or is bitcoin still treated like a risky asset and nothing more?