Yeah, I forgot the ETF too. From what I have seen of Gary Gensler I think this will just make it more likely he will approve a US ETF this year
The Cryptocurrency Trading Journal
- Thread starter Daal
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Since fees are an unbounded number with no limit, its quite possible that as institutions adopt it and dominate transactions in the network, the little guy will be left out of this "btc country" and lots of small amounts of bitcoins will be essentially trapped
Solutions like more Segwit adoption can delay the problem but the basic inequality of this 'country' will eventually play out when lots of big funds want to move btc at high speeds and small investors cant. I dont know what is the solution but lightning wont fix this
The fact that the miner tax is soaring and its unbounded by anything tells me that Bitcoin, as it currently structured is very unequal by its very nature. One day, it might cost $1,000 to do an on-chain Bitcoin transaction making it uneconomical for most of the planet (but not for those that got in early, or for institutions with a lot of money).
SWIFT does 33 million transactions per day, Bitcoin does 400,000 and blocks are always full so it can't go any higher. As the big money comes in to try to get in that bus, someone must leave, the small money. So that will hurt broad adoption, unless they increase the block size. I think all roads lead to a bigger block size or ETH2 might win as store of value.
This rambling is unlikely to be a big deal now (I'm super bullish for the coming 6-12 months), maybe it will only matter in the next cycle but I think this is a valid criticism of Bitcoin that you dont see from idiotic journalists or economists which is why I wanted to put here in this journal. Bitcoin does have flaws, but they can be worked/fixed on or they can be hedged by owning ETH
SWIFT does 33 million transactions per day, Bitcoin does 400,000 and blocks are always full so it can't go any higher. As the big money comes in to try to get in that bus, someone must leave, the small money. So that will hurt broad adoption, unless they increase the block size. I think all roads lead to a bigger block size or ETH2 might win as store of value.
This rambling is unlikely to be a big deal now (I'm super bullish for the coming 6-12 months), maybe it will only matter in the next cycle but I think this is a valid criticism of Bitcoin that you dont see from idiotic journalists or economists which is why I wanted to put here in this journal. Bitcoin does have flaws, but they can be worked/fixed on or they can be hedged by owning ETH
Bitcoin transaction fees in satoshi terms have come down with Segwit and much more so with Lightning
As you mentioned, for higher $ value transactions, the transaction fees are merely a nuisance at this time
I'm on the camp of bitcoin as a SoV and not for spending on coffee (micro transactions)
You can use PayPal, Square, and PayPal credit cards for those micro transactions funded by bitcoin, if you really have to. You can have a BlockFi or Nexo Credit card , again, to spend your bitcoin. In the future, you can use Visa and Mastercard funded by bitcoin
There will be many ways to spend your bitcoin. It is not a must to use the bitcoin blockchain and pay high $ costs on transaction fees
As you mentioned, for higher $ value transactions, the transaction fees are merely a nuisance at this time
I'm on the camp of bitcoin as a SoV and not for spending on coffee (micro transactions)
You can use PayPal, Square, and PayPal credit cards for those micro transactions funded by bitcoin, if you really have to. You can have a BlockFi or Nexo Credit card , again, to spend your bitcoin. In the future, you can use Visa and Mastercard funded by bitcoin
There will be many ways to spend your bitcoin. It is not a must to use the bitcoin blockchain and pay high $ costs on transaction fees
Its not about spending Bitcoin for coffee. SWIFT does 33M transactions a day, no one is using that for coffee. Its about being able to move value to tap liquidity (rebalancing, taking profits), security (sending to a custodian or to a hardware wallet), among other reasons. Over the last 10 years fees are up 1 for 1 with the Bitcoin price. So if Bitcoin goes to $500K, fees will be $150 (10x to 10x). That will price out a lot of people from being able to do those things I mentioned above. Lightning will not change that because almost no one is using LN (and trust me, I like LN), also LN is not safe for storing BTC, at some point you will pay the Network Fee. Only solutions that I can think of are a bigger block size or to tell everybody they cant transact on bitcoin and they should just hold their BTC ETF (or BTC at Coinbase) and never move it
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There are better crypto rails (solutions) for what you describe
I believe this is what big institutional traders do now, when moving hundreds of millions of $ between exchanges and platforms, they use stable coins and may even use prime brokerage (i.e. BlockFi or Celsius) to finance them on margins
For retail there will be solutions that are similar in use case. For example, I can move up to $25K (daily) from Coinbase to PayPal instantly for $0 fees. Once in PayPal, I can transfer $ to any of the hundreds of millions of users on the PayPal network
By the way, PayPal owns Venmo. I don't use it much but I suspect that integration above is already working now on Venmo
I expect the above scenario to expand to other platforms, with banking (i.e. BNY, Avanti) and Visa and Mastercard and Square all supporting bitcoin. I don't know if fees will always be $0, but it will probably be much less than your projected $ figures
Personally, I would not worry about the future too much. Hypotheticals will keep you up at night. As problems arise, solutions will be developed
That's what I was saying, small folks will have to trust a custodian. So they buy BTC at coinbase, then move to Paypal for free, then move via LN at somewhere else. At all of these steps they are taking risks someone that is fully on-chain are not. The blocksize will work as the security safe haven, but that safe haven will come at a steep price. The L2 solutions are nice, cheap and fast but come with additional risks. Risks that will be carried by the small investors. The big money will be on-chain, paying whatever they need to pay to be on the next block meanwhile the peasants will be taking hacking risks like crazy. It will be a challenge with Bitcoin dealing with this inequality. Meanwhile ETH has a better roadmap in dealing with that
No offense, but you keep moving the goal posts.
Ethereum stablecoins are centralized, look into how they were able to freeze funds and revert back.
At some point, you will need to deal with and trust centralized entities in order to redeem the value of your crypto investments. The key for me is to only do it when I absolutely have to and at the value that I need (i.e. selling to Coinbase and transfer to bank or PayPal
I own Eth, I want it to go $10K, but I believe you locked some of your Eth and that is causing you to have a sunked costs bias
Polka DOT is very exciting project. I also think Tezos is great. Both are Eth competitors. In the mean time, not-so-decentralized blockchain Binance Smart Chain is crashing the party and eating Eth Defi lunch
I can sell all my Eth right now if I want to. I have no blinded loyalty to Eth. I do on bitcoin btc, however
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No offense, but you keep moving the goal posts.
Ethereum stablecoins are centralized, look into how they were able to freeze funds and revert back.
At some point, you will need to deal with and trust centralized entities in order to redeem the value of your crypto investments. The key for me is to only do it when I absolutely have to and at the value that I need (i.e. selling to Coinbase and transfer to bank or PayPal
I own Eth, I want it to go $10K, but I believe you locked some of your Eth and that is causing you to have a sunked costs bias
Polka DOT is very exciting project. I also think Tezos is great. Both are Eth competitors. In the mean time, not-so-decentralized blockchain Binance Smart Chain is crashing the party and eating Eth Defi lunch
I can sell all my Eth right now if I want to. I have no blinded loyalty to Eth. I do on bitcoin btc, however
You underestimate my commitment to a lack of bias, while I have ETH locked in ETH2, I have even more Bitcoin locked in a timelocked address with end dates from mid 2023 to early 2026. Also, my Bitcoin position overall is much bigger than ETH. What I'm doing is trying to argue the other side, to find the flaws in the investment thesis so I dont make a mistake.
So I'm not moving any goal posts, I just dont express myself very well and have a tendency to ramble.
What I'm arguing is basic arithmetic, the excel data I posted earlier is just comfirmation.
The Basic Math:
There is this 400,000 transaction a day bus that carries all the on-chain transactions. That can't go higher due the blocksize limit, Segwit can squeeze a bit more people in, but that is a one-time benefit. We are entering a phase where more than a billion+ people will be exposed to Bitcoin and there is not enough space for these people to transact on-chain, as a result, fees MUST rise exponentially or these people must move off-chain (out of the bus). When they move off-chain, they increase risks (even before conversions to fiat stablecoins), some of these risks WILL lead to losses (Murphy's Law), these people will not like that and might decide other coins are the way to go. Also, its terrible marketing if you own this cryptocurrency but you can't make transactions on it only the rich can, you feel left out
Meanwhile ETH is being used as collateral (in other words as a store of value) in DeFi, derivatives and other things. If ETH2 delivers on its roadmap, everyone in the world will be able to use it as a store of value without the off-chain risks, without $100 fees to send to their trezor, etc.
As I said, in the long-run all roads lead to a bigger block size or an alternative coin (ETH2 in my mind), but hey, maybe I'm missing something
A correction, Segwit can help that 400,000 transaction a day count increase. Maybe to as much as 800,000 (I dont know, I havent run the numbers) but its a one time benefit and when it is widely adopted it will stop increasing the transaction count