> Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin.
That's an important point, because it prompts the question: what is the problem that Bitcoin is solving if the preferable outcome is that it does exactly the same things that gold and centralized banks already do?
The more that I hear people justify slow transaction times, high fees, and a general lack of platform evolution, the more it sounds to me like the only problem that Bitcoin is solving in the real world is that gold is already stable, and speculators need a new thing to jump on. The arguments people are making today about why slow transactions are irrelevant are not the same arguments that people were making when Bitcoin was new. It's revisionist history. And when people are talking about centralization as the end goal... this is also part of why I'm skeptical about claims that proof of stake is going to solve anything on the environmental front, or that microtransactions are ever actually going to get better.
The overwhelming perspective I'm seeing here is that nobody involved in speculating on Bitcoin cares about the technological side at all, and I don't see what incentive there is for anyone to make mining easier, cheaper, more democratic, or more environmentally friendly. The whole point seems to be that people want to get in early and then erect as high barriers of entry as possible. What makes people think that anyone speculating on Bitcoin is going to care about proof of stake? At the point where bitcoin becomes a nationally backed currency that is just a backbone for other smaller systems and is (for most people) completely independent from their regular everyday transactions -- there's no advantage to creating that world, that is the world we already have. The only difference is that a few people on Reddit haven't gotten rich off of the world we have.
The fact that the majority of the market is still standardized on Bitcoin despite a plurality of clearly better coins drives home to me that the discussion about Bitcoin has nothing to do with practical merits of the system, and everything to do with a bunch of people trying to extract as much money as possible before tragedy of the commons sets in. We can make centralized banks without bitcoin. If that's the end goal, then we should absolutely get rid of the blockchain because blockchain is not necessary for a centralized bank exchange with a small number of government-level actors.
I'm surrounded by people who tell me that Bitcoin is a giant innovation, but who are then openly hostile to any kind of improvement to the platform and who are continually dismissing valid criticisms of its technology and governance model as irrelevant because those criticisms don't directly impact Bitcoin's value as a purely speculative currency. What you're describing when you propose a single, centralized exchange is, "we want to make banks a second time the same way, except less efficiently with fundamentally outdated technology, because we want some of the pie this time."
Which, great, but as a non-speculator, why on earth should I support that or care about it?
The problem it solves is that currently, it's not possible for any single central entity to prove anything about ownership changes directly. Now, you can simply trace every on-chain transaction on the chain -- it's as if there were a universal log of every SWIFT transaction, available to the public. It's incredibly useful for forensics! And we can leverage the huge amount of compute power directed here to do useful work as a side effect, by putting in identity stakes and layer2'ing things like proof-of-identity or proof-of-ownership.
But no, it doesn't solve those problems. Because you're talking about setting up a central exchange and layering separate currencies on top of it. You're talking about the majority of settlements and transactions taking place off-chain.
So when you think about tracking on-chain transactions, what you're really talking about is tracking government-level, giant transactions that are largely divorced from the kind of detailed forensics that people would want to do. Which... there are better ways to audit giant government-level agencies than a blockchain.
Similarly, leveraging the blockchain to handle things like proof-of-identity doesn't work if the transaction speed for ordinary people can't keep up. If you want to use Bitcoin for proof of identity transactions, you need ordinary people interacting with the network, not a central exchange. Because again, if you have a few central exchanges that everyone is interacting with, then it's almost strictly better to just let them handle proof of identity and proof of ownership in shared centralized databases.
The only reason Bitcoin could matter is if it actually did scale enough that it was feasible for ordinary people to use it for micro-transactions and as a performant, robust API. But the problem is that Bitcoin as a technology is poorly suited for that use case, and none of the people hyping are interesting in solving those problems, evolving the technology, or moving to other coins that would be better suited.
In a world with centralized exchanges and secondary layers on top of bitcoin that consolidate and batch transactions, all of the problems you're describing end up being easier and better to solve by just having the centralized exchanges coordinate with each other, the same way that banks already do. And to the extent that banks don't coordinate with each other right now, it's unrealistic to assume that the blockchain is going to suddenly change their incentives or force them to do so.
Currently the MSFT identity approach uses blockchain as an identity stake and then layer2's the access. The identity stake allows for anyone to verify that the credential is valid and belongs to a real person without everyone involved having to run the entire chain back to that point, with a secondary chain providing a changelog. Since you only need to exist once, this can cost $5 or so without major issue. (We can't use a centralized database for this because people in the US are afraid of the government.) NHS is using it as a cross-region credentialing system, since it's easier for them to accept a blockchain entry than work out all the regulatory nonsense about actually sharing history, or getting their systems to work together securely.
I would say first read the article, which goes in detail what it solves. I'm not doing a TL;DR for you here but the post title does have a lot to do with it. You're stuck on speculation side. There are other parts to the problem which also needed a solution. As the time progresses the reward is smaller and then becomes negligible if bitcoin ever fulfilled it's ultimate goal. This is the reward for early adoption.
I did read the article, it's an explanation of how blockchains work. And I know how blockchains work.
What the article doesn't explain is why decentralized consensus and ledgers matter for a system that is increasingly obviously designed to be centralized and used in a centralized manner.
Yes, Bitcoin allows transaction resolution in a distributed ledger. The problem is that everything else around Bitcoin's design, implementation, and community is ill-suited for creating a decentralized currency. There are a hundred coins out there that use a blockchain to "create time". The article does not explain why Bitcoin in specific is worth paying attention to, other than because speculators are currently already paying attention to it.
First to market and the technology that works good enough. Nothing has come around that is better, enough, to warrant a switch. Once that happens we will go with better technology, it has always been the case.
The current banking system is better right now, because it's at least usable and scalable. Of course the current banking system is centralized and expensive, which is a problem, but if a substantial portion of Bitcoin's userbase is arguing for that transaction speeds and costs are irrelevant because Bitcoin will be centralized too, then I'm not giving them credit for that.
And frankly, it's not at all true that no other coins have come around that are better. Monero is vastly better at privacy than Bitcoin in pretty much every way. There are already coins on the market that are using proof of stake today. In pretty much every area, the state of cryptocurrency has evolved over Bitcoin -- but, importantly, none of those coins have become better systems for speculative investing. And I would argue that's the "better enough" that most Bitcoin advocates care about.
I also don't see any reason to assume that once Bitcoin goes more mainstream that a community that is currently hostile to change because it might affect their wallets is suddenly going to be less hostile to change. Bitcoin could be evolving today. People could be switching to better coins today. But they're not. It's not going to be easier to make those improvements in the future.
Bitcoin is the technology. The idea that we need wide adoption of a technology that is ill suited for the problem it is trying to solve, just so that we can drop that technology and choose something that's actually usable on its own without first reimplementing the entire concept of banks -- it just doesn't make sense as a long-term strategy.
You're discounting the whole problem the bitcoin solves because of speculating. Since dawn of time there have been only 2 types of money, token and ledger. Bitcoin came around and created a third type of money and the genius of it is to do that it had to create a new concept of time. That's the cool part that the article goes in depth about. I'm sorry but it's hard for me to believe that anyone who read that article can go back to "speculation" arguments.
There are tons of coins that do what Bitcoin is doing, except better. They also create their own concept of time. They handle distributed anonymity better, they integrate very clever concepts like zero-knowledge proofs and proof of stake. Bitcoin does not have a monopoly on the concept of a distributed ledger or any of the other concepts that are actually interesting about blockchain technology.
But Bitcoin is particularly bad at everything surrounding the concept of a distributed ledger. In fact, it is set up in such a way as to make working with its distributed ledger more difficult than it needs to be. It was an interesting first pass at this technology, but it has been very clearly surpassed by other coins in pretty much every single way.
So the question is, given that Bitcoin is particularly bad at what it does, given that other cryptocurrencies are doing the same things that the article praises except better, why are people sticking with an outdated technology? I would posit that people who are really genuinely excited about concepts of "creating time" would be moving to better coins that are doing even more clever things than Bitcoin is, and the people who remain are largely remaining because they're interested in the speculation part and for them concepts like "first to market" are very important.
But I don't see how anybody would ever say they prefer Bitcoin because of the technology. It's outdated.
That's an important point, because it prompts the question: what is the problem that Bitcoin is solving if the preferable outcome is that it does exactly the same things that gold and centralized banks already do?
The more that I hear people justify slow transaction times, high fees, and a general lack of platform evolution, the more it sounds to me like the only problem that Bitcoin is solving in the real world is that gold is already stable, and speculators need a new thing to jump on. The arguments people are making today about why slow transactions are irrelevant are not the same arguments that people were making when Bitcoin was new. It's revisionist history. And when people are talking about centralization as the end goal... this is also part of why I'm skeptical about claims that proof of stake is going to solve anything on the environmental front, or that microtransactions are ever actually going to get better.
The overwhelming perspective I'm seeing here is that nobody involved in speculating on Bitcoin cares about the technological side at all, and I don't see what incentive there is for anyone to make mining easier, cheaper, more democratic, or more environmentally friendly. The whole point seems to be that people want to get in early and then erect as high barriers of entry as possible. What makes people think that anyone speculating on Bitcoin is going to care about proof of stake? At the point where bitcoin becomes a nationally backed currency that is just a backbone for other smaller systems and is (for most people) completely independent from their regular everyday transactions -- there's no advantage to creating that world, that is the world we already have. The only difference is that a few people on Reddit haven't gotten rich off of the world we have.
The fact that the majority of the market is still standardized on Bitcoin despite a plurality of clearly better coins drives home to me that the discussion about Bitcoin has nothing to do with practical merits of the system, and everything to do with a bunch of people trying to extract as much money as possible before tragedy of the commons sets in. We can make centralized banks without bitcoin. If that's the end goal, then we should absolutely get rid of the blockchain because blockchain is not necessary for a centralized bank exchange with a small number of government-level actors.
I'm surrounded by people who tell me that Bitcoin is a giant innovation, but who are then openly hostile to any kind of improvement to the platform and who are continually dismissing valid criticisms of its technology and governance model as irrelevant because those criticisms don't directly impact Bitcoin's value as a purely speculative currency. What you're describing when you propose a single, centralized exchange is, "we want to make banks a second time the same way, except less efficiently with fundamentally outdated technology, because we want some of the pie this time."
Which, great, but as a non-speculator, why on earth should I support that or care about it?