Author Topic: What do you think of adding a low% of crypto allocation  (Read 233778 times)

the_gastropod

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Re: What do you think of adding a low% of crypto allocation
« Reply #650 on: November 28, 2021, 01:37:54 PM »
Perfectly stated, Telecaster. MustacheAndaHalf. I do not mean this as a slight. It is just self-evident that once again, you’re providing hypothetical solutions to problems you don’t understand that well. Blockchain literally cannot be cheaper than a centralized solution like Visa or Mastercard because it is by design less efficient for the sake of decentralization. Again: the only place it can be cheaper is by bypassing regulations (which is what I mean by “regulatory arbitrage”)

Telecaster

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Re: What do you think of adding a low% of crypto allocation
« Reply #651 on: November 28, 2021, 02:41:01 PM »
But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
I said a "cheaper payment system", referring to the Lightning Network, and you call that "Solving problems you’ve created for yourself"?  Instead of talking about the "cheaper payment system", you make up a story about cars running on hamburgers.  Who was arguing in bad faith, again?

I see that @the_gastropod already responded, but I did not believe his analogy was in bad faith.  Let me explain.  Many people like the idea of Bitcoin for a long list of reasons we are all familiar with.  But two of the problems with using Bitcoin are 1) scalability and 2) transaction cost.  Lightning fixes some of those problems, but creates new problems which also require new fixes on top of the original fix.   

For example, the first step to initiating a Lightning transaction is to open a node.  I guarantee that step alone just eliminated 95% of the potential user base.    And you can't open a node on mobile at all without use of a third party app.  The original Bitcoin paper is titled "A Peer-to-Peer Electronic Cash System."  Using a third-party app isn't peer-to-peer. 

Another problem is that users don't pay Visa fees.  The merchants do.  Merchants could eliminate Visa fees tomorrow by requiring cash, at least for in-person purchases.  But most of them don't because the convenience of  credit card purchases increases consumer spending, and that makes up for the higher costs.   Easy to pay = good, from the payee's perspective.

Getting set up to open a Lightning node is a lot harder than swiping the Visa you already have.  The fact it might be cheaper for the merchant (which I don't believe, as discussed in my previous post) but it doesn't help the consumer--which is the person you need to convince.   Now, the merchant could rebate a percentage of the purchase price in exchange for using Lightning.  But doesn't benefit the merchant.   Why wouldn't he just continue to use the existing system if the costs are the same?  For mobile consumers, which is most of them--using Lightning in any practical sense requires using a custodial wallet.  Which is nearly identical to using a bank, but without the regulatory protections of using a bank.

Point is, as you start adding fixes on top of fixes you also start eliminating reasons to own Bitcoin in the first place.   I laughed at @the_gastropod 's hamburger car analogy, but it made sense.  The more you start trying to make the hamburger car function as well as a real car, the more like a real car it becomes. 

Metalcat

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Re: What do you think of adding a low% of crypto allocation
« Reply #652 on: November 28, 2021, 03:17:34 PM »
But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
I said a "cheaper payment system", referring to the Lightning Network, and you call that "Solving problems you’ve created for yourself"?  Instead of talking about the "cheaper payment system", you make up a story about cars running on hamburgers.  Who was arguing in bad faith, again?

I see that @the_gastropod already responded, but I did not believe his analogy was in bad faith.  Let me explain.  Many people like the idea of Bitcoin for a long list of reasons we are all familiar with.  But two of the problems with using Bitcoin are 1) scalability and 2) transaction cost.  Lightning fixes some of those problems, but creates new problems which also require new fixes on top of the original fix.   

For example, the first step to initiating a Lightning transaction is to open a node.  I guarantee that step alone just eliminated 95% of the potential user base.    And you can't open a node on mobile at all without use of a third party app.  The original Bitcoin paper is titled "A Peer-to-Peer Electronic Cash System."  Using a third-party app isn't peer-to-peer. 

Another problem is that users don't pay Visa fees.  The merchants do.  Merchants could eliminate Visa fees tomorrow by requiring cash, at least for in-person purchases.  But most of them don't because the convenience of  credit card purchases increases consumer spending, and that makes up for the higher costs.   Easy to pay = good, from the payee's perspective.

Getting set up to open a Lightning node is a lot harder than swiping the Visa you already have.  The fact it might be cheaper for the merchant (which I don't believe, as discussed in my previous post) but it doesn't help the consumer--which is the person you need to convince.   Now, the merchant could rebate a percentage of the purchase price in exchange for using Lightning.  But doesn't benefit the merchant.   Why wouldn't he just continue to use the existing system if the costs are the same?  For mobile consumers, which is most of them--using Lightning in any practical sense requires using a custodial wallet.  Which is nearly identical to using a bank, but without the regulatory protections of using a bank.

Point is, as you start adding fixes on top of fixes you also start eliminating reasons to own Bitcoin in the first place.   I laughed at @the_gastropod 's hamburger car analogy, but it made sense.  The more you start trying to make the hamburger car function as well as a real car, the more like a real car it becomes.

This is exactly the thing. There may be brilliant uses for crypto, but like with any revolutionary invention, the uses that people propose for them tend to be stupid as fuck. Instead, it's the uses that evolve to meet the existence of the revolutionary tech that are the game changers.

The internet existed for a very long time before it became all that useful to anyone, and the predictions of what it could be used for back then were generally idiotic and easily shot down.

The phrase is that "necessity is the mother of invention" but history has proven that again and again to be a load of horseshit. People invent things generally because they're fucking nuts and feel compelled to, then down the line someone sane and practical figures out a use for it.

Wasn't the first internal combustion engine absolutely massive and had no practical use whatsoever, or something like that?

If blockchain ends up revolutionary, like the internet, and like many technologies before it, it will be difficult for us pre-revolutionary people to predict what it will mean to the world.

The question as to whether or not it's revolutionary remains to be seen.

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #653 on: November 29, 2021, 07:06:53 AM »
Perfectly stated, Telecaster. MustacheAndaHalf. I do not mean this as a slight. It is just self-evident that once again, you’re providing hypothetical solutions to problems you don’t understand that well. Blockchain literally cannot be cheaper than a centralized solution like Visa or Mastercard because it is by design less efficient for the sake of decentralization. Again: the only place it can be cheaper is by bypassing regulations (which is what I mean by “regulatory arbitrage”)
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #654 on: November 29, 2021, 07:19:16 AM »
And others answered your post about that, that Lightning Network has fixed theoretical vulnerabilities, while nobody has lost money.  Another poster compared that to credit cards, where the vulnerabilities persist.

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).

All your benefits should be prefaced with "in theory."   First, lets talk about the payment system.  The grocery store, gas station, and mortgage company don't accept Bitcoin.  They only take dollars.  So in order to buy a latte'  a transaction looks like this: USD -> BTC --> transfer via Lightning --> USD.  So there is still a round trip on the blockchain before the merchant can spend it.  That guaranteed more expensive than a Visa transaction.   

And let's do a thought experiment.  Big retailers like Wal-Mart and Amazon have sales in the hundreds of billions per year.  If they could shave even half a percent off of transaction costs that would still result in billions of dollars in savings.  I guarantee a tech company like Amazon isn't going to leave billions of dollars on the table because they don't understand Bitcoin/Lightning tech.  They've looked at it and concluded it doesn't make sense. 

A problem is that at a minimum, the capital cost of the transaction must be locked up per channel.   But if the payment is not sent directly from payer to payee, but rather hops via other routing nodes, these nodes also need to lock up at least transaction cost.  For that reason, the Lightning transaction failure rate increases in proportion to the size of the transaction.   No merchant wants  a payment system that has a risk of failure for high value transactions.  And it is also a lot of capital being locked up for unproductive uses. 

Another problem is the liveness issue.  Both parties need to be online to complete the transaction.  There are work arounds for this like watchtowers, which increase costs.  Or use of a custodial wallet--using a trusted third party, in other words. 

Let that last part sink in:  Lightning is a centralized network that benefits from use of a trusted third party.  It is the antithesis of the entire raison d'etre of Bitcoin.   It represents everything Bitcoin was designed to eliminate.
Since when does the Lightning Network does not require third-party custodial wallets?  Can you quote your source for that claim?

I don't think that's true at all.  Others more familiar with Lightning Network can do a better job refuting it.  What I read is that either party can finish the transaction by themselves - they can close the channel at any time.  If one party is trying to steal from the other, they can be caught up to a week later, and lose all the Bitcoin they put into the transaction.  None of which involves third-party trust or wallets, so you should give a source for that.

I don't know who you're quoting with "in theory", but I would agree Bitcoin and Lightning Network are speculative.  That's why there's controversy, because some people believe there will be more value than the current BTC price, and others argue less - or even worthless.

If a start-up creates a payment system, they face a similar problem.  How many brick and mortar stores accept PayPal?  Not as many as accept it online.  A payment system starts as an untested experiment that people fear will risk their money.  Early adopters need to prove it works before there's any hope of adoption by later waves of customers and vendors.  We're not there yet for Lightning Network - it's speculative, and early on.  So yes, we don't know how it will turn out, which is why there's such strong disagreement in this thread about crypto.

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #655 on: November 29, 2021, 07:22:16 AM »
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #656 on: November 29, 2021, 07:36:44 AM »
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/

Is that whole thread just you arguing with nobody about how awesome your investment sense is?

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #657 on: November 29, 2021, 08:06:20 AM »
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/
Is that whole thread just you arguing with nobody about how awesome your investment sense is?
Well played. :)
It's more of an invitation to discuss my personal performance and investment choices there, for people who have trouble with "attack an argument, not a person" in the forum rules.  I do not have an "awesome ... investment sense" now, because my experiment is over and I've sold my outperforming investments.  But I did beat the market - see "an experiment" from Mar 26 2020 to Nov 5, 2021.

If you lack the urge to tell me to stop chasing crypto, that "Case Studies" thread is probably not for you.  But others here take my posts and assume I chase crypto with a large allocation, and I'd rather their opinions find voice in one thread there, than derail threads in this forum.

the_gastropod

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Re: What do you think of adding a low% of crypto allocation
« Reply #658 on: November 29, 2021, 08:19:39 AM »
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
« Last Edit: November 29, 2021, 08:22:40 AM by the_gastropod »

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #659 on: November 29, 2021, 08:46:36 AM »
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.


(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

the_gastropod

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Re: What do you think of adding a low% of crypto allocation
« Reply #660 on: November 29, 2021, 09:07:16 AM »
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

Ok, this is apparently one part of confusion. Quotation marks don't always indicate a quotation. You quote titles in books, etc. My use of quotation marks here is grouping a thought / argument. I'm explicitly asking you if that is what you are arguing. Apparently it is not. But I am really struggling to understand your point.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.

(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

...What in the world? I am so confused here. You're comparing Lightning's hypothetical upper-limit to Visa's actual transactions to assert that Lightning Network solves a real-world problem—that Visa users suffer from Visa's well-known transaction scalability issues? And that is also your argument to prove that I was wrong about solving non-problems? You've got to be kidding me.
« Last Edit: November 29, 2021, 09:09:32 AM by the_gastropod »

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #661 on: November 29, 2021, 09:09:35 AM »

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

It's not correct to compare 'losses' due to credit card vulnerability with losses due to lightning network vulnerability.

With credit cards, the individual users are protected by the credit card company.  Any issue or problem that exists and causes a loss will not be borne by the credit card holders - and thus is inconsequential from a use perspective.  This is fundamentally different from problems in the Lightning network where the risk is entirely borne by users.

Also, the Lightning Network has not fixed their known issues - several still exist.  See Griefing attacks, Eclipsing attacks, Pinning attacks, and Flood & Loot attacks.

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Re: What do you think of adding a low% of crypto allocation
« Reply #662 on: November 29, 2021, 10:28:44 AM »
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

Ok, this is apparently one part of confusion. Quotation marks don't always indicate a quotation. You quote titles in books, etc. My use of quotation marks here is grouping a thought / argument. I'm explicitly asking you if that is what you are arguing. Apparently it is not. But I am really struggling to understand your point.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.

(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

...What in the world? I am so confused here. You're comparing Lightning's hypothetical upper-limit to Visa's actual transactions to assert that Lightning Network solves a real-world problem—that Visa users suffer from Visa's well-known transaction scalability issues? And that is also your argument to prove that I was wrong about solving non-problems? You've got to be kidding me.
I used "cheaper payment system" in every line of the middle of my post, and you still refuse to talk about "cheaper payment system".  You have literally ignored the key point of my post three times in a row, which is a cheaper payment system.  How many posts do I have to write "cheaper payment system" before you use that phrase even once?

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #663 on: November 29, 2021, 10:30:40 AM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

the_gastropod

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Re: What do you think of adding a low% of crypto allocation
« Reply #664 on: November 29, 2021, 11:09:02 AM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.
« Last Edit: November 29, 2021, 11:20:49 AM by the_gastropod »

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #665 on: November 29, 2021, 11:10:11 AM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

Yep - cheaper payment system.  Cheaper than using bitcoin.

The whole point of the invention of the Lightning Network was to solve the problems caused by attempting to use a decentralized, anonymous, peer to peer method of trading a commodity as though it were a currency.  That's why it implemented a centralized, fully identified, third party dependent payment system.

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Re: What do you think of adding a low% of crypto allocation
« Reply #666 on: November 29, 2021, 11:48:26 AM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.
 

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Re: What do you think of adding a low% of crypto allocation
« Reply #667 on: November 29, 2021, 12:58:44 PM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.

Are we not discussing this from an actual human use case?

As a credit card end user, I have never paid a fee to use a credit card.  0$ per transaction.  For that 0$, I have protection from the issuing bank against fraudulent use of my credit, the ability to perform a chargeback should a problem with a transaction arise, a warranty on a variety of items, insurance, and a rewards program.

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Re: What do you think of adding a low% of crypto allocation
« Reply #668 on: November 29, 2021, 01:02:36 PM »
Since when does the Lightning Network does not require third-party custodial wallets?  Can you quote your source for that claim?

I don't think that's true at all.  Others more familiar with Lightning Network can do a better job refuting it.  What I read is that either party can finish the transaction by themselves - they can close the channel at any time.  If one party is trying to steal from the other, they can be caught up to a week later, and lose all the Bitcoin they put into the transaction.  None of which involves third-party trust or wallets, so you should give a source for that.

I don't know who you're quoting with "in theory", but I would agree Bitcoin and Lightning Network are speculative.  That's why there's controversy, because some people believe there will be more value than the current BTC price, and others argue less - or even worthless.

If a start-up creates a payment system, they face a similar problem.  How many brick and mortar stores accept PayPal?  Not as many as accept it online.  A payment system starts as an untested experiment that people fear will risk their money.  Early adopters need to prove it works before there's any hope of adoption by later waves of customers and vendors.  We're not there yet for Lightning Network - it's speculative, and early on.  So yes, we don't know how it will turn out, which is why there's such strong disagreement in this thread about crypto.

According to the AP Stylebook, a correct use of quotation marks is to set off or delineate a word or phrase.  For example:

The words "accept" and "except" are frequently confused.

The words in quotation marks aren't quotes.  Quotes are used to set them apart from the rest of the sentence.    I truly hate pedantic posts--like this one.  Sincere apologies up front, for that.  I mention this only because that use of quotations mark as a signifier has caused a huge amount of confusion in this thread.   You thought I was quoting someone when I was instead setting apart a phase.  In order to reduce the miscommunication, I'll use italics instead for that purpose from now on in this thread.

That out of the way, I may have misunderstood you when you listed the benefits of Lightning.  I thought you were listing actual benefits when you seem to be listing potential benefits.  Is that correct?  I agree, the benefits seem to be potential, not actual.

To be clear, I didn't say Lightning requires a third party, I said it benefits from use of a third party.  The exception is mobile because you cannot open your own node on a phone, so you must use a third party to make mobile payments via Lightning.  This is a major design flaw in my view. 

This also creates a philosophical problem.  The promise and premise of Bitcoin is that allows for trustless, peer-to-peer payments on a decentralized system that is not controlled by any government or organization.  This concept is intriguing to me, and the reason why I got interested in Bitcoin in the first place.      But once you start using Lightning, you've tossed at least two, if not all four of those premises.  So if you are going to toss out the benefits of Bitcoin, why not just stick with Visa?  Serious question.

And is it not just philosophical.  To great fanfare, El Salvador declared Bitcoin as legal tender and rolled out a wallet (which you don't have to use) and its own Lightning app, called Chivo.  So instead of a decentralized payment, we have centralized system, designed and operated by the government--and a government with a very sketchy history at that.  A centralized, government designed and operated payment system is as far from the basic promise of Bitcoin as you can get.    Yet, many people, including some on this board, think having the El Salvador government controlling Bitcoin payments is a major step forward in the evolution of Bitcoin.  Seems to me to be a gigantic leap backward, no?

Re: Paypal.  Great example.  IIRC, eBay's public interface was rolled out in 2000 (could be off on the dates a bit but something like that).   At the time, I was a big user of Ebay (this is before you could buy anything on Amazon) and I remember when it happened.     A problem at the time was most people didn't take credit cards and so you had to physically mail a check.  Slow, required trust, and just a big pain.  There were some work arounds, but they were a pain too.   Paypal fixed all that, and it was adopted by a huge percentage of Ebay users in what seemed like overnight.  Just two years later Paypal was purchased by eBay, who had come up with their own payment system but it never took off. 

The Lightning whitepaper was written in 2015.  Six years later, where is the Lightning eBay?  Nowhere.  From a consumer aspect, Visa works fine.   From the merchant side, you've claimed Lightning is a cheaper payment system and it is, but only compared to native Bitcoin.   The payee still has to convert Bitcoin to dollars, which is very expensive.  And there are also the capitalization costs of opening a node.   Those costs alone, I suspect eliminate or nearly eliminate any cost savings over Visa.  As I mentioned previously, if big venders thought they could save money with Lightning, they would have done so already. 

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Re: What do you think of adding a low% of crypto allocation
« Reply #669 on: November 29, 2021, 01:28:51 PM »
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.

Are we not discussing this from an actual human use case?

As a credit card end user, I have never paid a fee to use a credit card.  0$ per transaction.  For that 0$, I have protection from the issuing bank against fraudulent use of my credit, the ability to perform a chargeback should a problem with a transaction arise, a warranty on a variety of items, insurance, and a rewards program.

A credit card end user doesn't see the fees paid by merchants, but that doesn't mean the fees are not passed on. I was making the point comparing the Lightning network to credit cards with all the benefits you highlighted is comparing apples to a five coarse meal. Debit cards with a merchant fee of 27 bps on a $100 transaction is the more direct comparison to the Lightning network.

People spend more on credit cards because the solve paycheck to paycheck cashflow issues. Merchants are willing to pay 200 - 300 bps because consumers are willing to spend more. Merchants could elect to only accept only debit cards and cut processing fees by 90%. I see very few businesses which accept debit only or place a surcharge on credit; until that changes, I don't think Lightning has a future.     

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Re: What do you think of adding a low% of crypto allocation
« Reply #670 on: November 29, 2021, 01:35:47 PM »
A credit card end user doesn't see the fees paid by merchants, but that doesn't mean the fees are not passed on. I was making the point comparing the Lightning network to credit cards with all the benefits you highlighted is comparing apples to a five coarse meal. Debit cards with a merchant fee of 27 bps on a $100 transaction is the more direct comparison to the Lightning network.

People spend more on credit cards because the solve paycheck to paycheck cashflow issues. Merchants are willing to pay 200 - 300 bps because consumers are willing to spend more. Merchants could elect to only accept only debit cards and cut processing fees by 90%. I see very few businesses which accept debit only or place a surcharge on credit; until that changes, I don't think Lightning has a future.   

Ah, I think I understand your point now . . . and agree with you.

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Re: What do you think of adding a low% of crypto allocation
« Reply #671 on: November 30, 2021, 06:21:52 AM »
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.

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Re: What do you think of adding a low% of crypto allocation
« Reply #672 on: November 30, 2021, 06:28:22 AM »
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".

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Re: What do you think of adding a low% of crypto allocation
« Reply #673 on: November 30, 2021, 06:49:26 AM »
I reported three more trades over at my crypto- trading journal:

https://forum.mrmoneymustache.com/journals/tall-texan's-crypto-trading-journal/msg2939004/#msg2939004

Nothing but gratitude to the group on this thread for affecting my thinking!

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Re: What do you think of adding a low% of crypto allocation
« Reply #674 on: November 30, 2021, 06:57:46 AM »
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.

😂 good god. Cool—I’m going to plant these magic beans I bought on eBay that solve world peace. Don’t dare question me whether they solve real problems!

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Re: What do you think of adding a low% of crypto allocation
« Reply #675 on: November 30, 2021, 07:28:02 AM »
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".

Have you checked Western Union fees?

The service fee is $2 if you use a bank account and transferring to another bank (at least for India which I have used as well as Mexico). The $6 price you are quoting for a $100 transfer is to drop USD cash off at a store and have someone pick up Pesos in Mexico.

Wester Union charges a ~0.3% exchange rate when paying in cash or debit and transferring to a foreign bank and a 1.8% exchange rate when going cash to cash. If transferring bank to bank, the exchange rate is the spot rate.     

This site allows you to compare exchange rates and service fees for multiple transfer services:
https://www.exiap.com/

What is the exchange rate to use USD to buy BTC and later sell BTC and buy local currency? What infrastructure is needed by the person sending and receiving the money on the Lightning network to got USD->BTC->local currency? Western Union charges ~$6.80 for $100 ($26 for $1000) and neither the sender or receiver needs an internet connection or bank account to complete the transaction. If the sender and receiver both have a bank its $2 for up to $5000. If the sender has a bank and the receiver picks up cash it is $3 for up to $5000.

Western Union allows someone working in any country to send funds for local currency cash pickup in a different country. Can the Lightning network accomplish the same?     

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Re: What do you think of adding a low% of crypto allocation
« Reply #676 on: November 30, 2021, 07:50:05 AM »
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.

😂 good god. Cool—I’m going to plant these magic beans I bought on eBay that solve world peace. Don’t dare question me whether they solve real problems!
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).

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Re: What do you think of adding a low% of crypto allocation
« Reply #677 on: November 30, 2021, 07:52:45 AM »
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".

Have you checked Western Union fees?

The service fee is $2 if you use a bank account and transferring to another bank (at least for India which I have used as well as Mexico). The $6 price you are quoting for a $100 transfer is to drop USD cash off at a store and have someone pick up Pesos in Mexico.

Wester Union charges a ~0.3% exchange rate when paying in cash or debit and transferring to a foreign bank and a 1.8% exchange rate when going cash to cash. If transferring bank to bank, the exchange rate is the spot rate.     

This site allows you to compare exchange rates and service fees for multiple transfer services:
https://www.exiap.com/

What is the exchange rate to use USD to buy BTC and later sell BTC and buy local currency? What infrastructure is needed by the person sending and receiving the money on the Lightning network to got USD->BTC->local currency? Western Union charges ~$6.80 for $100 ($26 for $1000) and neither the sender or receiver needs an internet connection or bank account to complete the transaction. If the sender and receiver both have a bank its $2 for up to $5000. If the sender has a bank and the receiver picks up cash it is $3 for up to $5000.

Western Union allows someone working in any country to send funds for local currency cash pickup in a different country. Can the Lightning network accomplish the same?     

I had to post less and less context because gastropod never focused on what I said.  So I stopped including the original context for this, which was not me:

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

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Re: What do you think of adding a low% of crypto allocation
« Reply #678 on: November 30, 2021, 08:45:38 AM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

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Re: What do you think of adding a low% of crypto allocation
« Reply #679 on: November 30, 2021, 08:53:22 AM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?

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Re: What do you think of adding a low% of crypto allocation
« Reply #680 on: November 30, 2021, 09:22:40 AM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?

Because I strongly believe that hammers are the future?

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Re: What do you think of adding a low% of crypto allocation
« Reply #681 on: November 30, 2021, 08:00:49 PM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?

Because I strongly believe that hammers are the future?

If you had a hammer...
https://www.youtube.com/watch?v=01M_J7c1ft4

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Re: What do you think of adding a low% of crypto allocation
« Reply #682 on: December 01, 2021, 05:01:27 AM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

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Re: What do you think of adding a low% of crypto allocation
« Reply #683 on: December 01, 2021, 11:33:40 AM »
I think the disconnect is cheaper payments could be the goal of Lightning, but that's not the outcome in a practical sense, except for a tiny number of niche use cases. 

In the sending money to El Salvador example, both parties can avoid going to the Western Union office, so there could be some utility there.  But there still are a minimum of two blockchain transactions required to send and make the Bitcoin spendable.  At that point, there are little or no savings to be had.   And that is the same case for consumer transactions as well.  Two blockchain transactions are required.   

If you are really serious about regular cheaper payments, you could send money to El Salvador by ACH, which is essentially free, and simpler than Lightning.  It does require both parties to have a bank account, however. 


GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #684 on: December 01, 2021, 12:17:46 PM »
I think the disconnect is cheaper payments could be the goal of Lightning, but that's not the outcome in a practical sense, except for a tiny number of niche use cases. 

In the sending money to El Salvador example, both parties can avoid going to the Western Union office, so there could be some utility there.  But there still are a minimum of two blockchain transactions required to send and make the Bitcoin spendable.  At that point, there are little or no savings to be had.   And that is the same case for consumer transactions as well.  Two blockchain transactions are required.   

If you are really serious about regular cheaper payments, you could send money to El Salvador by ACH, which is essentially free, and simpler than Lightning.  It does require both parties to have a bank account, however.

I think there's also a real concern about holding a wildly variable commodity like bitcoin instead of a stable currency like the US dollar.  You might have 100$ worth of bitcoin transferred to you that is only 80$ (or that has gone up to 120$) when you want to spend it.

Telecaster

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Re: What do you think of adding a low% of crypto allocation
« Reply #685 on: December 01, 2021, 12:30:44 PM »
For sure!  And take the example of say, a low margin business like a restaurant.  The customer payments are on the gross, so if you get even small movement in the wrong direction you can wipe out your yearly profit in one night.   

Bitcoin/Lightning tech is very clever, but they never stopped to think about how money works.   

index

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Re: What do you think of adding a low% of crypto allocation
« Reply #686 on: December 01, 2021, 01:08:03 PM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

The fee in question is $2 not $6.



I addition, the super low fees with Chivo work because the government of El Salvador is subsidizing the money transfer. Conversion at the ATM has a 0.2 to 0.3% spread the round trip "fee" on the transaction USD->BTC->USD is about 50c.

The big problem with this setup is the government of El Salvador is the custodian of your dollars and BTC. They are making money by lending the USD and BTC float just like Venmo/Paypal. You cannot transfer BTC held in Chivo to an outside wallet, so the government can hold and lend the BTC and just keep a record of how the digital BTC is trading hands within the country. By using Chivo, you are trusting a government with a history of corruption to hold BTC and USD reserves. 70% of El Salvadorians do not have a bank, so transfers out of the app will be limited. If confidence is lost in the system, you are relying on government sponsored ATMs to withdraw cash. The daily cash withdraw limit is $1000. There are 231 Chivo ATMs that can hold a maximum of 200k each if stocked with all $100s, more than likely these are stocked with 10% to 25% of that of that amount. So a $5M-12M run on the government ATMs (with a population of 6.5M) and you have a real situation on your hands...

So options are:
A. Get a bank in El Salvador and transfer out of Chivo - USD-BTC-USD costs 0.5%
B. Get a bank in El Salvador - Bank to Bank with Western Union costs 1%, maybe there are better methods?
C. Trust the government and use Chivo as your bank - USD-BTC-US costs 0.5%
D. Western Union - costs 2%

This all gets more complicated if you are transferring to a country that doesn't use a reserve currency. Right now the transaction would go - USD -> (1.5% fee) -> BTC -> (1.5% Fee) -> USD -> (0.25%+ spread "fee") -> local currency (maybe ATM fee). Western Union is doing this without BTC for around 2%.



   

aceyou

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Re: What do you think of adding a low% of crypto allocation
« Reply #687 on: December 03, 2021, 12:24:25 PM »
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

The fee in question is $2 not $6.



I addition, the super low fees with Chivo work because the government of El Salvador is subsidizing the money transfer. Conversion at the ATM has a 0.2 to 0.3% spread the round trip "fee" on the transaction USD->BTC->USD is about 50c.

The big problem with this setup is the government of El Salvador is the custodian of your dollars and BTC. They are making money by lending the USD and BTC float just like Venmo/Paypal. You cannot transfer BTC held in Chivo to an outside wallet, so the government can hold and lend the BTC and just keep a record of how the digital BTC is trading hands within the country. By using Chivo, you are trusting a government with a history of corruption to hold BTC and USD reserves. 70% of El Salvadorians do not have a bank, so transfers out of the app will be limited. If confidence is lost in the system, you are relying on government sponsored ATMs to withdraw cash. The daily cash withdraw limit is $1000. There are 231 Chivo ATMs that can hold a maximum of 200k each if stocked with all $100s, more than likely these are stocked with 10% to 25% of that of that amount. So a $5M-12M run on the government ATMs (with a population of 6.5M) and you have a real situation on your hands...

So options are:
A. Get a bank in El Salvador and transfer out of Chivo - USD-BTC-USD costs 0.5%
B. Get a bank in El Salvador - Bank to Bank with Western Union costs 1%, maybe there are better methods?
C. Trust the government and use Chivo as your bank - USD-BTC-US costs 0.5%
D. Western Union - costs 2%

This all gets more complicated if you are transferring to a country that doesn't use a reserve currency. Right now the transaction would go - USD -> (1.5% fee) -> BTC -> (1.5% Fee) -> USD -> (0.25%+ spread "fee") -> local currency (maybe ATM fee). Western Union is doing this without BTC for around 2%.



   


Solid research Index, thanks for compiling and sharing this with us. 

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #688 on: December 05, 2021, 08:42:14 PM »
Ah shit

talltexan

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Re: What do you think of adding a low% of crypto allocation
« Reply #689 on: December 06, 2021, 08:50:24 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #690 on: December 06, 2021, 09:19:41 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #691 on: December 06, 2021, 09:22:34 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

clarkfan1979

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Re: What do you think of adding a low% of crypto allocation
« Reply #692 on: December 06, 2021, 10:11:19 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.   


boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #693 on: December 06, 2021, 10:22:22 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.

ChpBstrd

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Re: What do you think of adding a low% of crypto allocation
« Reply #694 on: December 06, 2021, 11:25:45 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.

That's the story for millions of people worldwide. It's why consumer debt payments / disposable income is at levels last seen in 1991-1995 and 2010-2014. In both cases, 5 years of strong stock returns followed.
https://fred.stlouisfed.org/series/CDSP

Household debt to GDP continues to fall:
https://fred.stlouisfed.org/series/HDTGPDUSQ163N

But maybe not for long... The personal savings rate plummeted from 13.6% in Oct. 2020 to 7.3% in Oct. 2021.  https://fred.stlouisfed.org/series/PSAVERT

We're now back to the economy of 2013-2019, except with a bunch of consumer debt problems wiped out. Consumer-suckas are flush.



boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #695 on: December 06, 2021, 11:29:50 AM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.

That's the story for millions of people worldwide. It's why consumer debt payments / disposable income is at levels last seen in 1991-1995 and 2010-2014. In both cases, 5 years of strong stock returns followed.
https://fred.stlouisfed.org/series/CDSP

Household debt to GDP continues to fall:
https://fred.stlouisfed.org/series/HDTGPDUSQ163N

But maybe not for long... The personal savings rate plummeted from 13.6% in Oct. 2020 to 7.3% in Oct. 2021.  https://fred.stlouisfed.org/series/PSAVERT

We're now back to the economy of 2013-2019, except with a bunch of consumer debt problems wiped out. Consumer-suckas are flush.

yeah thanks for throwing down the data i've read about most of these exact things over the pandemic it does appear there is a lot of capital on the table and what happens is that gets spent.  It is really refreshing to see people take these payments and use them to their own financial advantage over the last year though it appears to be going away.  I'm also a big fan of the monthly pay out of the CTC b/c it makes people work it into a budget for needs as opposed to buying a new toy with their tax return.  these things arent what this thread is about but it was good to see people shift focus if only for a little bit.

talltexan

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Re: What do you think of adding a low% of crypto allocation
« Reply #696 on: December 06, 2021, 02:09:28 PM »
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I'm hardly the most "pro-" person on this thread, but the low prices will result in me purchasing more because of the system I follow.

Part of my system involves only trading on 1st and 15th of the month, so I'm not breaking with that to try to rush money into the market early, the low prices will need to last for nine more days for me to benefit.

No matter how fantastic the underlying asset, allowing myself to trade "whenever I feel like it" doesn't seem wise.

waltworks

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Re: What do you think of adding a low% of crypto allocation
« Reply #697 on: December 06, 2021, 03:56:57 PM »
I personally think bitcoin is so awful (for reasons that have already been discussed) that it needs to die for crypto to achieve it's potential, so I'm personally rooting for it to crash and crash hard. But that's just me. I have no skin in the game or interest in playing, so it's just entertainment, so long as it doesn't take down some other more important part of the financial system simultaneously.

-W


talltexan

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Re: What do you think of adding a low% of crypto allocation
« Reply #698 on: December 07, 2021, 06:42:54 AM »
In the recent pullback, Bitcoin has seemed comparatively safe when you look at Alt-coins.

Bitcoin today is trading at 74% of its all-time-high. For Litecoin, Chainlink, and ZRX (just to pick at the rest of my portfolio), they're all 40% or less.

DaKini

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Re: What do you think of adding a low% of crypto allocation
« Reply #699 on: January 04, 2022, 12:54:38 PM »
I find it interesting how the discussion ceased together with the latest meltdown.
I bet that we will see crypto discussions pop up again with the next run.

Isn’t that telling?