Lightning Network Grows To 1,700 Channels!

  • Bitcoin's future looks bright again with lightning
  • Professor Steve Hanke says something rash about bitcoin

Comment of the Day @brakmic

Lightning Network Grows

The future of Bitcoin is looking bright once again and it seems as though the enormous fees that we saw only weeks ago are starting to dissipate. The price taking a huge dive certainly helped reduce the $ cost of fees as well as reducing the trading volumes and general velocity of bitcoin. However SegWit has also helped to reduce fees and the first 'organic' 2MB block was mined recently. Even Coinbase has said they will be implementing SegWit shortly as well as batching transactions, all of which will put less stress on the network.

 

 

However, 'Satoshi's vision' and many early bitcoin adopters' vision was to provide cheap and fast transactions that would allow you to buy your cup of coffee and send $1 Billion. Unfortunately this vision had been lost as security and censorship resistance come at a cost but the much hyped and long awaited layer two scaling solution is here - lighting. 

The testnet launched late 2017 and I even had the pleasure of taking part as the 2657 node. I managed to pay for my 'Starblocks' coffee with fake bitcoin and the fee was less than a cent and the payment instant. It gave me a warm fuzzy feeling but I dared not hope that we could truly revive 'Satoshi's vision' from the grave. For one it was very buggy and not that easy to set up and secondly there are the issues with having to lock your money in a channel until you settle your balance, which means part of your wealth is trapped and if the other side of the channel doesn't pay up, your BTC stake can remain frozen for some time. 

Looking at the beautiful map of the 1,700 channels setup on the mainnet its exciting to imagine the potential retail adoption of Bitcoin with cheap and instant transactions. I dare to hope that Bitcoin will really be used as a common medium of exchange one day.

In the meantime, help get this lonely node a payment channel!

Steve Hanke On Crypto

Cryptocurrency seems to encourage a hasty and often stupid response from some of the world's most intelligent people. Professor Steve Hanke has joined the long list of these high profile remarks, behind Nobel laureate Joseph Stiglitz who said Bitcoin 'Ought to be outlawed' and Jamie Dimon who garnered the most publicity for calling bitcoin 'a fraud'. 

Professor Steve Hanke is an American applied economist at the Johns Hopkins University in Baltimore and he recently tweeted:

Its clear that the anonymity of cryptocurrencies scares some people and governments but as many were quite to respond it kind of the point... Seeing as bitcoin emerged from the 'Cypherpunk' group  who were activists advocating widespread use of strong cryptography and privacy-enhancing technologies as a route to social and political change.

Regardless of whether Bitcoin and cryptocurrencies succeed they are without doubt one of the most disruptive innovations as they allow wealth to be stored outside of the control of governments for the first time since fiat money was invented. It is also the first form of money thats supply is controlled by math. Unlike fiat supply which is controlled by centralized groups of power who enjoy the freshly minted currency before generously 'spreading the wealth' to everyone. This debases the currency by the time it reaches the average citizen and their dollar is worth less than the same dollar printed, this is called inflation.

Hopefully as time passes the great thinkers of our time will take a bit more consideration when weighing up the good and bad of cryptocurrenices to elevate the debate from - is it a Fraud, Yes of No? 

Crypto Twitter Reacts to Buffett's Recent Criticism of Bitcoin

Warren Buffett, an American business tycoon and one of the most successful investors in modern history - with a net worth of approximately $90 billion, has argued that Bitcoin (BTC), the flagship cryptocurrency, is a “gambling device.”

Buffett, who has previously compared cryptocurrencies to “rat poison,” recently told reporters (prior to attending Berkshire Hathaway’s annual meeting): “There’s been a lot of fraud connected with [Bitcoin]; there have been disappearances. So there has been a lot lost on it. The bitcoins haven’t produced anything."

Bitcoin “Just Sits There”

Buffett, who’s a notable philanthropist as he’s reportedly pledged 99% of his wealth to charity, mainly through the Bill & Melinda Gates Foundation, thinks that Bitcoin “doesn’t do anything.” He claims the world’s most dominant cryptocurrency “just sits there.” Moreover, the prominent speaker compared Bitcoin to a seashell which has no meaningful purpose.

Buffett also noted he doesn’t consider Bitcoin to be an investment. He remarked: “I’ll tear off a button here. What I’ll have here is a little token...I’ll offer it to you for $1,000, and I’ll see if I can get the price up to $2,000 by the end of the day... But the button has one use and it’s a very limited use.”

Bigger Question Is If You Can Do Payments On Top Of Bitcoin, A “Gambling Device”

In response to Buffett’s comments, Twitter user JP Koning (jpkoning) acknowledged that Buffett was right in saying that Bitcoin is used frequently to engage in speculative trading or gambling. However, Koning, an economist and active blogger, mentioned that “the bigger question is whether you can build a payments system on top of a gambling device.”

Koning, who writes frequently about stablecoins and various other topics related to tokenomics, questioned whether the developers of the Bitcoin protocol will be able build a payments system that “will be used by everyone, or just hobbyists and outsiders.”

Koning further noted:

The features that make bitcoin such a popular gamble interfere with its functionality as a payments system. Only die-hard fans or folks who lack access to regular money will ever be willing to ignore this awkwardness [and] use it for payments.

Responding to Koning and Buffett’s statements, Arthur Breitman, the Chief Technology Officer at Dynamic Ledger Solutions, a company that’s focused on the ongoing development of Tezos, asked:

How many stores of values do you know that don't represent anyone's obligation towards you, that can be self-custodied and moved around easily?

Bitcoin Is "Gold 2.0"

Meanwhile, Vijay Boyapati, a former Google engineer and widely-followed commentator on Bitcoin, remarked

Bitcoin is not PayPal 2.0, it's Gold 2.0. Not unsurprisingly Buffett has a poor history of understanding gold's value proposition.

Notably, Buffett's most recent criticism of Bitcoin as an ineffective medium of exchange (MoE) or store of value (SoV) has come right after Grayscale Investments, a subsidiary of the Digital Currency Group,launched a campaign called #DropGold. Grayscale's campaign has been aggressively promoting Bitcoin as a better form of investment. Meanwhile, Grayscale's management claims it's time to move away from the gold bullion as a form of investment because "it just sits there." 

In response to Grayscale's campaign, the World Gold Council published a blog post in which it argued that Bitcoin is too volatile and it may not be considered an effective replacement for gold, which is a time-tested and established asset.