This paper just came up on another (not neutral) forum ChainBLX: http://community.chainblx.com/t/bit...e-currency-which-will-have-to-be-replaced/249 However, it's an interesting argument that current cryptos like BTC are just prototypes that are so flawed they will have to be replaced. They are saying that future cryptos will have to be asset-backed. I wondered what the community here thinks: _______________________________________________________________________________ Bitcoin and other cryptocurrencies are a prototype currency, which will have to be replaced Bitcoin and other current cryptocurrencies are a prototype currency, which will have to be replaced soon with asset-based, decentralized cryptocurrencies. It is obvious that the core idea of cryptocurrencies is solid and that society will not go back in time and abandoned this idea. But, it is also obvious that crypto currencies like Bitcoin will not become a mainstream, worldwide currency in their current form, a potential opportunity that asset-based crypto currencies will provide. According to our analysis, we predict that Bitcoin will undergo several major market adjustments within 2018 and that this adjustment will make mining of crypto currencies non-profitable for an extended period (of several years) after the upcoming market adjustments. Thus, many miners will stop the mining process and choose to use their hardware for other purposes (Deep learning processes and some will even attack the system itself). The collapses of the mining industry will create investor agony, further depreciating the price of Bitcoin and the availability of asset-based cryptocurrencies will be considered by investors as a safer alternative. It remains to be speculated that an alternative use of Bitcoins currency will be discovered and implemented, which will deem the end of Bitcoin serving as a cryptocurrency, or not. During the same time frame investments in other blockchain technologies will be fruitful and create a new booming market, taking advantage of many things the industry learned from the early crypto currencies. Miners leaving the cryptocurrency market will further contribute to the future boom of artificial intelligence (AI) related industries, as deep learning requires a lot of time to train, which is computer time and is much faster over GPU instead of CPU (Mining computers have very powerful GPUs). “There is no such thing as free lunch.” We know the promise of a free lunch is very attractive but sadly not possible. For example, in the stock market bubble between 1995-2001people saw high returns just by investing, many people quit their jobs and just started to invest in the market, not noticing that the liquidity was coming from concentration of money in the stock market and not from an increase in productivity (more goods be manufactured). A solid economical principle is that value increase value of currencies and stocks are related to increase in productivity. Bitcoin itself is not related to productivity at all, where fiat currencies show a strong correlation between productivity (e.g. GDP) and their value versus other currencies. Hence it seems strange that one could just invest in a cryptocurrency and then relax from now on gaining a substantial return. Asset based crypto currencies like the stock portfolio based crypto currency as proposed by ChainBLX overcome this “castle in the sky” problem, they are backed by the productivity of the enterprises which stocks are held in the portfolio underlying the crypto currency. To further demonstrate the current “castle in the sky” approach of current non-asset backed crypto currencies we take some data of ChainBLX financial calculations into consideration. For people not familiar with ChainBLX cryptocurrency here’s a quick summary: https://www.enterprisetimes.co.uk/2018/02/05/chain-blx-debuts-decentralized-blockchain-project/ : ChainBLX uses decentralized blockchain technology to improve access to liquidity and record keeping. The result is universal access to global liquidity, minimized costs barriers and improved security. In addition, the marketplace is always open and directly accessible to any individual or organization. This means that participants can buy or sell any asset – from digital stock derivatives and currency. Chain BLX automates the record keeping and charges a maximum fee 0.25% of a transaction’s value, charged to each party to a transaction, which builds the backbone of its asset underlying its own crypto currency. Thus, a decentralized asset-based crypto currency is born. Thus, we would deal with a potential crypto currency: • Which is Asset backed, • Which has a steady supply of new coins/token created, • Which overcomes the scalability issue of Bitcoin, • Which is decentralized, • Which reduces mining cost significantly, • Which created internal use (necessity to own) of the cryptocurrency, • Which has less volatility therefore can be used for pricing of assets and goods. ChainBLX internally calculated therefore its year 4 revenue to be 450 Million in accumulated underlying assets from transactions. This would bring its hypothetical market cap to around 9 billion (considering an average P/E ratio of 20% of financial institutions) which is normal. If ChainBLX would apply a calculation based upon past data of current non-asset based crypto currencies the value would be above 31 billion. Hence overvaluing ChainBLX by triple its actual value. Assuming that Bitcoin would be overvalued by a factor of three the current real value of Bitcoin would be $2238 at the point this paper is written. If such an overvaluation is true, the value of Bitcoin would drop under the cost of creating new Bitcoins and initiate the here proposed scenario. ( https://www.cryptocurrencyguide.org/one-bitcoin-mining-cost-per-country-based-on-electricity-bill/ ) As a final annotation to this example, some people argue that the cost of creating a bitcoin has an intrinsic value underlying the currency, which is not true. The electricity consumed is economically seen a sunk cost, money which is gone and can’t be recuperated (the same way you drive a car off the dealer lot, it is worth much less the first mile you drive it). Another way to predict “judgment day” (the day where bitcoin falls under the mining cost for several years) would be using trend analysis. The problem with technical analysis (e.g. trend analysis), is that it’s based upon underlying consumer behavior in stock markets and are very inaccurate if used in circumstances of high volatility and with very limited data (Bitcoin is not a stock, is highly volatile and we have no past data of similar financial instruments). Very simplified, if you simply put a regression through the Bitcoin dollar price index you can show whatever you want by choosing the right start and end point (e.g. Bitcoin should be worth between $0 and $15,000+ within the next three month). Therefore “Judgment day” may never happen or would be very soon (both incorrect assumptions, as stated above traditional technical analysis cannot be applied to crypto currencies). It is a known fact, that Bitcoin has been mined in conditions of higher electricity cost vs. value, but this mining has been justified with an exuberant expectation during an upwards trend of Bitcoin value vs. dollar. Never in the short history of Bitcoin have such a large number of individual investors experienced such a long lasting downward trend, and never have miners experienced such an increase in mining cost, accompanied with such a decrease in value of Bitcoin. It can be speculated that the past popularity may be by itself part of the postulated future demise of the current non-asset based cryptocurrencies, even by ignoring all other arguments brought forward above. The past cryptocurrency boom may have attracted too many speculative investors (gamblers) guiding to an exuberant value increase of cryptocurrencies. This caused a speculative increase of GPU-power (i.e. cost) to mine new coins. Similar to an enterprise, which can be driven out of business by growing to quickly, Bitcoin experiences the same risk. The speculative investors don’t behave in a rational manor, but more in a manor like gamblers in Las Vegas. If they don’t win any more on one table, they change tables (and to convince them to return they would need to see a long lasting exuberant value increase). This leaves the rest of the more serious community with the aftermath (e.g. high mining cost, the lease of equipment must be paid even when not in use, problems to attract people wanting to invest in Bitcoin, etc.). An aftermath which more and more serious investors may not want to deal with. This may guide to a shrinking user base and may cause a downhill spiral as those investors just look for the right time to leave. Future asset-based currencies will not have this risk as the underlying valuation gives serious investors a clear indication of when to stop and when to restart, as well as a safety net of their investment. In conclusion; Bitcoin and other non asset-based currencies are a wonderful idea. They provided all coming blockchain endeavors as well asset-based cryptocurrencies with vital information. As prototype cryptocurrencies they will be the foundation of many technological developments as well as new understandings in economics and a second generation of asset-based cryptocurrencies. Since there is no such thing as a free lunch and because of the massive prior influx of speculative investors and their after math bitcoin and other cryptocurrencies may lose attractiveness. This may give room for anew boom in AI, asset based cryptocurrencies as well as other blockchain related endeavors.
Well I won't say I agree with everything but they seem to be on to something. I mean with the volatility and slow transaction speed of BTC makes it not practical to exchange for goods and services. That's the point.
Dont get me wrong, having an asset based crypto does create a price floor, like being backed by gold. But arguing that bitcoin is a prototype that should be replaced sounds like they are just writing an article to pitch you their crypto which solves the problems they just told you about. As is tradition.
I agree with you and I also posted this same question on the bitcointalk forum to get some feedback. To my complete shock, the next day I got a message that employees from ChainBLX found the discussion and answered the negative comments on their forum. (I'm pasting it in below). It seems for me that they write just to provoke people, but I'm honestly looking for feed back. I liked your input and if you could find the time to give me your opinion would be great. Basically I wanna know if their doomsday scenario could really happen. More I would like to know if investments in AI would be a good move for diversification based on what they said. HERE IS THEIR RESPONSE: Thanks @bitchcoin for making us aware of the more controversial discussion (...) We noticed that this discussion is more controversial to the discussion found here on our forum. Therefore, we post those comments here to give readers also other points of view outside our community. We took the liberty to post also our comments with in this discussion. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @SolarTwin Thank you for sharing this post on the Bitcoin forum. We noticed that the title was changed to a more provocative title that we would predict Bitcoin to be dead within this year. To be accurate we did not say that bitcoin will be dead within this year. We said that according to our internal analysis we expect more market corrections of bitcoin this year. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @BigDippr wrote: If ChainBlx can do this then great. But it’s a bit like a cold fusion reactor. There are a lot of people trying and nobody has been able to do it. Our comment: You rightfully say that many people try to do what ChainBLX is doing, our proposed asset-based cryptocurrency, but no one has successfully done this yet. Some elements have already been done successfully and proven by Bitcoin itself. Hence, we speak only about two points you mentioned mining cost which we will address with a more efficient consensus algorithm and less volatility which we address with being asset based. As this thread is not about marketing our product please visit this link for information …. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @Palmerson wrote: This is bullshit. We know that bitcoin coin mining is limited. No one will sell coins cheaper than their cost. If the price of the coins will be significantly reduced then I think there is a mechanism of compensation for these losses due to the payment transaction. Bitcoin is an economic model that is capable of self-regulation. Our comment: People often have to sell assets below cost, also when limited. For example, in the US many people had houses where the mortgage was higher than the home value after the housing crisis. Sometimes the government comes in and helps to fix such crises by bailing out banks or homeowners, we don’t believe that the US government would bail out Bitcoin. It is just a fact of life, sometimes people need the cash and have to sell it undervalue and lose money. Of course, Bitcoin could issue more coins to miners when they mine a block to compensate “inflation” or miners could ask to be compensated in other ways. We would like to know more opinions from people on how the self-regulation described by @palmerson would take effect. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @KingScorpio wrote in response to @hiker: “BTC PREDICTS BLOCKCHAIN STARTUP IS DEAD BY END OF YEAR” everyone wants to just make money out of thin air and take from the economy what he wants, thats calledbeeing in power constantly there will be insults about one not able to fit the conditions the other unable etc. in truth its all about the best job there is the one that sets the rules, not the ones that has to sell his time. the bankers are unable to get order, as they are just protecting the billionaires that want everyone to sell them their time. so the choice is ugly communism never ending chaos and constantly more and more coins. there is no reason why bitcoin will continue to exist in this environment as wont the us dollar. but at the height of the ugly competition around who prints the money out of thin air, the game gets ugliers much uglier actually first there will be now the established financial elite starting to gable with cryptocurrencies as they try to hedge for their future guessing which coins centere will likley survive the longest. and then, abusal of the situation if i would be an islamists, this is a very good situation to attack a society when it is fighting each other about who prints the money. i dont feel comfortable in this, but neither would anyone that would not somehow obtain power. thats the ugly reality around the pyramid of power. Our Comment: Yes, everyone will try to keep their power and there will always be resistance to change. Most of the resistance comes from people which gain financially from the current system the most. We are not in a fight with Bitcoin, we are not trying to defer people from there to us. What we want to do is build on the achievements of Bitcoin and make strides to enhance areas which Bitcoin has not. Bitcoin can still improve, honestly we hope it does. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @amishmanish wrote: Wasted so many words to repeat the same thing that all the doomsayers have been repeating for the past 8 years, that is, Bitcoin has no intrinsic value. The bullshit then intensifies with claim of giving “value” to this new currency by making it “asset backed” or “security based”. How the hell is that different from the myriad derivative products that investment banks peddle even now?? Just because you put it onto the blockchain doens’t make it a cryptocurrency. Our Comment: The intrinsic value is the actual value of a something based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. We don’t argue that bitcoin doesn’t have any intrinsic value also when bitcoin is missing tangible assets it has intangible factors. Our argument is by adding tangible assets to the intangible assets a cryptocurrency may become less volatile and may attract more investors. As far this is different from derivative products (option and futures) it is by far. By option and futures, you can lose all your investment and there is no fix bottom which is given through tangible assets. If Bitcoin is going to survive, it needs to find a way to move towards being actually used as a currency. Have users actually use it to buy goods and use it in their everyday lives. As it looks right now, the only way to achieve that is to support centralized systems. There looks to be no way around this. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @liamnorthcoins wrote: This is as clear as the sun a sponsored paid article. To attact, to destroy and to creat havoc and mislead the investors and people planning to invest in bitcoin. The writer of this article points out a pretty sure period of the end which is by the end of this year, why so bold? No one can fore tell the future… Well anyway we people must be vigilant enough, we must do our research ask questions why bitcoin or a certain system created is being attact by the government or the elite? Well chances are they are threatened by it or they cannot control it. Bitcoin gives people the power to create and have a better and enjoyable life. They don’t want that. The greed of the few makes the general public suffers… Our Comment: This is a discussion post on our forum and not a sponsored article with the goal to help governments or the elite to stay in power (nice conspiracy theory, we are flattered). As stated above we explained a potential cause and effect scenario if Bitcoin falls under a certain price level, leading to a potential demise. Trying to predict when Bitcoin may end and whether Bitcoin’s price will rise is the same. An assumption based on data collected. At the end of the day though, that is all they are, assumptions. We pointed out that the latest influx of too many speculative investors and hyper investment of mining, before Bitcoin is widely used as a currency for transaction, may have caused irreversible damage to the community. We wish that Bitcoin will adjust and stay, if you review our business model it would make our lives much easier (we will offer a platform where securities can be directly bought over crypto currencies). Calling Bitcoin a prototype currency is not wrong, prototypes become real usable instruments in the future, after some initial aspects are fixed (replaced). This said, a solid plan has to be created so that when such fixes occur, the current community will not lose the value they created so far. Our intention was not to sway investment away or attack Bitcoin and other crypto currencies, but rather highlight their achievements as well as their mistakes plus show that because of their breakthrough, asset-backed currencies as well as blockchain endeavors will continue to rise and will potentially take over. Last but not least, the government is not an enemy but an elected body in western countries by the people, it is not the enemy. It is an institution with which we have to work with. Governments are of course afraid to lose power which would render them inefficient to act if necessary, thus a reasonable plan and regulation for cryptocurrencies has to be developed with governments. As much as it seems cool to say we want a revolution, it’s really not what we want. We want a clear plan to change to a better system endorsed by consumers and therefore by the government. To do this we have to also respect the needs of a government to be able to do their job and point out how a government can do their job better with cryptocurrencies. To your last point, yes nobody can accurately predict the future, be it if Bitcoin rises to 30k+ or drops to zero. We only can offer different theories trying to understand what may happen so that we can act now to change the possible future outcome for the best. And of course, predictions are based upon models and models give a potential outcome. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @boyshx wrote in response to @Palmerson “This is bullshit. We know that bitcoin coin mining is limited. No one will sell coins cheaper than their cost. If the price of the coins will be significantly reduced then I think there is a mechanism of compensation for these losses due to the payment transaction. Bitcoin is an economic model that is capable of self-regulation.” Thanks for this! These were the words when I read the title in the first place, total crap, bullshit and much more. They think that they are the best one to predict the things and whatever this forum is named as ChainBLX looks looser to me. Why would anyone consider this piece of art as worth nothing after so many hassles to develop it and then later on make it so popular. This has got to do something with the conspiracy of taking down the blockchain which is like hitting the hill with ant. Lolz. There is no need to replace the currencies like this which is already running with the full node over the blockchain. Also there will be no other tech that can overcome such algorithm in the future. Our Comment: Bitcoin technology development is worth a lot for the future. We stated in our discussion that it is a wonderful idea but a prototype, from which we all learn. Investing in any research prototype is a good investment. It provides knowledge and new tools. Hence it has value. There is no conspiracy to take down Bitcoin by us. We hope Bitcoin lives on, however if it does not, ground has already been set for asset backed currencies as well as blockchain endeavors to rise up in its place. Your comment that there will be no other tech overcome such algorithm in future is quite bold and tunnel vision. There is always new developments and everything that man creates is doomed to decay and be replaced in the future by something better. This will happen also to the consensus algorithm of bitcoin. If people are not open to adjust any more in a community we have a danger of phenomena called “group thinking” which hinders the further development of a product. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @Radientgurkin wrote: Bitcoin has already established itself as the main SOE (store of value) and this is still where the largest developer community still works. This is no longer a design/functional war where a newer, faster and prettier crypto suddenly is the new Bitcoin. This is /was a protocol war and Bitcoin already won. It is the standard and whatever comes after is complementary to whatever needs are required by the market. Our Comment: The protocol war is not over ever.For example, VHS vs Beta video, VHS won. Video tapes vs DVD, DVD won. Video streaming vs DVD, video streaming won. There will be new consensus algorithm in the future and there it is likely that the future technology wins. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @hylyk91 wrote: The blockchain is a 25+ years old technology (essentially a distributed database) still looking for a problem to solve… Bitcoin is 10 years old “prototype” proving absolutely unsuitable as a a currency…Just ask yourself, who you are going to trust, karlBLX pimping another ICO or Warren Buffett: ‘I can say almost with certainty that they will come to a bad ending’ Our comment Please read our post again or even the critics on our post. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @SolarTwin wrote: I have to agree with you the Bitcoin will always be the “Kleenex”… in other words synonymous with cryptos as a whole. And yeah it’s probably not going anywhere in terms of disappearing completely. But myspace is also still around. I think the point of the chainblx article is that a new generation of coins will make this current generation irrelevant. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @Anti-Cen wrote in response to @parlase “This is bullshit. We know that bitcoin coin mining is limited. No one will sell coins cheaper than their cost.” I could spend millions on counting black pixels on millions of images spread across the internet but the information is worthless regardless of how much money it cost me to collect the data. Next you will be telling us that we are running out of numbers as you attempt to defend Bitcoin that no one trusts anymore and the joke is that none of the modern alternative to Bitcoin even needed miners to produce new coins so really you are living in a dream world and just repeating anything you are told. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @KingScorpio in response to Anti-cen miners will sell their coins if their is a lawsuit against them not beeing able to pay their electricity bill and or rent ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @marjil wrote: The “asset backed” notion is an anomaly. The whole point is that, where a cryptocurrency does not meet the practical conditions of a currency, it may become a store of value depending on perception, cost and take-up. Bitcoin has fulfilled the latter conditions and, by default, is the asset, rather than being backed by an asset. This is why bitcoin has been used as an investment. People invest in assets; by definition therefore, Bitcoin is an asset and does therefore render the requirement to be backed by an asset as null and void. Our Comment: As mentioned above intrinsic value includes non-tangible assets which back up bitcoin. But intangible assets can easily become zero. For example, brand image, a brand image of a company can be destroyed and even be negative. Please consider the asset tangible asset backing as diversification which renders an asset backed currency more stable. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @marjil wrote: The comment regarding an assumption that bitcoin is overvalued by a factor of three may have been well and good if backed up by a premise or evidence, empirical or anecdotal, of which the writer has provided neither. Therefore, the question is, why make an assumption that is based on nothing? That tells us a lot about the article’s flawed argument. Our comment We will provide the calculations for this discussion. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ @marjil wrote: Finally, the comment on intrinsic value is misguided. The value of an investable asset, which bitcoin is because that is how it is used, must at least be “book value”. This will include, as a minimum, the cost of producing it. Our comment If I buy a Picasso painting and cut it up to make a collage out of it. The Book value is the material needed for the collage, 1 Picasso painting: $2 Million, 1 Glue tube: $5, book value $2 Million and $5. The Creation cost is sunk cost. Book value is only used for depreciation to reduce tax liabilities. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++
