Cognitive dissonance

I find the crypto world particularly prone to cognitive dissonance. That's when you adopt a belief and you "weld" it (emotionally) to your image of yourself. You become one with that belief and tearing it apart is suddenly so painful! So painful that, when presented with solid arguments that challenge your belief, you would rather distort reality than renounce your belief.

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Bitcoin

So with bitcoin as a "cryptocurrency". You know, a "means of payment", something with which you pay, like cash. "A peer-to-peer electronic cash system", remember? For the true bitcoin believers, Satoshi is God the Father and Bitcoin is his Son. Hence it has to be like cash, because this was the stated intention of Satoshi. Who, it turns out, was a coding genius but a lousy economist ... because he designed bitcoin to be deflationary. And a "means of payment" mathematically needs to keep pace with the number of transactions that it mediates.

M*V = P*T

When the number of actual economic transactions increases very fast, as is the case for bitcoin with more people drawn to it, but the quantity of bitcoin only increases slowly, the "price of money" (bitcoin here) increases to compensate. This is why in 2010 it took 5000 bitcoin to buy a pizza and in December 2017 you could have bought 5000 pizzas with one bitcoin.

Which is pretty clear to see for someone who is not a Satoshi fan(atic): you don't want to spend bitcoin! Because it's deflationary and it has acquired a mystique and it became a brand that will in a few years challenge "Coca Cola" in renown, its value will only increase. Whatever you'll pay today with bitcoin, you'll regret it in 10 years (except STEEM, that is).

As when you sold that piece of land you inherited from gran-gran-dad, that you thought was worthless, that would have now been part of the leafiest gentrified suburbs and would have fetched 10 times more than you got for it back then ... "Buy land my son, they don't make it anymore!"

But not everybody agrees with the "buy land" advice, for instance the very crypto-libertarian compatible Mises Institute which published for instance this paper back in 2015. If you read it, you realize that, had the author known about Bitcoin back then, he would have recommended that you buy it!

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The truth is that BTC is probably the worst "cash" ever invented, whatever the efforts of the brilliant guys developing the Lightning network. It's not about transactions per second, nor about transaction fees. Bitcoin is simply not designed to function as cash. Bitcoin is digital gold. Buy and HODL.

Ethereum

Another case of cognitive dissonance in the blockchain world is Ethereum, full of crypto-contradictions. Ethereum was designed to be "the computer of the world", with ether a generic crypto-currency, part of which would go toward paying for computation through the "gas price".

Except that once ether, also a deflationary currency of bitcoin inspiration, started increasing in value the price of the "computing services" on the Ethereum blockchain started becoming prohibitive. Not only prohibitive, but often unpredictable.

What better illustration than a couple of relatively recent transactions that you can visit on Etherscan
$23000Txfee.JPG
Yes, you see it right, this happened toward the cut-off time of a hot ICO (Fantom Token, a Korean venture). In order to buy 500 ether of FTM tokens this guy has spent 43.82 ether in fees, which depending on ETH's price has been about $20000 to $24000 lately

But at least the guy got his FTM tokens. What to say about this other, less lucky guy?
$6300TxFail.JPG
Yes, he tried for 500 ETH as well and got refunded because no FTM tokens were available. However, nobody refunded him for the transaction fees of 11.978 ETH, more than $6000 at the time.

At this point, given the initial design choices which plague it, I can't see how either Plasma, Sharding, Casper or even the large developer community will be able to do much for Ethereum. Speaking of the latter argument ("largest developer community"), I would like to remind people that back at the end of the 19^th century the "horse and buggy" technology

_{"Aren't you envious of my beautiful Ethereum?"}