Just store it at BNY Mellon and use a Visa card to transact haha.
The issue of course is the transaction rate is so low and the system so inefficient it cannot possibly meet its stated goal as a payments system without trusted, centralized networks layered on top. That layer meets none of the goals of the underlying meaning the underlying can simply be elided, and we’re right back where we started but without an Argentina of power wasted.
While the overall transaction rate limit is low, the typical customer experience is quite good. I mean Visa transactions take 1-3 days for the merchant to actually receive the funds. On top of that it's not settled on the consumer's end until the transaction posts to their account 1-3 days later. Bitcoin on average settles in something like 10 minutes and is non-reversible at that point.
It's far from perfect but I feel the case you are making is disconnected from the actual experience today.
> I mean Visa transactions take 1-3 days for the merchant to actually receive the funds.
Luckily we have loans.
Merchant processing is something I happen to know way too much about. The fact it takes a few days to settle is an implementation detail. Square for instance will front you until settlement and pay you out overnight, free. I believe all merchant acquirers have followed suit.
This aspect is not a real problem for anyone anymore.
> That layer meets none of the goals of the underlying meaning the underlying can simply be elided
Of course that's not true. It creates a separation of concerns where the user chooses the trade-off which is most appropriate for them between centralization and decentralization, and can easily move to a different solution if their needs change.
They leave out just about everything important. No details regarding how the block size increases were blocked, which crippled bitcoin's use as a payment network.
> We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size.
As a simple example, suppose every one of the 7 billion people on the planet make only 1 transaction per day. With a basic transaction size of ~250 bytes, this would require a blocksize of ~12GB per 10 minute block. (check my math)
"But storage is cheap!" I hear some say. Even if you could dismiss the cost of storing an aggregating ~600TB/year, that's not the real bottleneck. Bandwidth and processing power are. You have to broadcast that 12GB block to the entire global bitcoin network as fast as possible to beat other miners to the award. Then all the world's full nodes have to do the work of processing that 12GB of data to validate it. All within an average 10 minute window.
And this is all based on the absurdly conservative assumption that every person only makes 1 transaction per day. It's not even considering the use case that billions of machines might want to transact with each other billions of times a day. Or that you might want to build micropayment systems for metering. e.g. http://andyschroder.com/DistributedCharge/ or https://twitter.com/JackMallers/status/1346869624789463040
And even if you could solve all these problems, it doesn't get around the fact that blockchains as a payment system are a really shitty experience compared to existing solutions. You have to wait an unknown amount of time for your transaction to make it into a block before you're safe from a double spend. That time is 10 minutes on average, but in reality, it could be anywhere from a few seconds to over an hour because mining a valid block is a random search that averages out to 10 minutes based on an ever changing balance of real world hash power and mining difficulty value.
The only way blockchains were ever going to be interesting at scale is as a rock solid, incorruptible settlement layer. Decentralized layer two networks like Lightning are exciting because they have the potential to create a trustless payment network that directly settles to the blockchain. Even more exciting is that lightning can span separate blockchains and sidechains, e.g. BTC<->LTC, BTC<->USDT (and future CBDCs?), or BTC<->lBTC/rBTC. And they can actually scale to an arbitrary number of transactions that don't need to all get recorded forever in the base chain immutable ledger.
You are clearly a core supporter. Obviously any reasonable person is aware that there are technical limitations that prevent infinite scaling.
However, your entire argument is a strawman. This never was about scaling instantaneously to accept all transactions in the entire world. The debate was, and is, about allowing storage, money, markets, network speed, technology in general, and other natural phenomena govern the amount of data the network supports.
This debate is about a small group of people deciding that they were able to make a better decision about the block size than the free market. This is about arrogance, power, and control. Until you can bring an argument relating to scaling that actually acknowledges the reality that the free market can govern things better than you can, you can keep it to yourself.
>>The idea that raw blockchains would ever be a scalable payment network for the world's population was always a completely absurd idea.
Strawman.
Bitcoin could have increased its block size 100X, allowing tens of millions of people to use it every day, and it would still impose lower bandwidth costs on full node operators than streaming Netflix 24/7.
The mental gymnastics used to rationalize keeping Bitcoin transaction throughput limited to 7 per second, instead of allowing it to rise several orders of magnitude to meet more of the immense market demand for p2p transactions, has been very harmful to cryptocurrency adoption.
>>Decentralized layer two networks like Lightning are exciting because they have the potential to create a trustless payment network that directly settles to the blockchain.
The Lightning Network has no chance of gaining mass-adoption. It has high start up and capital lock-up costs, proportional to on-chain transaction fees, which only grow as Bitcoin/LN adoption ramps up. It has high upkeep costs, requiring you to have your LN node online to receive payments, and for your node to have access to the LN funds via a connection to the private keys, which is a security liability.
To monitor for fraudulent channel closes in order to be able to react in time to challenge them, it also requires you to have an always on-line node, or a trusted third party delegated to do that on your behalf. And if you want rapid/automated reaction to fraudulent channel closes, that node needs to have access to the private keys to your LN funds.
Then there are routing issues when the topography of the network changes with every transaction, and where the existence of routes is dependent on sufficient capital being locked up in channels.
There's a reason why there's 100 times more BTC locked up for use in Ethereum dApps than for use in the LN. Ethereum-based scalability solutions could, ironically, provide BTC with the scalability needed to gain mass-adoption as an instrument for peer-to-peer payments.
Anyway, Bitcoin can scale, on-chain, just as Satoshi described. I don't know if it can scale to 8 billion transactions a day, but it can scale to 30 million transactions day, which would make it more effective for every application, including using Bitcoin as a savings account and Bitcoin-based layer two solutions.
>>And even if you could solve all these problems, it doesn't get around the fact that blockchains as a payment system are a really shitty experience compared to existing solutions.
They're a far better solution than cash, and in many cases better than other electronic payment solutions, because they are censorship resistant and can be made very private.
>>You have to wait an unknown amount of time for your transaction to make it into a block before you're safe from a double spend. That time is 10 minutes on average,
You can use Bitcoin with zero-confirmations, as long as miners reject RBF. Satoshi explained this all over a decade ago [1], and zero-confirmations being enough has been amply demonstrated in practice.
Yeah, this seems like content marketing level drivel. There isn't enough information given about important events, structural constraints and limitations, and most importantly key milestones in regulations and legal guidance made for global institutions to begin holding the asset in a compliant manner.
Node centralization is a lot less concerning for monero because the privacy by default nature of it makes it very difficult if not impossible to censor transactions. Even if stupid large blocksizes results in only a handful of datacenter sized nodes running the network, there's not much they could do to try to denylist particular coins.
However, node centralization does still carry the concerns about powerful actors being able to arbitrarily change the supply issuance and debase holders without explicit taxation or seizure.
Monero has about 6% the amount of transactions per day as bitcoin, but its fees are less than 0.5% that of bitcoin. This is thanks to the Bulletproofs update introduced in 2018.
Nowadays, transactions B2C usually involve an institution like Paypal or Stripe and the fees are about 3~5% of the value of the transaction (depending on which country you are from). I find this fee extraordinary high. If bitcoin can find a way to do the same thing in an order of magnitude cheaper (which I don't think is a far fetched scenario, considering Lightning Network and another L2 solutions being developed), then this is a trillion market opportunity.
Why would someone use an awkward and complicated second layer built on top of 1.5KB/s of transactions that cost $25 ?
Ethereum and bitcoin cash both exceed bitcoin's transaction throughput. Ethereum dwarfs everything else in number of transactions per day.
If everyone in the world uses bitcoin, everyone will get a single on chain transaction every 60 years, even though a single hard drive could store the next 300 years of transactions at this rate.
If your internet connection had the throughput of bitcoin, reddit.com would take 36 minutes to load.
There is no technical reason it has to be this way, bitcoin was crippled just to sell you a second layer while other cryptocurrencies are easily blowing past it in transaction throughput.
Why ether and bitcoin cash would be superior alternatives? They don't solve the scalability problem and will quickly run into the same problems the moment a lot of people start using it. Ethereum is trying to migrate to POS now and it is probably going to help on that front, but it is still an experiment and comes with drawbacks. Layer 2 solutions gives you optionality. You can make your own risk assessment and choose the best solution for you. I think this is a much superior framework than incorporating all these features into the blockchain.
Bitcoin cash tested full blocks 32x bitcoin's max block size a long time ago. There is no issue with having more transactions. Bitcoin was just crippled to make people think they need a second layer.
What numbers do you have that makes you think there is a technical problem with scalability?
> Ethereum is trying to migrate to POS
That is a mining method, transaction throughput is a matter of blocksize * block generation time.
> Layer 2 solutions gives you optionality.
Like what?
> You can make your own risk assessment and choose the best solution for you.
What 'risk assessment' are you talking about? With any decentralized cryptocurrency you sign your transaction and wait for it to be included in a block. It is simple and there is no risk. The only risk is when you have some hacky 'layer 2' nonsense that needs to be always on.
> I think this is a much superior framework than incorporating all these features into the blockchain.
What framework and what features are you talking about?
> There isn't a scalability issue from a technical perspective. Block size limits were originally just to protect against spam.
> Ethereum and bitcoin cash already have more transaction throughput than bitcoin.
Sure, but consider the size of the blockchain of Ethereum. Right now, it is around 6.5 terabytes. It is a 'scalability problem' if you take the premise that everyone should be able to verify the blockchain with a normal residential computer. If you don't think that that is important, then there is indeed no issue.
> That is a mining method, transaction throughput is a matter of blocksize * block generation time.
I guess you are right. The mining method is orthogonal to the total transaction that can be validated.
> Like what?
I used the Lightning Network as an example. You can use for instant payments, but it can be hindered by liquidity shortages on the network and less clearance certainty. If you are okay with that, you can then proceed to use this network. If not, then another option may come up that satisfies your risk assessment.
> With any decentralized cryptocurrency you sign your transaction and wait for it to be included in a block. It is simple and there is no risk.
Sure, and that is indeed how bitcoin works. I think you are criticizing the fact that bitcoin does it very slowly, but then consider again that doing it quicker would increase the total blockchain size and possibly jeopardize the decentralization.
> What framework and what features are you talking about?
The idea that Bitcoin (as a network) will be composed of building blocks on top of the blockchain.
> It is a 'scalability problem' if you take the premise that everyone should be able to verify the blockchain with a normal residential computer. If you don't think that that is important, then there is indeed no issue.
There is no point in making sure everyone can run a full node. Even so, it is trivial. A few of the biggest steam games are the size of the entire chain.
> I used the Lightning Network as an example. You can use for instant payments
They aren't instant, your transaction doesn't make it to the main chain. You might as well use a different cryptocurrency instead of a hacky second layer.
> then consider again that doing it quicker would increase the total blockchain size and possibly jeopardize the decentralization.
What numbers are you basing this on? I see people repeat this but they can never back it up with numbers. Bitcoin right now is 1.5KB/s. Watching a single low resolution youtube video ends up being 100x the bandwidth of bitcoin. The average transaction value of bitcoin is over $50,000 USD right now. That's not a network that everyone is participating in. People are buying claims on exchanges because the transactions are $12-$32 USD. That's centralization. Sending more than 1.5KB/s is not centralization.
> The idea that Bitcoin (as a network) will be composed of building blocks on top of the blockchain.
I asked what framework and features a second layer would give and your answer is 'a second layer'.
> No it isn't. It is 628 GB. This comes out to about $11.50 USD of hard drive space, which is about the cost of a single ethereum transaction.
These are not full nodes.
> There is no point in making sure everyone can run a full node. Even so, it is trivial. A few of the biggest steam games are the size of the entire chain.
Not trivial when you take into account that to assure decentralization the nodes must also broadcast the whole blockchain. Compare the costs of having to broadcast a 6.5tb file for an average of ~30 nodes per month. It will probably cost >$1 thousand. Not very acessible.
> They aren't instant, your transaction doesn't make it to the main chain. You might as well use a different cryptocurrency instead of a hacky second layer.
That is why I pointed that there is less clearance certainty. But you can still be pretty sure that it is settled. It is about trade-offs. Sure, you could use another crypto that incorporates the same trade-offs as Lightning Network. But why would you bother if the network effect is already building around Bitcoin?
> What numbers are you basing this on? I see people repeat this but they can never back it up with numbers. Bitcoin right now is 1.5KB/s. Watching a single low resolution youtube video ends up being 100x the bandwidth of bitcoin. The average transaction value of bitcoin is over $50,000 USD right now. That's not a network that everyone is participating in. People are buying claims on exchanges because the transactions are $12-$32 USD. That's centralization. Sending more than 1.5KB/s is not centralization.
I don't run a full node. That's up to the community to decide. There is no easy answer as you are seemingly implying.
Click on eth, see that the ethereum chain is 630 GB.
I don't know what you mean by "these are not full nodes".
> Not trivial when you take into account that to assure decentralization the nodes must also broadcast the whole blockchain. Compare the costs of having to broadcast a 6.5tb file for an average of ~30 nodes per month. It will probably cost >$1 thousand. Not very acessible.
Miners broadcast blocks. These numbers you have are made up. Your chain size is off by a factor of 10. Full nodes just help with whatever bandwidth they have. Only the miners really have to send out blocks and sync with the chain. I don't know where you are coming up with your ideas of sending out the full chain every month, 30 nodes, or the cost.
A $10 vps can cover the bandwidth of 1000 people syncing with the chain. You can get gigabit connections with multiple terabytes for that much. I think exchanges and miners can handle that, not to mention anyone with a cable modem. There is plenty of headroom, there is no centralization from bandwidth or anything else. Only in cryptocurrency do people think a gigabyte a day in bandwidth is a problem while the average person is streaming multiple gigabytes in youtube, netflix and steam games every day.
> Sure, you could use another crypto that incorporates the same trade-offs as Lightning Network.
Other currencies don't have the trade-offs of a second layer. You make a transaction, you see it show up. Only bitcoin and ethereum have expensive transactions. Everything else works.
> the network effect is already building around Bitcoin
Bitcoin's average transaction fee was $31 a few days ago. The average transaction value on bitcoin's chain is over $411,000 USD. There is no network effect of bitcoin because it has been crippled.
> I don't run a full node. That's up to the community to decide.
I asked you where you got your numbers and how you came to your conclusions. You said "I don't run a full node. That's up to the community to decide". That doesn't even make sense as a response, let alone answer the question.
> There is no easy answer as you are seemingly implying.
There are easy answers, don't use chains with expensive transactions. Don't use chains that refuse to scale. Bitcoin refuses to scale because the people that took it over want to sell a second layer that solves a problem (poorly) that they created.
There is no real problem here. There is no reason cryptocurrencies can't scale to many orders of magnitude more transactions. There is no reason to pay money to use a second layer.
I am trying to open a LN channel, it says that I need at least $50-$100 to open a channel (100k-200k Satoshi), is true? This makes it an instant deal breaker for third world users. BCH is Rs 0.16
My understanding is that opening a LN channel is the same as making an on-chain transaction, which is subject to fluctuations depending on how busy the blockchain is. Right now, according to mempool, the transaction costs are around $1, which I expect would be the cost of opening a channel.
I don't know for sure, but I guess there are also some methods for opening more than one channel at once, reducing substantially the cost of opening channels when there is coordination (which could be built by a wallet app). Not entirely sure of that, though. But exciting times ahead.
Looking at transactions that are not going to make it in does not mean anything. This person actually looked at the real information. You are making a guess based on something irrelevant.
> I don't know for sure, but I guess there are also some methods for opening more than one channel at once, reducing substantially the cost of opening channels when there is coordination (which could be built by a wallet app). Not entirely sure of that, though. But exciting times ahead.
What are you basing that on? Transactions are priced by the bytes they take up. Larger transactions cost more.
Ether fees are staggering now too, and Bitcoin cash fees are low because nobody uses it.
The reality is the inefficiency required to meet the decentralized trustless verifiable goals is so high it’s not possible to build a crypto payment network which actually handles more transactions than a midsized Costco.
> Bitcoin cash fees are low because nobody uses it.
Every cryptocurrency has a higher maximum throughput than regular bitcoin because doing that is trivial. Bitcoin cash actually has more transactions per day than regular bitcoin. It's low fees aren't because no one is using it, it is the second most used chain. They increased the maximum block size to be 32x bitcoin which keeps congestion down from happening while having more transactions than bitcoin. It is as simple as that.
> The reality is the inefficiency required to meet the decentralized trustless verifiable goals is so high it’s not possible to build a crypto payment network which actually handles more transactions than a midsized Costco.
This is wrong. This gets said from time to time by people who don't understand how things work or haven't run the numbers. Some people extrapolate from bitcoin being intentionally crippled that there is an actual technical hurdle to more transactions which is not true. There is no technical reason why there can't be many orders of magnitude more transactions with pretty much any cryptocurrency. Only miners and exchanges even need to sync with the main chain. 100x bitcoin's throughput would still only be 150KB/s, far less than a low resolution video stream. After 11 years the entire chain is the size of two large video games on steam.
What numbers do you have that makes you say "it's not possible", because I don't think you know what you are talking about.
> Every cryptocurrency has a higher maximum throughput than regular bitcoin because doing that is trivial. Bitcoin cash actually has more transactions per day than regular bitcoin. It's low fees aren't because no one is using it, it is the second most used chain. They increased the maximum block size to be 32x bitcoin which keeps congestion down from happening while having more transactions than bitcoin. It is as simple as that.
Trust me we both dislike Bitcoin lol.
Weren't some BCH miners preferring to mine empty blocks though because the fees were too low so it wasn't worth their time? [1]
> What numbers do you have that makes you say "it's not possible", because I don't think you know what you are talking about.
Not possible while maintaining the side-quest of allowing anyone with an average computer to run a full node. I believe that constraint was applied to Bitcoin early on to reduce centralization and improve trust/integrity. Mission failed of course, but if you believe that's important, then of course, it remains impossible.
I'm not your average hater, if you have information for me that challenges that assertion I'd love to read it.
When I asked for your numbers that make you say "it's not possible" your response is "Not possible". You said bitcoin cash is not used by anyone, I showed you a graph that it is second in transaction throughput.
Empty blocks and running non-mining nodes are trivial and inconsequential gish-galloping from what you said before. Non-mining nodes don't really matter to general users and anyone that can watch 240p youtube has the bandwidth to run one easily.
> I'm not your average hater, if you have information for me that challenges that assertion I'd love to read it.
I don't know what that means or even what assertion you are making. All you have said is "not possible" without backing it up with any information at all despite everything I outlined above. It should be obvious that multiple orders of magnitude more transaction throughput is possible by looking at the real numbers of bandwidth, chain size, cpu time, latency, etc. etc. Your response was to bring up irrelevant issues to blur what is being discussed.
I was pretty clear that it wasn’t possible while maintaining the side quest that your average computer can run a full node, yeah? I don’t think that matters but clearly the core team does. I don’t think any of this matters though. I still don’t think you’ve demonstrated meaningful scale, visa alone supports 50,000tx/sec.
> it’s not possible to build a crypto payment network which actually handles more transactions than a midsized Costco.
That's not true for all the numbers I outlined above.
Now you are saying:
> I was pretty clear that it wasn’t possible while maintaining the side quest that your average computer can run a full node
Which doesn't matter at all and yet is still trivial, for all the numbers I outlined above. Also you weren't "clear" you just made the assertion over and over with nothing behind it. You haven't given a single technical reason.
> I don’t think that matters but clearly the core team does.
They have told nothing but lies for years. They can't give numbers to back up what they say either. They want to sell a second layer that no one needs.
> I don’t think any of this matters though. I still don’t think you’ve demonstrated meaningful scale, visa alone supports 50,000tx/sec.
Ah, now the goalposts shift again. First it was more transactions than a costco. Then it was running a node at home. Now it's the transactions visa claims as their max capacity (not their actual transactions per second). The numbers I outlined are trivial for today's technology. Steam games download at 26,000x bitcoin's throughput. A single hard drive can hold the next 300 years of transactions. Why won't you confront these facts and explain the numbers behind your original assertion?
I get that you’re frustrated but you’re conflating a number of different things. The scaling past a Costco metric applies to Bitcoin which is something you yourself mentioned above re 1.5kb/sec for $25. That were actually aligned on.
The scaling meaningfully beyond that with proof of work by increasing block size, ok I get, however it comes at a cost as I mentioned. It does not allow an average person to run a full node. I’m asking how you feel about that. You say the core team is trying to “sell a second layer” - do you have some citations for me to read?
Beyond that it’s not clear any POW coin would scale materially because it still has massive inherent inefficiencies in proof of work, which aren’t manifest in BCH at the moment because too few people use it (ok more than BTC but my point about visa wasn’t to move goalposts but to say 7tx vs 116tx/sec still round to roughly zero). Further the direct costs (ie transaction) while low have side effects such as miners not bothering to even mine. Maybe that’s not a big enough problem, ok, but I don’t think anything I’ve said is invalid is it?
If it ever actually becomes popular miners will clamor all over themselves and then we’ll have two Argentina’s of power wasted on this.
And while yes 50ktx/s is visa peak velocity at time of writing - 24k is typical - bitcoins remains 7 peak, 3 typical, and bch is 120 peak?
> The scaling past a Costco metric applies to Bitcoin
That isn't what you said. I will remind you again since in every reply you seem to re-write things.
> "it’s not possible to build a crypto payment network which actually handles more transactions than a midsized Costco"
You didn't say bitcoin, you said it isn't possible at all, which is obviously wrong for the reasons and numbers I gave. You haven't confronted any of that.
> It does not allow an average person to run a full node.
This doesn't matter at all. You injected this instead of backing up anything you originally said. Only miners and exchanges need to sync with the full chain. For everyone else it's a hobby.
It also is not true, again, since the numbers for bandwidth, disk space, cpu time etc are trivial and can be scaled up many orders of magnitude and still be in the realm of streaming video and decades stored on a single drive.
> I’m asking how you feel about that.
I don't feel anything since the premise is not true.
> Beyond that it’s not clear any POW coin would scale materially because it still has massive inherent inefficiencies in proof of work, which aren’t manifest in BCH at the moment because too few people use it
I think you have had it explained to you many times that mining is detached from block size. Larger blocks don't mean more mining energy is used. Proof of work or proof of stake has no bearing here, either is orthogonal to transaction throughput.
> miners not bothering to even mine
If they don't mine, they aren't miners.
> but I don’t think anything I’ve said is invalid is it
You haven't really said anything valid. Everything has been repeated assertions. You haven't explained the numbers behind anything even after all these replies.
Don't move the goalposts from the "transactions of a costco" to visa's claimed max throughput (they do about 1,700 by the way, your 24k is from estimates of the busiest hours of christmas shopping).
This is about cryptocurrencies being able to scale orders of magnitude higher than their current throughput no matter how badly you want to distort the topic to not admit your claims are ridiculous. Bitcoin's throughput is what it is because it is limited. Bitcoin cash's throughput is what it is because its 32MB blocks aren't being filled up by design.
You’re clearly out to win an argument for the sake of winning an argument instead of engaging in productive discourse which is your prerogative. I’ll leave it at this: proof is in the pudding. 13 years later, no pudding, and the directionality is clear. Crypto is moving to layer 2, which is centralized, trusted and offers no benefit over what exists today. The custody plan is BNY Mellon and the scaling plan is Visanet. It’s instead built on the digital equivalent of rolling coal, the single least efficient thing on earth.
I dunno man I see clear directionality. If it were as simple as you say I suspect someone would have done it and 13 years later you wouldn’t be tilting at bitcoins 3tx/sec average haha.
I can see we are on to the "I don't like the way you said it" act of avoiding backing up your claims.
Just back up what you originally said, that it's "impossible to have more transactions than a mid sized costco" even though ethereum processes over a million transactions every day.
> Crypto is moving to layer 2, which is centralize
If you look at transactions, it is moving to other crypto currencies. Mostly ethereum and bitcoin cash. Bitcoin is third and smaller currencies have their own fraction.
> The custody plan is BNY Mellon and the scaling plan is Visanet.
I don't know what "custody plan" is supposed to mean and this is another prediction of the future with zero to back it up.
> I dunno man I see clear directionality.
Based on what?
> If it were as simple as you say I suspect someone would have done it and 13 years later you wouldn’t be tilting at bitcoins 3tx/sec average haha.
People did do it and it was simple. That's why bitcoin is third in transaction volume as shown in the easy to read graphs I linked you. No one is tilting, you are just repeating things that you know are not true even though many people have explained them to you. All your effort seems to go into avoiding confronting the claims you make.
Stellar (XLM), Ripple (XLP), Cardano (ADA) and several others are promising transactional tech, particularly for cross-currency transactions in the case of XLM. That said, all three are less decentralized as a result.
Because the people who control the money everywhere on this planet all simultaneously debase their phony currencies all the time over and over again, creating a hidden inflation tax that there was no way to avoid until bitcoin was invented.
be wary of bakkt, there was talk a few years ago about them issuing fake bitcoin and trying to valuate it like real bitcoin. caitlin long mentions it in an interview here. https://youtu.be/kxpVO6RE09E
proper custodial services exist with bank charters like avanti, kraken and anchorage if you want a bank that guarantees real bitcoin and not some paper derivative made out of nothing.
Rehypothecation is pretty far away from "paper derivative made of nothing" -- it may not be "contracts as code" level of assurance, but it is "the long arm of securities and commodities law" level of assurance, which many would argue is the more critical level you would want for your assets. My stance on this is neutral and I think both sides have a point, but I think it's a little hyperbolic to call that a "paper derivative made out of nothing."
