[HN Gopher] I, Token: The untold story of the hole in Bitcoin's ...
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I, Token: The untold story of the hole in Bitcoin's heart
Author : SirLJ
Score : 51 points
Date : 2021-07-31 12:50 UTC (10 hours ago)
(HTM) web link (brettscott.substack.com)
(TXT) w3m dump (brettscott.substack.com)
| cosmin800 wrote:
| TL;DR seems just another random anti-cryptocurrency article. Long
| story short bitcoin has the same value people give to a nicely
| printed image of Benjamin Franklin on a piece of paper or a
| sparkling rock from Sierra Leone. Things have the value the
| trading partners agree upon.
| docflabby wrote:
| Money is a token than can be readily exchanged for goods and
| services.
|
| The value of money created by governments is based on the ability
| of then government to tax the population.
|
| But there are many counties where USD is more useful form of
| money than the local government backed currency.
|
| Legally enforcable numbers in a bank account means nothing when
| your account is frozen, the government changes, you have no funds
| to pursue legal remedies, or be bogged down for years in court.
| Probably wishing you'd kept it all under the mattress or in
| Bitcoin at this point
| okareaman wrote:
| If the financial system collapses I'm pretty sure I'll have
| bigger problems than money, which Bitcoin will not solve. If
| traditional money becomes overly manipulated then I'm pretty sure
| Bitcoin will have the same problem. I prefer to live my life as
| if the financial system is not going to collapse or become
| worthlessly corrupt. I stock up a few things for barter. That's
| about it.
| Geee wrote:
| Money is not as complex idea as he suggests. It's just the most
| agreed upon way of measuring prices and committing trade between
| individuals in a society. It allows people to sell, buy and
| measure prices. Whichever way does this the best, spontaneously
| becomes "money" through network effects from individual decisions
| of market participants. It's beneficial for each individual and
| for the society to use the same way as everyone else, and that's
| why something becomes "money".
|
| Something needs to have certain properties in order to become
| money, such as scarcity, divisibility, durability, verifiability
| and transportability. This ensures that the money can be used for
| trade in different scales, in different places, and in different
| times. Whichever money does this best, will eventually replace
| the old money, given a free market.
| foobarian wrote:
| I think stability is important too. Currencies do fluctuate but
| not very much, and volatility usually leads to bad
| consequences. That's the main problem with Bitcoin - it is too
| unstable. Using it as a currency is much like using shares of
| some random company as currency. Imagine getting paid in, say,
| TSLA stock and using it to buy everyday needs!
| Geee wrote:
| Value and stability have more to do with adoption phase, i.e.
| how many people accept it as good money and want to use it.
| Today, Bitcoin is mostly traded against USD or other
| currencies, and these traders make up most of the total
| trading volume. The volatility is the result of this very
| one-sided activity. If it was used as money, it would be
| traded against goods and services, real estate, stocks, etc.
| which would give it lots of uncorrelated trading volume and
| create stability.
|
| Inherently, Bitcoin is very predictable, because we know with
| certainty how many bitcoins have been issued and how many
| will be issued in the future. Fiat currencies have an
| opposite problem. Central banks and governments influence the
| issuance and value of the currency too much, and this makes
| the currency inherently unpredictable. It has an effect of
| destroying confidence in free markets, because everything
| becomes a bet on monetary policy rather than markets itself.
| Same problem with TSLA; it is inherently unpredictable (both
| in issuance and dependency on their business success). In
| other words, some assets carry an inherent risk in them, and
| they're not good as money.
| j3th9n wrote:
| "There are three classes of people: those who see, those who see
| when they are shown, those who do not see." -Leonardo da Vinci
| seanhunter wrote:
| That quote is actually from Machiavelli's "The Prince" and is
| often misattributed to Leonardo.
|
| https://suebrewton.com/2016/07/31/no-leonardo-da-vinci-did-n...
| j3th9n wrote:
| Ok, cool, nice to know.
| nixpulvis wrote:
| Yet, you must first see to have been shown. Funny how that
| works.
| karmakaze wrote:
| I took that to mean 'to see without first being shown' from
| the context rather than literally. What is taking arbitrarily
| parts literally and feigning incomprehension? Noise.
| [deleted]
| headsoup wrote:
| I think the legal issues with Tether could be a bigger risk to
| Bitcoin's heart going by the volume of trade it supports
| supposedly fraudulently (https://bitfinexed.medium.com/tether-is-
| setting-a-new-standa...)
| ethn wrote:
| I'm not a fan of Graeber's debt model for currency (i.e. the
| IOU). I prefer Aristotle's nomisma and Szabo's work on top of it
| [1].
|
| [1] https://nakamotoinstitute.org/shelling-out/
| MathYouF wrote:
| The opening paragraphs are very frustrating for a software
| developer to read, because it assumes a very technologically
| ignorant perspective that might beg similar questions like "What
| IS a website" and having the asker be annoyed by having you
| describe the features of a website. At the end of the day, it is
| a series of electrical on and off switches stored in one or
| several computers.
|
| Is the value of websites indistinguishable from a bunch of
| batteries just because its form can't be meaningfully
| distinguished from a battery to a drunk 12th century techno
| illiterate in a tavern?
|
| To explain what a bitcoin actually is to people utterly ignorant
| and skeptical of how information stored on hardware works sounds
| like an exercise that can be left to the writer, they may have to
| spend the rest or their lives explaining every bit of tech to
| every layman.
|
| What is a book after all? Dead trees stained with ink? What
| intrinsic value does that hold? If someone were to ask stubbornly
| the value of any book, I'd be similarly disinclined to spend the
| time explaining that as well.
|
| Like with TVs and cell phones and plumbing, lay people will stop
| asking or caring about "What is bitcoin" once you can give a
| functional answer of "You can buy a house with it". Explaining
| what it actually is to people that obtuse will not get one any
| closer to that point anyway, so I'm not sure what the value is.
|
| The cycle for the next wave of technology whose final purpose and
| form baffles the general public will continue on and on, this is
| just a season we're in, like all the ones before.
| nixpulvis wrote:
| > The opening paragraphs are very frustrating for a software
| developer to read, because it assumes a very technologically
| ignorant perspective that might beg similar questions ...
|
| It's an allegory. I see no problem here.
| MathYouF wrote:
| I don't think anyone else was confused by this, but I'll
| endeavour to clarify for you.
|
| The allegory the writer of the article used is meant to reflect
| the same perspective of people in the modern day world and the
| rest of my comment pretty effortlessly transitions to
| discussing the limitations of those modern day peoples
| abilities to understand technical subjects.
|
| The frustration refers to the task given of explaining tech to
| the willfully tech illiterate. The first few paragraphs I
| reference clearly move from the allegorical to the concrete
| modern day person whose perspective I refer to as frustrating.
| I also do offhandedly refer to the allegory to make a passing
| reference to the article and show that the allegorical
| character isn't that different from the modern day target
| audience of the author.
|
| The rest of the article explores explaining crypto a
| frustratingly tech ignorant modern person. I think that context
| would be clear to anyone who even skimmed a good part of the
| article. You should consider reading the thing people are
| discussing before leaving a short derailing comment about it.
| imtringued wrote:
| >4.4. The digital tavern
|
| >Recall the story we began with. The man in the 12th century
| tavern sought to give you an ambiguous 'token' whilst taking your
| ducats. If you gave him your ducats, the net effect would not be
| an attack on the ducat system. It would be an attack on the
| tavern owner, who might otherwise have got those ducats from you
| for board and beer. To use a more recent example, it is the
| promoters of Gamestop shares that lose out when people start
| using their disposable income to buy Bitcoin tokens from crypto
| promoters instead. The decision to buy either of those might be a
| response to an uncertain environment affected by monetary policy,
| but neither action is a direct 'attack' on the dollar, because
| the dollar system is the pricing hub for both objects, rather
| than the thing being traded.
|
| I love this paragraph. You have to consider that fiat currencies
| are "artificially" kept stable i.e. price stability is a
| political goal. This means that the savings risk has been
| externalized to government institutions that will take over debts
| from the failing banking system. If the government is doing this
| to maintain price stability then where is all the instability
| coming from? As dollars are created through debt and we want
| those debts to be repaid (again this is what we want because of
| our human nature) they must fulfill their function of medium of
| exchange. Those dollars must keep flowing. They aren't allowed to
| stagnate in a bank account for all eternity where they actually
| interrupt the repayment of debts and that interruption is what is
| causing instability.
|
| The ability to save in USD is at odds with the ability to use it
| as a medium of exchange. This is because savings represent a
| certain amount of value in the real world that has not been
| consumed. Because the real world keeps changing that real value
| is extremely volatile but the dollar isn't. It's extremely
| stable. How does saving in USD impact real world value? Saved
| money is money that is not being spent, meaning you delayed
| someone's paycheck and they were unemployed for the time being.
| Unemployment doesn't increase real value, therefore saving in USD
| has a negative impact. If the value of the dollar must stay
| stable (0%) inflation then the obvious answer is that the number
| of dollars must decrease to represent the loss in real value. You
| know, the thing that should have happened in 2008. People who had
| deposits at those banks should have lost their money. Of course
| telling people without warning that they lost all their deposits
| is terrible news. It would make more sense to fix the problem in
| the short term and clean things up over the long term and give
| people time to make the right decision. Of course that doesn't
| change the fact that their money must disappear through negative
| interest rates. Of course we can also loosen price stability and
| erode the value of each individual USD via inflation.
|
| This introduction got much longer than I intended. Now back to
| the article.
|
| When people buy Bitcoin and start saving in Bitcoin they stop
| saving in USD. The moral hazard is gone. When you save in BTC
| there is no entity protecting your investment, you shoulder the
| savings risk yourself. The volatility of BTC (and gold) isn't
| actually a bug. No government will ever bail out BTC. If people
| are unemployed because of you (assuming there was a BTC economy
| in El Salvador), you take the hit yourself. Thus saving in BTC is
| not an attack on the USD. You are actually making the USD more
| stable, you are reducing the need for government interventions to
| keep the system going. Of course it would be more sensible to
| invest into bonds and the stock market but simply taking on the
| savings risk while saving into nothing is better than saving into
| something with a moral hazard.
|
| Edit: I failed to mention that holding onto savings beyond the
| duration of the debt is what is harmful about saving. Given
| enough debt saving is ok but as mentioned governments have to
| create artificial debt when there isn't enough "natural" debt.
| joelbondurant wrote:
| Most USA members think the world's largest supercomputer is in
| the cloud which is massless zero volume dark matter, and the
| Federal Reserve is a government agency which processes coffee
| payments.
| Archelaos wrote:
| A very mysterious story: both seem to have knowledge about the
| bubonic plague two centuries before the event.
| MarkPNeyer wrote:
| This article fits perfectly with something Orwell wrote, about
| how the use of complex language gives bad ideas an heir of
| authority.
|
| The example of the chair, where the author asserts that
| "functional definitions are wrong, only 'structural' definitions
| are correct" is a good test here. The author objects to the idea
| that "anything you sit on can be a chair" and then provides a
| definition of chair which does not include: - folding chairs -
| metal chairs - plastic chairs - any chair much bigger or smaller
| than a person (such as dollhouse furniture or some novelty item).
|
| Does that make any sense? The moment you try to fix the problem
| with the author's definition , you should come to the conclusion
| that functional definitions correspond more reliably to what
| people mean.
|
| For example, how would this author define "food"?
|
| Look at the extremely convoluted definition of money the author
| proposes:
|
| > what is money?", I would begin like this:
|
| A vast network structure, at the centre of which lies three sets
| of issuers issuing out three chained layers of legal IOUs - in
| physical and digital form - which will later return to the
| issuers to be destroyed, but which in the interim entrench
| themselves as economic network access tokens that circulate
| around an interdependent web of people who cannot mobilise each
| other's labour without them. These tokens are activated in the
| context of legal systems set within political systems set within
| social systems set within ecological systems, and this mesh
| structure underpins modern capitalism and is etched into the very
| fabric of our being.
|
| If this is the definition of money, then it suggests people never
| used money at all until computers existed. Absurd.
|
| This is someone trying to sell an idea (MMT) and claiming that
| it's the result of "more rigorous thinking".
| RandomLensman wrote:
| And interestingly enough physical cash is not an IOU in some
| big economies. So a 100 Euro bill would not be money...
| Retric wrote:
| You're complaining but not giving a better option.
|
| That definition of money applies to a physical Sestertius in 50
| BC just fine. The same physical coin may be worth more as a
| collectors item today, but it's no longer money. That's what
| makes the definition so convoluted, stuff can go from money to
| not money very easily.
| doomroot wrote:
| This is a well structured comment and much of the reason I
| still spend time on this site. Thank you.
| alexandrerond wrote:
| 12th century person talking about Syphilis in a tavern? Very hard
| to picture that scene indeed...
| dbuder wrote:
| Impossible since it came from the new world.
| kordlessagain wrote:
| Bitcoin, and other blockchain like devices, are simply a means of
| locking human consensus into a virtual object that can be
| manipulated under certain conditions, which are agreed upon by
| the same consensus. It is a type of stored human causality,
| similar to fiat.
|
| Bitcoin is a special type of Ponzi scheme that uses energy input
| from miners to create the illusion there is a return in value
| over time. Like Rai stones, immutability comes from the work and
| risk, but the value of the object is itself held in the
| population's mind. This only "works" if everyone agrees it works.
| If everyone agrees it doesn't work then it doesn't work and isn't
| worth anything and the risk taken to "make" it is lost. This is
| why an allegory can be told that indicates it is the faith in
| such an object that brings it value.
|
| Without enough people using said blockchain, it is both worthless
| and empty of meaning - no different than a scrape in the mud. A
| killer use case for crypto will make its utility valuable and
| inventible. A road is formed from wear of people agreeing the
| road goes somewhere.
|
| The danger is the requirement for increases in power to the
| network, which both drives and is affected by the current value
| to fiat. We may yet wrap our planet with solar to drive our
| economic desire of "wealth".
| rantwasp wrote:
| > Like Rai stones, immutability comes from the work and risk,
| but the value of the object is itself held in the population's
| mind. This only "works" if everyone agrees it works. If
| everyone agrees it doesn't work then it doesn't work and isn't
| worth anything and the risk taken to "make" it is lost.
|
| Deep. Very deep. The exact same thing can be said about money.
| It only works only if people agree it works. When you exchange
| your work for money, you are taking a risk. When you keep your
| money in the bank you are taking a risk. What if all of a
| sudden everyone stops accepting money?
|
| I really wish we would stop with the Ponzi scheme non-sense.
| Nobody believes that there is some sort of economic activity
| that is sustaining the growth. It's really no different that
| buying stocks on an exchange. Risky? yes. Speculative? yes.
| Ponzi? Nope.
|
| This Bitcoin - Ponzi scheme association is used to fear-monger
| and to stop people from ever learning about it (you don't want
| to be the sucker that falls for the scheme, do you?)
| throwaway34241 wrote:
| > It's really no different that buying stocks on an exchange.
|
| I think it's a little bit different depending on the style of
| investing. For Buffett-style value investing he's making a
| bet on the profitability of the company itself and not the
| future price of the stock (obviously meme stocks work
| differently).
|
| Bitcoins don't generate profits (by themselves) so their
| utility depends more on the future market price (which of
| course isn't driven by profits either).
|
| The traditional investment it seems most similar to is gold,
| which has value because the supply is limited, it's
| relatively easy to store/transport compared to bulkier
| materials, and there's lots of liquidity due to others using
| it for the same purpose. Bitcoin seems to have the same sort
| of advantages (minus the industrial / jewelry applications,
| but it's even easier to store and transact).
| rantwasp wrote:
| sure. there are nuances. stocks, options, futures, gold,
| etc all have different trade-offs and risks associated with
| them.
|
| my point was that a case can be made that it's an
| investment and the ponzi people need to take a deep breath.
| lottin wrote:
| > It's really no different that buying stocks on an exchange.
|
| Actually, the difference is quite substantial. Stocks are
| fractional ownership of businesses and businesses create
| value by transforming inputs into an output that is worth
| more than the inputs combined. In comparison, bitcoin is a
| virtual commodity, and commodities (virtual or otherwise)
| don't produce anything, this is why they're sometimes called
| non-productive assets. This means bitcoin cannot create
| wealth. If somebody get rich by investing in bitcoin it must
| be always at the expense of other bitcoin investors.
| rantwasp wrote:
| there is a loophole here that I think is worth mentioning.
|
| What does getting rich mean? If you compare bitcoin to the
| USD, its value "increases". But if you compare bitcoin with
| bitcoin you have the same amount of bitcoin today you had
| yesterday. So what really happens is you can buy more goods
| with the same amount of btc, in time, because of its
| scarcity.
|
| So bitcoin can create wealth in the sense that the quantity
| of goods you exchange for it increases over time (if people
| buy into using it that is).
| lottin wrote:
| No, you don't get it. Prices are set by the supply and
| demand, which means the fact that something is scarce
| doesn't mean absolutely anything in terms of what its
| price will be in the future. Second, the fact that some
| asset price has increased doesn't mean wealth has been
| created. For example, if your house increases in value,
| this only means that your _personal_ wealth has
| increased. In fact you personal wealth has increased at
| the expense of the people who are buying houses at over-
| inflated prices, while the stock of wealth in the economy
| remains unchanged. The only way to create wealth is to
| produce stuff, and bitcoin produces nothing.
| rantwasp wrote:
| No no no. You don't get it. You cannot make up your own
| definition of wealth and go meta (personal wealth vs
| WEALTH) as soon as the point you're trying to make no
| longer works.
|
| Something scarce that has any demand at all will see a
| rocketing price for it. That's what scarce means. Of
| course it's supply and demand and all that jazz but
| usually scarcity + any kind of demand leads to a high
| price.
| lottin wrote:
| No, you fail at elementary economics in a typical
| bitcoin-fan fashion. Your personal wealth is your share
| of overall wealth in the economy. Your share will
| increase or decrease whenever you become wealthier or
| poorer _relative to others_. This is what happens when
| there are changes in the relative prices of assets,
| wealth is redistributed. And, again, scarcity isn 't a
| predictor of price. Scarce means in short supply. It
| doesn't imply, by any stretch of the imagination, high
| price. No school of economic thought claims such
| nonsense.
| rantwasp wrote:
| sure thing buddy. only you can understand what wealth
| means.
|
| > you fail at elementary economics in a typical bitcoin-
| fan fashion
|
| Instead of being condescending here is a tip for you:
| learn about bitcoin before writing it off. Who know, one
| day you might even change your mind.
|
| > No school of economic thought claims such nonsense.
|
| Can you google things? Do me and youself a favor and
| google "the scarcity principle"
|
| Here I'll do it for you:
| https://www.investopedia.com/terms/s/scarcity-
| principle.asp
|
| I guess some schools of economic thought do claim such
| nonsense. Maybe you should have a word with them.
|
| But wait there is more: https://www.merriam-
| webster.com/dictionary/scarce
|
| scarce: deficient in quantity or number compared with the
| demand : not plentiful or abundant
|
| Wow, who would have guessed it's in the actual definition
| of the word?
| lottin wrote:
| > I guess some schools of economic thought do claim such
| nonsense.
|
| And what would that school of economic thought be
| exactly?
|
| > Wow, who would have guessed it's in the actual
| definition of the word?
|
| The definition of the word 'scarce' implies the notion of
| high price?
| dmitriid wrote:
| > But if you compare bitcoin with bitcoin you have the
| same amount of bitcoin today you had yesterday.
|
| Yup. So the people who were in on it early will have
| significantly more bitcoin than anyone who gets it by the
| time its hard to get it.
| valyagolev wrote:
| it's kinda like demanding to be backed by a gold standard, but on
| a conceptual level. the author is not satisfied by the
| extensionality (metaphorically, the exchange-value), he need
| Bitcoin to be conceptually "backed" by some kind essence
| cryptica wrote:
| Bitcoin's brand and its technology are two completely separate
| things. The technology isn't as great as people claim but that
| doesn't really matter.
|
| You could substitute the Bitcoin network with an entirely
| different PoS blockchain and the price would not be negatively
| affected. In fact, it might go up since PoS would be cheaper to
| operate.
|
| The hard part would be convincing everyone to switch to the
| technology.
|
| The price of Bitcoin is almost entirely in its brand and its
| social structure. Tech doesn't matter.
| mediocregopher wrote:
| The article's premise seems to me to be that real money is
| valuable because there's more to it than its properties and its
| form...
|
| > But a cash token is not mere paper, and the numbers we see in
| bank accounts are not mere numbers. They are accounting records
| of legally-enforceable promises...
|
| That sentence strikes me as the crux. But we never find out what
| is being promised. The word IOU is also used a lot, but we don't
| find out what we are owed.
|
| Is it access to a financial system? If so that's a flimsy
| argument, who's to say crypto couldn't create its own financial
| vortex (as the author describes it)?
| rantwasp wrote:
| the author strikes me as ignorant TBH. Here is what people want
| when it comes to money: ability to exchange the money for
| goods. That's it.
|
| Money is valuable because it can be exchanged and everyone has
| 1) accepted that you can exchange it 2) is using it for this
| exchange.
|
| What bitcoin is is captured in its name: bit coin == digital
| money. It's not complicated. Also, breaking news: most money
| (like 90%+) today only exist in electronic form (in that sense
| the dollar is a digital currency with a paper form and so on)
|
| People hate bitcoin because they don't understand what it is
| and perceive it as being somewhat of a threat. It's not. The
| ultimate success or failure of bitcoin will depend on how many
| people use it and what it's used for.
|
| Also, as a side note, the blockchain idea is revolutionary.
| Distributed consensus in a zero trust environment? yup. Has
| this been done before at this scale?
| 4512124672456 wrote:
| > It's not. The ultimate success or failure of bitcoin will
| depend on how many people use it and what it's used for.
|
| Bitcoin has already failed as money. Even most coiners admit
| that nowadays.
|
| > Distributed consensus in a zero trust environment?
|
| The whole cryptocurrency environment still relies on plenty
| of trust (exchanges, programmers, apis...). It's just less
| regulated, and this is why it is full of scams
| (https://www.rekt.news/).
| rantwasp wrote:
| the environment does not rely on trust. When you make a
| transaction you make a transaction without needing to trust
| anyone.
|
| Exchanges are needed only in the world where you need to
| transform bitcoins into other currencies.
|
| Relying on programmers, api, etc: if you want to go down
| that rabbit hole, you can literally take the code and
| verify it yourself. It's out in the open and it's backed by
| cryptographically sound primitives.
|
| Bitcoin has failed as money? Most coiners? Where is this
| coming from? Do you have anything to support these
| assertions?
| dmitriid wrote:
| > the environment does not rely on trust. When you make a
| transaction you make a transaction without needing to
| trust anyone.
|
| Ah yes. Because I don't have to trust anyone that the
| order from BitcoinAmazon will arrive. Or that the house I
| bought on BitcoinZillo will actually be mine. Or...
| lottin wrote:
| > When you make a transaction you make a transaction
| without needing to trust anyone.
|
| For the transaction to actually take place it means that
| it needs to be appended to the blockchain, and whether it
| is appended or not is not up to you. Instead you have to
| rely entirely on others for that to occur. This is the
| very definition of trust.
| rantwasp wrote:
| nah. no offense but you don't understand how it works.
|
| there is nothing preventing you from running your own
| node or miner.
|
| also, you are overextending the meaning of trust. Do you
| trust air when you're breathing? Do you trust traffic
| lights? Do you trust you're going to eliminate excess
| water through pee?
|
| The point is that if you have a series of established
| rules and a way to verify that they are actually applied
| as designed, it does not really matter who applies them.
|
| One miner cannot become a bad actor and invent its own
| rules.
| Arnavion wrote:
| I wouldn't say running your own miner is necessarily the
| way to not "trust anyone (else)", because at the current
| global hashrate the chance that your individual miner
| will get to mint a block with your transaction in it is
| basically zero.
|
| The more correct answer is that your transaction has
| fees, which is why other miners are motivated to include
| it in their next block. (And also why a majority of the
| hashrate being centralized into a single entity with a
| singular will is a doomsday scenario for bitcoin.)
| lottin wrote:
| Exactly, and fees are only an incentive. There's nothing
| stopping miners from discarding your transaction.
| Therefore trust that miners won't discard your
| transaction is required.
| [deleted]
| Arnavion wrote:
| Fees being an incentive == trust is a strange definition
| of trust. But if that's the definition you want to roll
| with, sure distributed currencies rely on trust.
| drdeca wrote:
| the "only" part before "an incentive" was important. They
| weren't saying because the fees are an incentive there is
| therefore trust, but rather, that one is trusting that,
| essentially, that this incentive will be enough.
|
| Of course, the concern that some particular miner might
| just have it out for you to a degree that outweighs this
| incentive, or who has some other incentive to not include
| your transaction, is more mitigated when there are more
| separate/independent miners/pools .
| IncRnd wrote:
| Too bad that bitcoin can't actually be used as money at the
| grocery store, to purchase a car, to buy fertilizer, or in
| any of a billion other ways that money can be used.
| decodebytes wrote:
| Not here to defend bitcoin, but that's not true. You can
| buy all three of those (to varying degrees in different
| countries).
| salamandersauce wrote:
| I understand what it is. I hate it because it's literally
| wasting more electricity than some countries for no reason
| and has also led to ridiculous demand for GPUs making them
| near impossible to source at MSRP.
| paulryanrogers wrote:
| > People hate bitcoin because they don't understand what it
| is and perceive it as being somewhat of a threat. It's not.
|
| For those paying higher prices for electricity or GPUs it's
| rational to see Bitcoin as a threat.
| rantwasp wrote:
| isn't this "the dream"? a free market where the price is
| dictated by supply and demand?
|
| You see it as a threat? Fine. But if you're gonna be
| rational focus on all the things that impact you - don't
| just listen to propaganda parroting the same things over
| and over again.
|
| On a side note: at least for BTC GPUs have not been a
| viable option is quite a while. also, mining happens in
| areas with low electricity prices - so not sure either of
| these arguments have legs.
| drdeca wrote:
| The bitcoin price is correlated with the price of other
| cryptocurrencies. Greater bitcoin price -> greater other-
| cryptocurrencies-price -> greater motivation for people
| to mine these other cryptocurrencies -> greater demand
| for GPUs for mining.
|
| Well, I suppose I'm conflating correlation with causation
| here. Are the two correlated because a higher bitcoin
| price produces a higher other-cryptocurrencies price, or
| the other way around, or another thing which causes both
| of them, or maybe some mix of some of these 3?
| lottin wrote:
| The bitcoin consensus mechanism is literally a lottery in
| which the winner gets to decide what the "consensus" is. I
| don't know about "revolutionary"...
| rantwasp wrote:
| is it though?
|
| the "lottery winner" in your case assembles a block with
| transactions from the transaction pool (ie you don't just
| make shit up. you are taking useful transaction that people
| are making them and capturing them into the chain) So the
| winner does not decide much, except maybe what transactions
| to select (spoiler alert: the transactions with the highest
| fees are normally selected).
|
| The consensus is in the sense that: you wanted to create a
| transaction and that transaction is captured and everyone
| in the network sees and agrees that the transact happened.
| The miner cannot alter your transaction. Other nodes in the
| network cannot arbitrarily reject it. You cannot simply
| claim you didn't do it after the fact.
| lottin wrote:
| > everyone in the network sees and agrees that the
| transact happened
|
| Why would everyone agree that the transaction happened?
| rantwasp wrote:
| everyone == bitcoin nodes that each keep a copy of
| blockchain locally.
|
| once a block is mined it is propagated through the
| network and it's verified by all the nodes that see it.
| In effect, when you get the block and you append it to
| your local blockchain after verification you agree that
| the transaction that happened in that block happened.
| lottin wrote:
| Yes, but the question is why would all the nodes agree
| that the transaction has happened. What's stopping them
| from disagreeing?
| Arnavion wrote:
| They're welcome to disagree. I can write a node that
| creates a chain with blocks that only contain some
| transactions of my choice and then broadcasts it.
|
| For nodes that only have access to my chain, they will
| also go with my chain. This is why being connected to
| multiple nodes is important.
|
| For nodes that have access to both my chain and the rest
| of the world's chain, they will go with the chain that
| has the most work put into it, because that is the one
| that is clearly supported by the majority computation
| power. It's irrational to go with the chain that has less
| power, because the entities that created the chain with
| more power can easily overwrite the chain with less power
| by virtue of having more power.
|
| Unless I happen to have more computation power than the
| rest of the world, the chain with more work put into it
| isn't going to be mine, which is why it's important that
| global computation power isn't consolidated into a single
| miner.
| rantwasp wrote:
| hmm. it's not necessary more power. Sometimes it's luck
| if you are talking about chains that are the same except
| the tip where they differ by 1-2 blocks.
| lottin wrote:
| > It's irrational to go with the chain that has less
| power, because the entities that created the chain with
| more power can easily overwrite the chain with less power
| by virtue of having more power.
|
| This basically means the entire bitcoin network depends
| on the entities that have the most computer power
| behaving correctly, am I wrong?
| Arnavion wrote:
| That is correct. As I wrote in [1], the situation where
| the majority power becomes irrational is a doomsday
| scenario for bitcoin.
|
| [1]: https://news.ycombinator.com/item?id=28020592
| lottin wrote:
| Right. Though the problem is not so much behaving
| irrationally as dishonestly. At any rate it's hard to
| argue that the bitcoin network is more "trustless" than a
| bank, since we have coercive mechanisms to ensure that a
| bank will behave honestly, while we don't have the same
| mechanisms to ensure bitcoin miners will do the same.
| Bitcoin users have to trust that they will be honest.
| Arnavion wrote:
| No, you still don't understand. It's not dishonesty, it's
| irrationality.
|
| First you assume that the majority computation power is
| already colluding. This is not the case.
|
| Let's assume it's the case. As soon as they stop adding
| all transactions to a block that they would've been
| expected to, the entire world will notice. In response,
| the currency will become valueless. That is, it's a
| public act to abuse your position as a majority power,
| and the very act of your abuse destroys the thing that
| you're trying to abuse to your profit.
| lottin wrote:
| No, it's you who don't understand. There are many ways
| someone can profit from bitcoin losing all its value. And
| there many motivations other than financial profit.
| Therefore it's more accurate to speak of dishonesty
| rather that irrationality.
| PhasmaFelis wrote:
| > People hate bitcoin because they don't understand what it
| is and perceive it as being somewhat of a threat.
|
| I dislike Bitcoin because (a) it's causing quite a bit of
| environmental damage and (b) it has _revolutionized_
| kidnapping and ransomware.
|
| This is supposed to be a fair trade-off for letting people
| circumvent e.g. onerous drug laws. I'm not convinced it's
| worth it.
| mst wrote:
| It also fails to take into account e.g. Somalia, where there's
| been no bank for some time and banknotes are printed by whoever
| can put together a convincing-looking printing operation ...
| and yet they continue to function as tender just fine.
| paulgb wrote:
| Is there somewhere I can read more about this? I wasn't aware
| of the situation with Somalia but it seems to be counter to
| the narrative of hyperinflation I found on Wikipedia
| https://en.wikipedia.org/wiki/Somali_shilling#Modern_history
| mst wrote:
| The hyperinflation happened, yes, but the point is that
| once it stabilised "pre-1991 notes and subsequent forgeries
| were treated as the same currency."
|
| I'm not attempting to say this was a _good_ situation, only
| that it has interesting implications for "what is a
| currency" as a question.
| kovek wrote:
| One thing that is enforced legally is the IOU. It used to be
| that a note meant that the bank/government owes you gold for
| it. Since USD is now fiat, the IOU is in the form of ensuring
| that your debtors actually pay you (simplest form is loans or
| bonds). Within a jurisdiction that would be done in different
| ways with the court. Between countries it would be done with
| the military.
|
| On ethereum, the IOU is that you're granted a vote to shape the
| code of the network, and also you can are owed some structured
| computation cycles.
| generalizations wrote:
| > legally-enforceable
|
| That seems to me like the real crux. The acceptance of fiat is
| _enforced_ , ultimately with physical force; this ensures that
| it's used.
|
| With crypto, it's a social contract: I accept your bitcoin,
| because I think others will accept it when I try to spend it
| myself.
| jrm4 wrote:
| This is a _great_ exploration of what 's going on here without
| being too "pro" or "con." I see a lot of people here trying to
| quickly summarize "what side he's on" and I don't think that was
| the point here.
|
| I think he's correctly pointing out a very human barrier to
| adoption. There's, for example, a reasonable argument that
| bitcoin might be like gold -- really valuable, but perhaps not as
| moveable as a currency. What the author is pointing out is that
| gold is different because it's shiny and pretty and you can shape
| into things -- and like it or not, that MEANS something, even if
| that something isn't easily captured in a rigorous (nerdy?)
| economic analysis.
|
| I think the author would agree that it's too early to tell if the
| above "something" is a deal-killer or not, but it is certainly
| significant.
| dsr_ wrote:
| The intrinsic value of gold is its usefulness in electronics
| and jewelry. The same for silver and other natural resources:
| the cost to dig them out of the ground or grow them, process
| them and bring them to where you want them to be is exceeded by
| their economic usefulness.
|
| The intrinsic value of a bitcoin is zero, and the cost of
| production is about 1.7 megawatt-hours.
| fuzzybear3965 wrote:
| Apparently the fair value of gold when considering the
| manufacturing value is less than a hundred dollars an ounce.
| Other demand (store of value) drives the price up.
| nayuki wrote:
| I'm guessing the title is modeled after
| https://en.wikipedia.org/wiki/I,_Pencil
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