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Bitcoin Is Dead, Long Live Bitcoin

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Re: Bitcoin Is Dead, Long Live Bitcoin

#141
post #57

Earlier quoted context omitted.

The money supply is fixed to 21 million. Fortunately, the coins are basically infinitely divisible, so as the coins become more valuable (assuming over the long run that coins are used for larger and larger amounts of commerce rather than speculation), small transactions simply happen at smaller units. In other words the system is steadily deflationary instead of the highly volatile inflationary system we currently h…

If BTC become more valuable, then how is that deflationary?

The thing being inflated in inflation is prices. If a currency becomes more valuable, things cost less in that currency. An appreciating currency leads to deflation, all else being equal.

(This assumes you are treating BTC as a currency, which appears to be the OP's intent.)

Re: Bitcoin Is Dead, Long Live Bitcoin

#142
post #104

Earlier quoted context omitted.

The only real compelling reason anyone has these days to buy a bitcoin seems to be for use on darknet markets, mostly to buy drugs. The merits of those markets are wonderful to discuss, but as I don't really have a use for drugs in my life right now, I have no need for bitcoins.

That is why there was a Silk Road but they got busted by the FBI. Would sell drugs and ship them in a CD holder, claiming it was a CD-ROM for Bitcoins. There are other sites that sell things for Bitcoins that are not drugs. But there aren't that many of them. You have to get the banks to support Bitcoin so you can exchange from Bitcoin and back and that hasn't happened on a large scale yet. When I went to buy Bitcoin…

Silk Road was just the first darknet market though. There's plenty of others now, but anytime one gets a bit large, it tends to steal all it's users money and vanish, and if it gets REALLY large, it tends to be shut down by a government eventually.

But there's always another market. And there always will be.

Re: Bitcoin Is Dead, Long Live Bitcoin

#143

1. I have no idea how to get Bitcoin. A quick search takes me to several exchanges that look like torrent sites for pirating shit. 2. Nor has anyone presented me a compelling reason to get bitcoin (other than the future). Off the top of my head, if a company offered me an account that would take care of my online transactions in a secure way using Bitcoin, I might be interested. Maybe I'd put a few hundred in it each…

1. Coinbase or Circle

2. There really aren't any! Not for the average user, not right now. Adoption was only ever going to start with niche use cases, like international remittances, some B2B applications, darknet sites, etc. I think most people will start using Bitcoin without realizing it, as is the premise with 21inc. and many others. I think OpenBazaar will see some success, too. There's lots of time for this to work out, and speculators will drive the price for a long time.

3. A fiat blockchain is just expensive and inefficient fiat. Why do you need a public ledger when you're already placing all your trust on a bank or government? Just keep the private ledger that's cheap and trivial to implement. I think many people have this notion of thinking about Bitcoin like currency, but that's really not right. Bitcoin is a trustless network, and all of it's power and innovation stems from that. Introducing a trusted party to that just destroys all of that.

Re: Bitcoin Is Dead, Long Live Bitcoin

#144
post #2

This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockchain size" crowd than Mike Hearn's essay. Is it really true that the people who are objecting to increasing the blockchain size see Bitcoin turning into a reserve "currency" to hold wealth instead of a liquid currency used to make real time transactions? Is th…

The debate is very complex, with many people discussing orthogonal issues.

Some are the cypherpunks that want security at all costs. They see Bitcoin as a failure unless just about anyone can operate the network. They already see mining as a failure because it's too centralized, and are staunchly opposed to anything that might increase that centralization.

Ironically, I think increasing the block size would provide advantages to miners outside of the China firewall, which may have the effect of decentralizing mining a little. That's a very simple take on it, though, and only one of many factors.

Interestingly, many who hold this view argue that changes can only be made to the network through strict consensus, ultimately relying on very centralized development.

Others see Bitcoin as a currency that should be used at the consumer level, like cash. They want a network that grows and is predictable for investors. The possibility of expensive transactions is dangerous to business models and will stall adoption.

There are some focused on the technology, and what can be built on top of bitcoin. Recognizing the network effect (more users, more value), they see using Bitcoin as a settlement layer for the various implementations on top of that. Some of these require some changes to the Bitcoin protocol, and there's much controversy in what is permissible. Lightning Network, side chains, etc. could all operate at different frequencies of Bitcoin settlement transactions. Other services would like to store information on the blockchain, using a small transaction fee to pay for immutable information storage. This could be used for contracts of all sorts. Some would see this is spam on the network, and others a huge innovation and source of value.

Some will look to the early development for guidance. Satoshi wrote a lot about how the network might evolve, and it's quite clear that he thought network capacity would improve with technology. Basically, some use the argument that the 1MB limit was a stopgap, temporary limit that has passed its usefulness. The 'Bitcoin people signed up for' is one with a growing block size.

You can add to that concerns about many of the core developers working at Blockstream, so might have perverse incentives to cripple Bitcoin to generate demand for their products.

It's ... a little complex.

Re: Bitcoin Is Dead, Long Live Bitcoin

#145
post #19

Earlier quoted context omitted.

I would put it in a slightly different way: Everyone wants "Visa" functionality, but there is a debate about whether the solution is a one-layer system where base Bitcoin provides transaction throughput or a two-layer system where transaction throughput is provided by a separate layer on top of Bitcoin.

The trouble is that Visa functionality already exists and it already works really, really well for both consumers and merchants.

Consumers like it because they don't see the cost of it because it's baked into the price of goods and services.

There's also chargeback and consumer protection services, which currently there is little market for. You just rely on Visa. With Bitcoin, there is opportunity for a market of escrow and resolution services.

Right now, Visa works better, full stop. As Bitcoin improves, however, that could certainly change.

Re: Bitcoin Is Dead, Long Live Bitcoin

#146
post #2

This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockchain size" crowd than Mike Hearn's essay. Is it really true that the people who are objecting to increasing the blockchain size see Bitcoin turning into a reserve "currency" to hold wealth instead of a liquid currency used to make real time transactions? Is th…

I think Mike Hearn's essay was pretty disingenuous. Most of the people I know who have issues with XT have issues that go far beyond forking. For example, some of the code included in XT includes blacklisting code. It also would break anonymity. I don't know if the camps is quite divided along the lines put forth in this article, but it's certainly true that XT wants to become/replace Visa. Many people have been frus…

Yeah, it'll be interesting to see how Classic does. It definitely puts some pressure on Core.

Re: Bitcoin Is Dead, Long Live Bitcoin

#147

Earlier quoted context omitted.

If BTC become more valuable, then how is that deflationary?

The thing being inflated in inflation is prices. If a currency becomes more valuable, things cost less in that currency. An appreciating currency leads to deflation, all else being equal. (This assumes you are treating BTC as a currency, which appears to be the OP's intent.)

Oh right, of course. Inflation means that the value of currency becomes less valuable. Just a brain fart on my part. Thanks!

Re: Bitcoin Is Dead, Long Live Bitcoin

#148

Earlier quoted context omitted.

Nah. People need to learn that you simply can't build a decentralized, egalitarian system on capitalist foundations.

Has anyone built a decentralized, egalitarian system on any foundation? Call be cynical but at some point you run into human nature, and we're not fundamentally decentralising or egalitarian.

Non sense. It is not necessary for the agents in a decentralised system to be selfless in order for the system to self organise.

Edit. Drunk and offensive. But my point still stands.

Re: Bitcoin Is Dead, Long Live Bitcoin

#149

Block size isn't a free parameter. The team behind btcd, a Bitcoin full node written in Go, made the following observations about block size [1]: 1. a 32 MB block, when filled with simple P2PKH transactions, can hold approximately 167,000 transactions, which, assuming a block is mined every 10 minutes, translates to approximately 270 tps 2. a single machine acting as a full node takes approximately 10 minutes to veri…

Small quibble but that number is comparable to Visa's peak transactions per second figure, which is somewhere North of 56,000tps. Making the hypothetical 32x-better Bitcoin network 0.2% as capable as the current Visa network.

Re: Bitcoin Is Dead, Long Live Bitcoin

#150

Earlier quoted context omitted.

Well, right. One may frame this whole "failed versus not failed" as a power struggle between two camps: a. Those who own a large stake in the original BitCoin - such as the developers, miners, venture capitalists, the Winklevoss Twins, etc. and b. Those who don't own a large stake in BitCoin currently, but wish to own a large stake in the dominant cryptocurrency. Wall Street... When you attack BitCoin on any grounds,…

Another way to look at it is, what was the goal of the Bitcoin experiment? a. To create a new network for digital financial transactions? This seems to be what Fred Wilson is writing about, and I agree with him that the jury is still out. b. To create a distributed currency free from government bureaucracy? Bitcoin seems well-separated from the U.S. federal government, but lately it also seems like Bitcoin has organi…

> Bitcoin seems well-separated from the U.S. federal government, but lately it also seems like Bitcoin has organically sprouted its own messy government bureaucracy.

Bitcoin, nor its tokenholders, cheerleaders, etc. do not have the violence-backed power to tax. So while it may have the nasty trappings of a bureaucracy, I don't think it sinks to the level of a government bureaucracy.

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