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Bitcoin Is Dead, Long Live Bitcoin

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Re: Bitcoin Is Dead, Long Live Bitcoin

#161

Post by jsprogrammer »

rhino369 wrote: post #99
jsprogrammer wrote: post #58

Earlier quoted context omitted.

>You can criticize some of the actions that many central banks do to manipulate the economy, but I have a hard time buying the answer to bad management is no management. Why is active, central, management necessary? >The biggest economic problem to me has always been an unintelligent control of the money supply. The Bitcoin paper [0] lays down the rules of control and many have been able to follow it; In what way is…

Because it ignores the velocity of money and total amount of transactions. If the USA suddenly adopted bitcoin as the official currency, you would see insane deflation. If people stopped using bitcoin as much, you'd see strong inflation. Central banks manipulate money supply to keep prices steady. That's why I can sign a loan for a house in dollars. But you would be insane to sign a loan for a house in bitcoin. The f…

Why would I need to sign a loan for a house in Bitcoin? With Bitcoin I can just buy the house outright.

Debt currencies are used for signing loans.

Anyway, there is probably a way to add an inflation metric over the blockchain based on it's length (or #transactions, or avg. transaction value, etc.), where some value equivalence can be drawn between older coins and newer coins, if it's really desired.

Re: Bitcoin Is Dead, Long Live Bitcoin

#162

Post by makemonies »

AndrewKemendo wrote: post #30

Back in 2009 when I was getting into bitcoin, it was widely described as a "stateless currency" and not just an alternative to Visa or credit cards. Having a background in economics, bitcoin looked to me like a truly revolutionary technology and if it was adopted en masse would change politics forever. The problem however is that a nation's currency is arguably the primary source of it's sovereignty. Whomever control…

It's 'Whoever', not 'Whomever'

Re: Bitcoin Is Dead, Long Live Bitcoin

#163

Post by nodamage »

weinzierl wrote: post #140
snowwrestler wrote: post #64

Earlier quoted context omitted.

> The problem however is that a nation's currency is arguably the primary source of it's sovereignty. The reverse is also true--any significant currency creates sovereignty by elevating the power of those with the greatest influence over that currency. In the case of Bitcoin, the "core" developers, in addition to the highest-volume miners, have been elevated to the sovereign position. Rather than a distributed statel…

> In the case of Bitcoin, the "core" developers, in addition to the highest-volume miners, have been elevated to the sovereign position. I'm far from being a Bitcoin expert but from understanding: In the end Bitcoin is just a piece of Open Source software. Every user (including the miners) decides which version of the software (and ultimately which version of the blockchain) they like to use. Everyone can write his o…

That sounds great in theory, but in practice it sounds like the established players have a very strong financial incentive to avoid the rise of any forks, going so far as to DDoS any attempts at doing so.

Re: Bitcoin Is Dead, Long Live Bitcoin

#165

Post by im_down_w_otp »

krupan wrote: post #132
nikolay wrote: post #91

Bitcoin is long dead; the blockchain - not so much, but it won't survive in its present form as it's highly inefficient.

How do you have one without the other?

"Blockchain" is just a brand name given to a particular form of using Merkle trees, and Merkle trees have no correlation or dependency whatsoever on Bitcoin.

Re: Bitcoin Is Dead, Long Live Bitcoin

#166

Post by anon4this1 »

if chinese miners are indeed trying to limit blocksize in order to increase transaction costs, then the necessary chain of events which needs to occur is: 1) faith in bitcoin as a currency/payment system drops causing price crash 2) miners realise that the marginal increase in money made via transaction costs is massively outweighed by what they have lost in block rewards by limiting growth of the system 3) the miners get their act together and everyone upgrades to a new whizzy high capacity bitcoin.

This should continue to work until block reward becomes negligible in 2035.

Re: Bitcoin Is Dead, Long Live Bitcoin

#167

Post by Animats »

The article asks "is Bitcoin gold" or "is Bitcoin Visa".

Bitcoin's first killer app was drugs. Then Silk Road I and Silk Road II were taken down. That put a dent in the price.

Currently, Bitcoin is a way to get yuan out of China and convert it to dollars or euros, despite China's exchange controls. Most of the mining and the exchange volume are in China. Buying Bitcoin with yuan and selling it outside China is technically prohibited by the People's Bank of China, but they haven't cracked down hard on it. Yet. Mining is also a way to convert yuan to dollars. Miners in China can also qualify for the loans and subsidies the government of China gives businesses.

Bitcoin as a general currency for transactions just isn't happening. The real transaction costs are too high. There's volatility risk. There are exchange costs getting in, and exchange costs getting out. (At the retail level, those are high; Robocoin ATMs have a buy/sell spread of about 15%) There's also the substantial risk that the exchange will fail or steal your money. (This got better in 2015, but until then, more than half of Bitcoin exchanges went bust. It wasn't just Mt. Gox.) Paying 1% - 3% to Visa looks good compared to that, especially since buyers get protection against merchant fraud.

Bitcoin as a speculation looks good some years, and bad in others. It's like a penny stock, except that Bitcoin is zero-sum. There's no intrinsic value, and no fundamentals. It's all greater-fool speculation.

The impressive thing about Bitcoin is that the system is well behaved in the presence of a very high level of criminality. Few, if any, other distributed computer based systems can make that claim. It would be nice if DNS or BGP or SS7 worked that well.

Re: Bitcoin Is Dead, Long Live Bitcoin

#168

Post by dandelion_lover »

pcmaffey wrote: post #87

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. https://localbitcoins.com/

Re: Bitcoin Is Dead, Long Live Bitcoin

#169

Post by krapp »

npongratz wrote: post #150
snowwrestler wrote: post #118

Earlier quoted context omitted.

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.

That's damning with faint praise, if the best thing you can say about the Bitcoin community is that at least it hasn't monopolized its capacity for violence.

Re: Bitcoin Is Dead, Long Live Bitcoin

#170

Post by zanny »

Anonobread wrote: post #49
zanny wrote: post #35

Earlier quoted context omitted.

It isn't about computational difficulty. Larger block sizes simply mean larger blockchains and more network use to transfer them around. The verification of transactions in bitcoin is central to its protocol. Its the whole reason its novel and relevant. You would have to change the proof of work system from sha256 hashing to something else to make it anything but optimal for computation on specialized ASIC hardware.…

No matter what crazy optimized-for-decentralization algorithm you come up with to mine cryptocurrency, large investors are going to buy a ton of it and put it in datacenters in China. Newbies and people invested in alternative attempts at Proof of Work often complain about this longstanding issue while utterly failing to solve it themselves.

Is it an issue? Of course you could spend millions to buy mining hardware. The issue in bitcoin is more that you spend millions on novel mining hardware nobody else has. If your hashing function is CPU or GPU friendly, suddenly everyone in the economy has hardware capable of potentially mining your crytocurrency. The problem with bitcoin is that those hundred million dollar datacenters are the only places top of the line SHA256 hashing hardware is found. If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the bitcoin space.
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