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The blockchain paradox: Why DLTs may do little to transform the economy

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Re: The blockchain paradox: Why DLTs may do little to transform the economy

#31

Post by Nursie »

isubkhankulov wrote: post #23

the article is spot on when it comes to Distributed Ledger Technology (DLT) but misses the point of Bitcoin. Many in the community cite the lack of governance as a strength of Bitcoin. It's resilience is a virture because it becomes difficult to corrupt, unlike centralized governance of traditional payment methods.

I think you might have missed the point of the article - bitcoin is still governed by a small group of people, but its governance is informal and chaotic.

It is not governance-free.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#32

Post by simias »

Rabei wrote: post #20

Because bottom line, the only thing it improves is that there is no longer need to move the money around in armored cars, and that is not high impact in the bottomline of the economy You lose the following: 1 - Ability control monetary policy 2 - Reduction in theft via cost in effort (same thing as with e-voting and rigging elections) Because of that you have seen that blockchain stuff works on countries where 1 is b…

I think for the libertarian crowd (which seems to be a big chunk of the bitcoin enthusiasts out there as far as I can tell) the fact that a government can't easily enforce any kind of monetary policy on bitcoin is a feature, not a bug.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#33

Post by Nursie »

thechut wrote: post #22

Interesting points about enforcement. But I think the real barrier to adoption is that most people don't mind using centralized systems. If their Visa card works when they swipe it, they don't think beyond that. If it's easier for the end user when systems are centralized, breaking people out of this mindset will be very difficult.

I'm fairly pro privacy, but where it comes to currency, I don't see the benefit.

I certainly don't see the benefit of burning the amount of energy the average bitcoin transaction is now responsible for, when (as you say) I have Visa.

And with Visa I can charge-back if I get ripped off. Bitcoin is, AFAICT an actively worse proposition for me.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#34

Post by serg_chernata »

jwildeboer wrote: post #24
wildbunny wrote: post #18

He misses the point that the developers do not control bitcoin; the miners control bitcoin. The developers suggest improvements which will only be adopted if the miners support those improvements. The miner's interests are purely profit based, so they will not adopt changes which reduce their chance of profit.

Thank you for pointing out that the users of bitcoin (and other cryptocurrencies) have effectively no say in the design of the system they have to trust. This will ultimately limit the very trust needed to keep it alive IMHO.

I would say that this is exactly why Proof of Stake seems to be in higher regard than Proof of Work for new currencies as well as Ether's eventual transition later this year. Among other reasons, of course.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#35

Post by leitasat »

Well, there are some improvements over existing systems (e.g. fiat money):

1. Less costs to switch to a competitor comparing to banks and states which leads to 2. The governance body and all influential members are really in need of public approval of their actions since that is exactly what makes a coin worthy. If they change protocol in a drastic way, the price will immediately plummet leaving them in tatters 3. Same mechanism prevents conflicts within the community

In general I would like to see more about the role of law in economics and possible tech implementations of it (meta-protocols?)

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#36

Post by wyager »

wildbunny wrote: post #18

He misses the point that the developers do not control bitcoin; the miners control bitcoin. The developers suggest improvements which will only be adopted if the miners support those improvements. The miner's interests are purely profit based, so they will not adopt changes which reduce their chance of profit.

This is an excessively simplistic first-order explanation of the mining incentive system.

Consider that miners also lose money if the thing they are mining loses value. Therefore, if enough economic actors (besides miners) switch to version B that has some new feature, everyone will want to use version B instead of version A. The miners who are stuck mining version A lose money because the currency they're mining is no longer as valuable.

Realistically, the economics of cryptocurrency features work out quite nicely. You can't just say "oh, the miners make the blocks, so they have absolute control".

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#37

Post by chii »

jwildeboer wrote: post #24
wildbunny wrote: post #18

He misses the point that the developers do not control bitcoin; the miners control bitcoin. The developers suggest improvements which will only be adopted if the miners support those improvements. The miner's interests are purely profit based, so they will not adopt changes which reduce their chance of profit.

Thank you for pointing out that the users of bitcoin (and other cryptocurrencies) have effectively no say in the design of the system they have to trust. This will ultimately limit the very trust needed to keep it alive IMHO.

> users of bitcoin (and other cryptocurrencies) have effectively no say in the design of the system they have to trust.

how is that any different to the existing currency system like credit cards and banking?

And users _do_ have a say in bitcoins. Namely, they can vote with their wallet (literally and figuratively).

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#38

Post by rb808 »

jankotek wrote: post #6

Blockchain already transformed economy; it brought fast international payments with small fees.

One of the reasons there are fees for international payments is to comply with the legal requirements set up by governments to monitor and control such transactions.

The cost of transferring FX wholesale is near zero. If a bitcoin based processor implements the controls, the costs will be the same as a regular payment provider.

So bitcoin can only become cheaper than tradition payments if you bypass the legally required controls.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#39

Post by marxidad »

chii wrote: post #37
jwildeboer wrote: post #24

Earlier quoted context omitted.

Thank you for pointing out that the users of bitcoin (and other cryptocurrencies) have effectively no say in the design of the system they have to trust. This will ultimately limit the very trust needed to keep it alive IMHO.

> users of bitcoin (and other cryptocurrencies) have effectively no say in the design of the system they have to trust. how is that any different to the existing currency system like credit cards and banking? And users _do_ have a say in bitcoins. Namely, they can vote with their wallet (literally and figuratively).

Banks are regulated by democratic governments.

Re: The blockchain paradox: Why DLTs may do little to transform the economy

#40

Post by altcognito »

blfr wrote: post #26
yoz-y wrote: post #21

I always thought of bitcoin as a commodity, not a currency. It seems to solve the same problems and follow the same rules. E.g.: a commodity (such as gold) can not be created, but it is an important feature for a currency. Without inflation it will never be a good choice for currency anyways because it will always be a more interesting to hold on it rather than use it.

If bitcoin achieved (a big if) wide adoption, it would be like keeping all your money in an index fund whenever you're not actively spending it. Its value would follow the growing economy.

Except deflation instead of inflation. Instead of sticky wages you'll be pressured to drop your hourly rates. Borrowing money would increase the cost of the loan, depending on the rate of value increase, you're looking at negative interest rates. Everything about deflation makes zero sense.
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