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

oii.ox.ac.uk

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

#41

Post by dragonwriter »

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).

> how is that any different to the existing currency system

Fiat currency is governed by central banks, which are arms of government, and are accountable to the public in the same way as the issuing government. Obviously, the degree of accountability varies from government to government.

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

#42

Post by DINKDINK »

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.

>miners control bitcoin

Incorrect, I can sign or construct any type of cryptographic payment I wish. Miners trade their Proof of work to prevent double spends in exchange for coinbase (currency issuance) that the market values. If miners chose to mine on a chain that no one wants, no one will trade for their coinbase.

The game theory nuance is, how do you organize an economy around changes to blockchain consensus? The only guaranteed way to ensure that that happens (from a game theory perspective) is to have miners lead the change. If user wish to lead the change, they still can but they take a risk in that no one will join them on the new consensus chain ("hey you guys said you'd construct payments like this and now no one is!"). There are more improved ways of rolling out these changes.

At worst miners can execute a denial of service for new transactions entering into the UTXO or attempt to double spend funds, or release blocks in a manner that negatively affects the profitability of other miners but they have _no control_ over how users handle their UTXO.

Bitcoin is anti fragile, each time it goes through a market challenger it gets better at handling it, not weaker.

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

#44

Post by alextheparrot »

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.

Can you clarify why this is the case? This seems to just describe inflation as if it is a net gain, meaning you wouldn't actually realize gains because the aggregate of goods you buy would increase proportionally.

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

#45

Post by dragonwriter »

rlpb wrote: post #9
jasode wrote: post #7

I agree with Vili Lehdonvirta's analysis about governance and wrote a similar conclusion previously.[1] Yes, the concept of "money" existed before governments and therefore doesn't require government. That said, today's modern money is very much an instrument of government power. This is why alt-coins will not overthrow fiat currencies like some enthusiasts believe because Bitcoin does not come with its own Bitcoin-p…

> Bitcoin does not come with its own Bitcoin-police-force and Bitcoin-law-courts My government will enforce a contract even if it is denominated in some foreign currency, will it not? Currency used is independent of jurisdiction. They may award damages in legal tender, rather than in Bitcoin, but I have to pay taxes in legal tender anyway, so there will always be a market to convert back. Right now they might be conf…

> My government will enforce a contract even if it is denominated in some foreign currency, will it not?

Usually, the same as it would for a contract for some non-currency commodity: by converting it to what it considers an equivalent value at the time of injury (not time of award or payment) in the legal tender currency.

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

#46

Post by DiNovi »

wyc wrote: post #29

I think that the core value crypocurrencies and blockchains provide is a distributed system of trust. I also think that we people in developed nations have been spoiled by our trustworthy institutions, relatively speaking. I don't know too many people in US/UK/AUS/JP hesitant to put money away in the consumer banks, take out mortgages, or file disputes in the state courts. Those systems work well enough, with accepta…

and a distributed system of trust means a lot of well paid jobs (accountants, lawyers)will... not be necessary

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

#47

Post by Frogolocalypse »

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.

> the miners control bitcoin.

Incorrect. Nodes enforce consensus in bitcoin, not miners. It is thus. It has always been thus.

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

#48

Post by davidgerard »

wyc wrote: post #29

I think that the core value crypocurrencies and blockchains provide is a distributed system of trust. I also think that we people in developed nations have been spoiled by our trustworthy institutions, relatively speaking. I don't know too many people in US/UK/AUS/JP hesitant to put money away in the consumer banks, take out mortgages, or file disputes in the state courts. Those systems work well enough, with accepta…

The "Look at the popularity of Bitcoin in [country]" argument always turns out to be made-up rubbish.

I did actually try tracking the Venezuela hype to its source. You have linked the Reason article as a reference, but if you actually read the thing, its title is "The Secret, Dangerous World of Venezuelan Bitcoin Mining: How cryptocurrency is turning socialism against itself" and the article itself is an unhinged libertarian polemic fiercely advocating Bitcoin as a way to avert the SPECTRE of SOCIALISM and REGULATION. One of their interviewees had been arrested for stealing electricity to mine bitcoins, which the author describes as a "government crackdown" on "freedom" because "bitcoin mining is arguably the best possible use of electricity in Venezuela".

A story in The Guardian in the wake of the Reason story appears to be where the rest of the press picked it up. It spoke of some Venezuelans relying on Bitcoin for "basic necessities" - and was based on interviews with a Bitcoin exchange owner, one of his employees and two of his customers. The author had previously written similar stories of Argentina and bitcoin. https://www.theguardian.com/technology/2016/dec/16/venezuela...

These two questionably-founded stories were echoed and elaborated upon by the rest of the press, including - amongst many others - the Washington Post claiming that Bitcoin mining is "big business" in Venezuela (which it in no way is), the New York Times claiming that Bitcoin has "gained prominence" because of Venezuela, and BBC News repeating claims from a Bitcoin boosterism blog - all of this being factoids repeated in a media game of telephone.

The Venezuelan volume on LocalBitcoins at the time was on the order of 300-400 BTC/week, which isn't nothing, but is negligible in the context of a whole country, and tracked fairly closely with LocalBitcoins usage in other countries.

tl;dr no, Venezuela isn't a thing either.

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

#49

Post by rensgspzn »

TLDR Author thinks Bitcoin is mostly worthless because there is no single organization deciding how Bitcoin should work or enforcing its rules.

And ironically, most Bitcoiners believe this is exactly what gives Bitcoin its worth.

Sidenote: I also find it ironic that the author, a Faculty Fellow of the Alan Turing Institute, is enamored with governance when it was governance that forced Alan Turing to be chemically castrated.

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