Live data from Hacker News

Bitcoin Makes Even Smart People Feel Dumb

wired.com

11–20 of 108 posts

Re: Bitcoin Makes Even Smart People Feel Dumb

#11
post #5

The cryptosystem part is hard, but the rest is not all that complicated. The economics, though, are very strange. Valuing a cryptocoin is really hard. It's like valuing a penny stock with no business activity.

When any unit of trade has no activity, it's by definition worthless.

It could be argued that the opposite is also true; a unit of trade with activity (let's call it its "velocity") has value, because (also by definition) it must carry the value that it's being traded for. The precise relationship I have no idea, but I think it could follow. I feel like I read a paper about this idea back when Bitcoin was new, but it escapes me now.

EDIT: Found it, dates from 2013 which puts things into interesting perspective: https://bitcoinsurvey.wordpress.com/2013/04/08/what-is-the-r...

Re: Bitcoin Makes Even Smart People Feel Dumb

#12
What's hard to understand about the fork?

Bitcoin is an equation. A mathematical specification of how much bitcoins are there at any given moment of time, how new blocks are added to the chain, which sequence of blocks is accepted to be authoritative, etc. This is why it is a work of genius. An equation can't be hacked, unless you can challenge underlying mathematical assumptions, which is somewhat hard to do.

However, you can't run an equation on its own. You need an implementation, which actually runs calculations in the equation ("mining", verifying transactions etc). Technically, anybody can write their own implementation of the Bitcoin equation for running the blockchain, substituting their own parameters (e.g. maximum block size, how often the blocks are generated, the reward amount etc.) I can write a Bitcoin client today where new blocks will be attached to the chain the way I want it to. Giving me free money, for example. Or increasing the block size to shovel more transactions in. However, the Bitcoin network consists of many thousands of clients (A.K.A. "full node" clients). They have to accept my blocks to consider them valid, and sign the acceptance, and they won't accept anything that is not hardcoded in their implementation. tl;dr I (or anybody else) can fork Bitcoin today -- the only idea is that I will have hard time to persuade others to accept my fork. And without acceptance, anything stored or transacted in this fork will have no value.

However, some people manage to persuade others to run their fork as it has some feature some see as valid. As they are accepted by some people, they start to have value (and can be bought and sold by gamblers). However, more often than not, these forks fail to catch traction and deemed to obscurity, and as their user base diminishes, so it their value.

Re: Bitcoin Makes Even Smart People Feel Dumb

#13
post #8

The hard part here is market making. Market making is almost pure game theory, and unless you worked at a big market making trading house (i.e. Goldman, JP Morgan, etc) the learning curve can be really expensive. In this type of work, it's not that bitcoin is making people feel dumb, it's that the smartest people playing in Bitcoin are making money at the expense of everyone else. There are a lot of really smart peop…

So are other currencies. FX market is strange, to say the least.

Re: Bitcoin Makes Even Smart People Feel Dumb

#14
post #2

Hyperbole - it's not really that hard. But it uses maths, so maybe not everybody has the stomach to try to understand it.

It's not only the math involved in the creation of a bitcoin, there's also economics and networking and psychology involved. Granted, most people don't understand how money really works, but grasping a dollar bill in your wallet is easier than the a virtual something on some virtual place. See? I even feel dumb trying to explain why people feel dumb.

Sure - the economic dynamics and valuation are complicated (I don't understand them either), but I don't think that is what the article was talking about.

The tech is fairly simply, at least the principles. As simple as basic cryptography, anyway. And most people use that on a daily basis.

Re: Bitcoin Makes Even Smart People Feel Dumb

#15

When we say we "understand money" we mean we know how to spend it, aquire it and store it. When someone says they "understand bitcoin" it means grappling with cryptography, mining, ledgers, economics, game theory, fiat currencies, deflation, dapps, etc. etc. Very few people need to really understand all of that to "get" bitcoin, mainly because most of the use cases aren't figured out. Most people are overthinking at…

> Very few people need to really understand all of that to "get" bitcoin

Except when a fork comes, or why control of 51% of the hashing power is bad.

Re: Bitcoin Makes Even Smart People Feel Dumb

#16
Well, bitcoin makes people who think that they are smart, realize that they are way less smart than they thought they were. The author understands that he could impossibly understand the underlying mechanics of bitcoin. Hence, he came to realize that there must be other people, who are substantially smarter than he is.

Re: Bitcoin Makes Even Smart People Feel Dumb

#17

Well, bitcoin makes people who think that they are smart, realize that they are way less smart than they thought they were. The author understands that he could impossibly understand the underlying mechanics of bitcoin. Hence, he came to realize that there must be other people, who are substantially smarter than he is.

smart or intelligence is not a scalar.

Re: Bitcoin Makes Even Smart People Feel Dumb

#18
Author is projecting. Replaced "me" with "people" in writing this. Considered himself smart; tried to wrap head around Bitcoin, but lacks math/cs/finance background, and or curiosity to dig below surface level hype or read blockchain-y things beyond what's written by other lazy journalists ...? (now I'm projecting).

Doesn't 'get it'.

Plenty of people understand Bitcoin. Go read the whitepaper.

Re: Bitcoin Makes Even Smart People Feel Dumb

#19

When we say we "understand money" we mean we know how to spend it, aquire it and store it. When someone says they "understand bitcoin" it means grappling with cryptography, mining, ledgers, economics, game theory, fiat currencies, deflation, dapps, etc. etc. Very few people need to really understand all of that to "get" bitcoin, mainly because most of the use cases aren't figured out. Most people are overthinking at…

> Very few people need to really understand all of that to "get" bitcoin Except when a fork comes, or why control of 51% of the hashing power is bad.

Only miners and investors should care about this. Normal people should be able to use Btc without worrying about it.

Re: Bitcoin Makes Even Smart People Feel Dumb

#20

When we say we "understand money" we mean we know how to spend it, aquire it and store it. When someone says they "understand bitcoin" it means grappling with cryptography, mining, ledgers, economics, game theory, fiat currencies, deflation, dapps, etc. etc. Very few people need to really understand all of that to "get" bitcoin, mainly because most of the use cases aren't figured out. Most people are overthinking at…

> Very few people need to really understand all of that to "get" bitcoin Except when a fork comes, or why control of 51% of the hashing power is bad.

The two examples you provided can be understood at a lay level which is sufficient in most situations that you'd find yourself in. Now, if you were attempting to build a product or service that interacts with the Bitcoin protocol, of course you'd have to have a much wider and deeper set of knowledge of how the protocol selects the best chain and the different attack surfaces that exist.

I don't understand the systemic nuances of the SWIFT payment system but I was able to conceptually understand how it works without too much trouble.

Post reply on HN