The Guns of Bitcoin (2017) • Hacker News Board

Re: The Guns of Bitcoin (2017)

#111

Post by WorldMaker » Wed, Jul 22, 2020, 8:29 PM UTC

monokh wrote: post #109

WorldMaker wrote: post #107

Earlier quoted context omitted.

> Based on which signs or hypothetical scenario are you imagining that this whole systems turns back on itself and breaks? This is an easy one to answer. Proof of work as implemented in bitcoin is the largest, weirdest incentivized, most highly distributed preimage attack [1] ever run against any hash algorithm that we know of in human history. The history of hash algorithms suggests that humanity has yet to invent a…

Don't you think we have other problems too if Sha-2 is broken? I'm going to assume that you aren't worried about the numerous other applications where this scenario would be catastrophic? In any case, this scenario has very well been accounted for. The Bitcoin network can fork its consensus rules when such drastic requirements require it. Such as to a different hashing algorithm, and snapshotting of its previous stat…

> Don't you think we have other problems too if Sha-2 is broken? I'm going to assume that you aren't worried about the numerous other applications where this scenario would be catastrophic?

It is exactly this reason I find bitcoin incredibly scary. The catastrophe that happens if bitcoin "succeeds" in breaking SHA-2 is directly part of why I think Proof of Work is at best a waste of processing power, and at worst a catastrophe we are watching in real time.

> In any case, this scenario has very well been accounted for. The Bitcoin network can fork its consensus rules when such drastic requirements require it. Such as to a different hashing algorithm, and snapshotting of its previous state.

Which again is my point earlier: forks are natural parts of how bitcoin operates and directly a part of the underlying data structures. It doesn't exist without forks. You couldn't build bitcoin without forks. It isn't considered likely it would continue to exist in the future past certain points (including catastrophic ones) without forks. So the distinction of which fork is the "one true fork" is a political economics game, not a technical distinction in any way.

Re: The Guns of Bitcoin (2017)

#112

Post by munk-a » Thu, Jul 23, 2020, 12:08 AM UTC

paulgb wrote: post #43

munk-a wrote: post #29

Earlier quoted context omitted.

I disagree strongly here - there really is no incoming pole in the government and the outgoing pole is incredibly ineffective. The US (as an example) doesn't have the ability to effectively decrease monetary supply by simply failing to redistribute taxes - the total national wealth of the US is currently 105 trillion[1] while the total tax revenue is somewhere in the 3.5 trillion[2] range - it would take 30 years to…

> The US (as an example) doesn't have the ability to effectively decrease monetary supply by simply failing to redistribute taxes Why would it matter how quickly the government could cycle through the national wealth, which includes all private assets? The M1 money supply, at 5.2T[1] and using your 3.5T tax revenue figure, would take less than two years to cycle through. 1. https://fred.stlouisfed.org/series/M1

Very little value is in M1 and most of M1 is not cycled through the economy, the vast majority of M1 out there is used for illicit trading so I wanted to avoid touching on it too heavily in the paragraph above but there is a lot of M1 out there that won't get back to the government in a decade.

Re: The Guns of Bitcoin (2017)

#113

Post by wslh » Thu, Jul 23, 2020, 3:31 AM UTC

coralreef wrote: post #85

wslh wrote: post #78

Earlier quoted context omitted.

> Not sure I understand why you believe Bitcoin's network effects are lower than golds. The more people willing to accept a unit of Bitcoin, the more useful Bitcoin becomes. Gold is more connected to the regulated financial world than Bitcoin. The network effect is not only about user base but interrelation with other systems. Not saying that Bitcoin could not have a bigger place but it is not there yet.

I see, you're saying gold is basically more established in the current financial system. It might just be semantics, but when you say gold has stronger network effects than bitcoin, I'm imagining that an additional user provides X value to the gold system, but an additional bitcoin user only adds X-1 value to bitcoin. Which I believe isn't true, both networks probably follow the same marginal utility curves.

Tether (USDT) has more volume than Bitcoin which could mean that the network effect ironically turns to stable coins connected to fiat money taking advantage of permissionless protocols and not caring about the native assets like Bitcoin or Ethereum.

Re: The Guns of Bitcoin (2017)

#114

Post by coralreef » Thu, Jul 23, 2020, 5:58 PM UTC

wslh wrote: post #113

coralreef wrote: post #85

Earlier quoted context omitted.

I see, you're saying gold is basically more established in the current financial system. It might just be semantics, but when you say gold has stronger network effects than bitcoin, I'm imagining that an additional user provides X value to the gold system, but an additional bitcoin user only adds X-1 value to bitcoin. Which I believe isn't true, both networks probably follow the same marginal utility curves.

Tether (USDT) has more volume than Bitcoin which could mean that the network effect ironically turns to stable coins connected to fiat money taking advantage of permissionless protocols and not caring about the native assets like Bitcoin or Ethereum.

Stable coins like Tether are mostly used by large exchanges for liquidity purposes.

Retail users rarely use USDT to buy/sell goods or exchange with one another. It is also not really permissionless because you need to register with the administrators of USDT and wire a bank transfer if you ever want to convert your USDT to USD. All fiat backed stablecoins have this inherent flaw of having an intermediary party to "parent" transactions. An example of this is Tether banlisting addresses of suspected stolen coins.

Re: The Guns of Bitcoin (2017)

#115

Post by bb88 » Thu, Jul 23, 2020, 10:35 PM UTC

monokh wrote: post #100

bb88 wrote: post #93

Earlier quoted context omitted.

In history, large numbers of people have committed grievous mistakes under the notion of "It's popular so it must be the right thing." Axis powers during WWII, e.g. "You can in fact fork Bitcoin today and attempt to create a market, will your new coin be valued as a Bitcoin and derive its current ~9000 USD price?" Yes. They're called shit coins. I'll make 21,000,000 shit coins in my currency and sell you one for $9,0…

> The only difference between my offer and bitcoin is that many people are trading these magic numbers. And that is a world of difference. If I sold a Bitcoin for half the market price, anyone rational would take that offer without thinking. Your shitcoin on the other hand has no persistent or reliable market value and you would not be able to find a buyer.

Again, your argument is that it's popular, so it must be good. Illicit drugs are also popular -- but how many people have died from overdose?

Re: The Guns of Bitcoin (2017)

#116

Post by bb88 » Thu, Jul 23, 2020, 10:40 PM UTC

keymone wrote: post #99

bb88 wrote: post #93

Earlier quoted context omitted.

In history, large numbers of people have committed grievous mistakes under the notion of "It's popular so it must be the right thing." Axis powers during WWII, e.g. "You can in fact fork Bitcoin today and attempt to create a market, will your new coin be valued as a Bitcoin and derive its current ~9000 USD price?" Yes. They're called shit coins. I'll make 21,000,000 shit coins in my currency and sell you one for $9,0…

> I'll make 21,000,000 shit coins in my currency and sell you one for $9,000 What makes you think I will buy your shitcoin for $9000?

I just need one person to. And again, money need not exchange hands.

Re: The Guns of Bitcoin (2017)

#117

Post by conanbatt » Fri, Jul 24, 2020, 2:17 PM UTC

hansvm wrote: post #108

conanbatt wrote: post #86

Earlier quoted context omitted.

Currencies existed well before governments minted them. Plus the dollar was once backed by gold: you can transition from a convertible system to a fiat system, which has nothing to do with fiscal policy.

This reads like an argument, but it doesn't seem to contradict anything I said. Am I misinterpreting you? > Currencies existed well before governments minted them. Sure. Nevertheless, to accept a currency as a medium of exchange when it has no value to you personally (bank notes, gold, etc) you need to have confidence that you can exchange it to somebody else for something you do care about, regardless of who mints i…

As far as I know, there is no currency that existed because there were taxes involved, and that's certainly not the experience of the major fiat currencies.

In fact it might be otherwise: taxes are a deterrent to use currency, which is why barter is so often used by people and small businesses to avoid the tax-man today.