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A systematic critique of Bitcoin's value proposition

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Re: A systematic critique of Bitcoin's value proposition

#101

Post by overthrow »

JumpCrisscross wrote: post #100
overthrow wrote: post #88

Earlier quoted context omitted.

> a law appropriating tens of billions to create a crypto deterrent would crash prices on its own Doubt that. All that would happen is driving the industry underground or overseas. It wouldn't be the first time a government overplayed its hand and failed to acknowledge that bitcoin is a global technology. https://data.nasdaq.com/data/BCHAIN/HRATE-bitcoin-hash-rate That isn't slowing down. I have exactly 0 faith that…

> cooperate to outpace and then surpass the private sector in a chip fabrication project You move to seize it. ASICS are manufactured in China and among American allies.

Seizing overseas fabs to attack a private industry would be a historically unprecedented, diplomatically suicidal move. It wouldn't stay secret for more than an hour, and they'd have to stay and operate the fabs for years to manufacture enough chips. Then of course while that's happening, the rest of us would use that time to prepare a mitigation, not sit around on our ass for 5 years waiting.

But sure, I guess they could try.

Re: A systematic critique of Bitcoin's value proposition

#102

Post by mr_woozy »

pcthrowaway wrote: post #77
dxhdr wrote: post #71

Earlier quoted context omitted.

> What does it do better than other networks? Provides you complete control over your money. You can send any amount to whoever you want, whenever you want, with no third parties capable of approving, disapproving, or delaying the transaction. Obviously, there are downsides to that. But that's what it does better.

That completely ignores the question. How does it do this better or differently than Ethereum, or Solana, or Avalanche, or Polygon.

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Re: A systematic critique of Bitcoin's value proposition

#103

Post by mr_woozy »

JumpCrisscross wrote: post #83
overthrow wrote: post #34

Earlier quoted context omitted.

Remember that general-purpose computers use orders of magnitude more energy than specialized hardware for the same task. So if bitcoin uses (say) 0.05% of energy globally, matching the hashrate using general-purpose hardware (assuming an alternate reality where the planet has enough hardware for someone to attempt this) would require something like 5% of global energy usage. Diverting that much energy away from the r…

> would require something like 5% of global energy usage Fair enough, supercomputers + cloud was optimistic. They can’t do 40 zettaflops. Half of that, worst case, we could, though not triviallt. For bursts at a time. (Worst case because the math supercomputers designed to break encryption do is similar to that required to break Bitcoin.) Practically speaking, were we to do this, we’d procure the ASICs. (And target i…

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Re: A systematic critique of Bitcoin's value proposition

#104

Post by bb88 »

bloppe wrote: post #95
thesausageking wrote: post #18

> it means that bitcoin is ultimately not, as is often claimed, protected by mathematics or physics or even economics, but rather by the social cohesion, cooperation, and (dare I say it?) trustworthiness of the mining community This isn't a dig. Bitcoin's value does come from the community and authority of the chain. If it were just math, you could fork Bitcoin and have a competing currency that had the exact same co…

Bitcoin is very much protected by math. Transactions require cryptographic signatures. That's math! Obviously not talking about the Nash equilibrium but still relevant. The important distinction is who (or what) is being trusted. It's always possible that a compromised bank employee commits fraud against me, or a capricious treasury secretary causes runaway inflation with stupid monetary policy (this was actually one…

There's several aspects to trust in Bitcoin.

1. The miners won't just up and leave, or are regulated out of existence.

2. The developers (and/or miners) have your best interest (and not theirs) at heart.

3. Hodlers won't suddenly do a run on BTC bringing down the value dramatically. Diamond Hands often turn into Bag Holders (with out diamonds in the bag, btw).

4. The government won't prosecute you for holding BTC or exchanging it for goods and services, or say, dollars.

5. There's nothing propping up the value of BTC other than the good will of hodlers. There's no FDIC, Federal Reserve, or other large entity that can inject capital to stabilize the price.

6. Your public wallet tied to your real name/bank account won't get tied to a money laundering/human trafficking case accidentally. Why? Because you accepted BTC from a known bad wallet!

Re: A systematic critique of Bitcoin's value proposition

#105

Post by ashwagary »

latchkey wrote: post #51
0zemp1c wrote: post #30

misses out on the single biggest threat to BTC Western governments simply outlaw its use and ownership without the USD, there really isn't even a USA, Western governments live and die by their fiat currencies outlawing it would not be that hard, confiscate all Coinbase assets would be an easy first step

The single biggest threat to BTC isn't that. It is tokenized BTC. As soon as enough people realize that there is a lot more utility to bitcoin, as a tokenized version, on other networks, they might stop using bitcoin itself. I did that years ago.

>As soon as enough people realize that there is a lot more utility to bitcoin, as a tokenized version, on other networks, they might stop using bitcoin itself.

That is extremely unlikely due to the introduction of counterparty risks that Bitcoin users are growing more careful to avoid.

Re: A systematic critique of Bitcoin's value proposition

#106

Post by sowbug »

paulgb wrote: post #84
bufferoverflow wrote: post #46

Earlier quoted context omitted.

Can you demonstrate this at all? Bitcoin has been mined for over a decade and never came even close. When miners drop off, mining difficulty decreases. If you're talking about a nuclear war scenario, we will have much bigger problems than bitcoin mining being slow.

> Bitcoin has been mined for over a decade and never came even close. The problem with using past performance of the Bitcoin network as an indicator of future performance is that the exponential nature of halvings means that each decade is a vastly less subsidized environment for the network than the one that came before it. Over the last decade the network has given ballpark 4.2mm BTC to miners for their services; t…

Transaction fees are supposed to compensate for the decline in newly minted coins. Using very bad back-of-the-envelope math, transaction fees are about $2 right now, with about 2,300 transactions per block. That works out to a couple billion dollars over the last 10 years, which isn't peanuts.

(Again, bad estimate that uses USD and today's numbers as if they'd been the same since the beginning.)

Re: A systematic critique of Bitcoin's value proposition

#107

Post by anonymouskimmer »

danans wrote: post #85
overthrow wrote: post #67

Earlier quoted context omitted.

Sounds a lot like VTSAX. But somehow people still buy food and shelter even though they could put their money in VTSAX instead and get 7% returns. Either way less spending sounds good to me. We could use a world with more saving and less consumerism.

> But somehow people still buy food and shelter even though they could put their money in VTSAX instead and get 7% returns. Silly people, needing a roof over their heads and nutrition. > We could use a world with more saving and less consumerism. Everyone saving more would be disastrous for global human welfare. It won't preserve resources in any meaningful way and would set society back generations. If that's your g…

Right, money needs to circulate to everyone so that people can afford to spend their lives on other than subsistence work. Saving primarily benefits the saver (secondarily those who take out loans).

Re: A systematic critique of Bitcoin's value proposition

#108

Post by SilasX »

JumpCrisscross wrote: post #99
SilasX wrote: post #89

Earlier quoted context omitted.

It doesn't matter -- LedgerX doesn't own those Bitcoin or the customer deposits and never did. Even if the business fails (from e.g. being in debt and the fees drying up), customer assets are held separately from their own assets and would be available for withdrawal. Since you pretty clearly didn't research before posting, you may not realize that FTX bought LedgerX (in late 2021), and that owner did become insolven…

> customer assets are held separately from their own assets and would be available for withdrawal This protects cash and crypto at LedgerX. (Assuming it has few senior creditors.) Shorts are different. If you place 1 BTC short with LedgerX, it doesn’t hold 1 BTC of cash. Instead, it maintains claims on others. Those claims become unlikely to pay in a crash. That’s LedgerX’s counterparty risk, which does it in, which…

>If you place 1 BTC short with LedgerX

LedgerX doesn’t support short-selling or margin trading. If you buy a put (the suggestion I made in my original comment), the counterparty sets aside the cash to honor it.

(I think you’re confusing short-selling with a short position, but that doesn’t sound like mistake someone with your bio would make.)

Are you done being confidently incorrect, or can I expect you to pollute more discussions with baseless claims you know nothing about?

Bookmarking to warn future HNers what they’re dealing with.

It’s fine to make mistakes. It’s not fine to be that wrong, with that level of confidence.

Re: A systematic critique of Bitcoin's value proposition

#109

Post by jerry1979 »

lisper wrote: post #79
jerry1979 wrote: post #76

As far as I can tell, for most users a 51% would at worst look like their transaction didn't "go through". This is because wallet software waits for the system to mine a certain number of blocks before showing the final wallet balance. A 51% attack that is 1 block deep may actually be a good thing for bitcoin because it would cement the idea of needing to wait for confirmations in the minds of users. In this way, 51%…

No, it's much worse than that. The nightmare scenario for most people is thinking that a transaction for which they are the recipient did go through and then later have it turn out that it didn't, and the money actually went somewhere else. Because of this, the net effect of a 51% attack would be to very quickly destroy confidence in the system for the duration of the attack (at least).

Wouldn't that nightmare scenario mean that an attacker would need to perform a 51% attack 7-ish blocks deep?

Re: A systematic critique of Bitcoin's value proposition

#110

Post by lisper »

jerry1979 wrote: post #109
lisper wrote: post #79

Earlier quoted context omitted.

No, it's much worse than that. The nightmare scenario for most people is thinking that a transaction for which they are the recipient did go through and then later have it turn out that it didn't, and the money actually went somewhere else. Because of this, the net effect of a 51% attack would be to very quickly destroy confidence in the system for the duration of the attack (at least).

Wouldn't that nightmare scenario mean that an attacker would need to perform a 51% attack 7-ish blocks deep?

That's right. To be effective, the attack would have to be sustained for at least an hour, maybe more.
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