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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

#111

Post by lisper »

yellowapple wrote: post #87
lisper wrote: post #78

Earlier quoted context omitted.

> Bitcoin Cash is not Bitcoin That's true, but that is just branding. The values of fiat currencies are bound to the economies of their sponsoring countries. The value of cryptocurrency is not bound to anything except the name, so if enough people start to believe that "bitcoin" and "bitcoin cash" are interchangeable, it will become so. And the only reason this is not a problem right now is because the BTC/BTCC split…

Right, but that necessitates that people actually do believe two sides of a given split chain to be interchangeable. That's not the case for Bitcoin and Bitcoin Cash; they may have a shared transaction history in their ledgers up to the point where their chains split, but after the split there is no way to turn BTC into BCH or otherwise reconnect the chains. Accordingly: > Had it not been, had both sides insisted on…

> Rogue chains calling themselves "Bitcoin" happen all the time

That's news to me. Reference?

Re: A systematic critique of Bitcoin's value proposition

#112

Post by jwestbury »

rattlesnakedave wrote: post #92
arka2147483647 wrote: post #60

Earlier quoted context omitted.

But there has been changes to the way bitcoin works, and even forks because of it, eg bitcoin cash. Now, irrelevant of what you think of those, the community can, and has changed the way Bitcoin works. And, as such, it can also change what math it uses, if it so wishes. So the math ultimately depends on the community.

You get to decide what fork you run.

Yes, but if nobody else values the output of your particular fork, it hardly matters.

The community ultimately chooses which fork you run if you want to actually participate in a monetary system. Really, that's all this argument is -- any currency exists within a monetary system that is willed into existence by its participants, and no amount of maths will ever change that. It's not like gold had much use for the majority of its history, and yet it became the dominant currency.

Re: A systematic critique of Bitcoin's value proposition

#113

Post by jwestbury »

TigerTeamX wrote: post #42
paulgb wrote: post #21

Something I've always considered a curious decision about Bitcoin is the decision for halvings to occur as discrete events rather than as an exponential decay occurring on each block. Having them be discrete events is probably easier for someone to verify by eyeball, I guess, but it has the disadvantage that it creates moments in time where some large portion of the hardware in the market can suddenly no longer mine…

This is the only argument I have found against Bitcoin that have substance. I can see this as a problem, but so far there have always been enough miners that was profitable. One day that might not be true though - hopefully it wont. One reason for the halving cycle could be the way it kinda shocks the price and that makes people speculate and talk about Bitcoin like crazy. This is the perfect way to have a wrecking b…

Not the fact that the value proposition is poor because its inputs are destructive to society whilst providing questionable incremental value over existing currencies?

Re: A systematic critique of Bitcoin's value proposition

#114

Post by yellowapple »

lisper wrote: post #111
yellowapple wrote: post #87

Earlier quoted context omitted.

Right, but that necessitates that people actually do believe two sides of a given split chain to be interchangeable. That's not the case for Bitcoin and Bitcoin Cash; they may have a shared transaction history in their ledgers up to the point where their chains split, but after the split there is no way to turn BTC into BCH or otherwise reconnect the chains. Accordingly: > Had it not been, had both sides insisted on…

> Rogue chains calling themselves "Bitcoin" happen all the time That's news to me. Reference?

It's inherent in Bitcoin (like any other blockchain) being distributed; not every node is going to immediately recognize every transaction/block in the same order, and chains frequently diverge for a block or two. Usually they sort themselves out and regain consensus pretty quickly (via the so-called "longest chain rule"), which is why it ain't exactly newsworthy.

Also happens as a consequence of the node implementations being actively developed: any sufficiently-drastic change in a node's software produces such a split, wherein you end up with two chains calling themselves "Bitcoin": one consisting of the nodes which upgraded, and one consisting of the nodes which didn't. The latter is usually short-lived, but sometimes things get... messy: https://github.com/bitcoin/bips/blob/master/bip-0050.mediawi...

Re: A systematic critique of Bitcoin's value proposition

#115

Post by latchkey »

ashwagary wrote: post #105
latchkey wrote: post #51

Earlier quoted context omitted.

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.

That is why people are working on that specific problem. Badger is one with ebtc. There is also going to be people who are comfortable with the risk/reward ratio.

Re: A systematic critique of Bitcoin's value proposition

#116

Post by kasey_junk »

SilasX wrote: post #108
JumpCrisscross wrote: post #99

Earlier quoted context omitted.

> 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 mo…

I don’t know anything about LedgerX or Crypto trading but do have a fair bit of fx experience so have a few questions about what you are describing.

Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem? One that is even more systematically long crypto and one with less regulatory protections around senior debt?

Why would someone be a counterparty to this trade? It seems like they are trading a lot of downside risk to get cash equivalents upside.

I’m sure I’m not understanding something about this setup but it certainly seems worse in all ways than an exchange actually enabling more traditional shorting.

Re: A systematic critique of Bitcoin's value proposition

#117

Post by lisper »

yellowapple wrote: post #114
lisper wrote: post #111

Earlier quoted context omitted.

> Rogue chains calling themselves "Bitcoin" happen all the time That's news to me. Reference?

It's inherent in Bitcoin (like any other blockchain) being distributed; not every node is going to immediately recognize every transaction/block in the same order, and chains frequently diverge for a block or two. Usually they sort themselves out and regain consensus pretty quickly (via the so-called "longest chain rule"), which is why it ain't exactly newsworthy. Also happens as a consequence of the node implementat…

Oh, right, I remember that now. That was essentially a rental attack that happened by accident, and it was mitigated by the fact that no one was actually trying to exploit it. I think Bitcoin dodged a bullet that day.

But that was ten years ago. Has anything even remotely similar happens since then? (Other that the bitcoin-cash split, of course, which was done intentionally.)

Re: A systematic critique of Bitcoin's value proposition

#118

Post by SilasX »

kasey_junk wrote: post #116
SilasX wrote: post #108

Earlier quoted context omitted.

>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 mo…

I don’t know anything about LedgerX or Crypto trading but do have a fair bit of fx experience so have a few questions about what you are describing. Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem? One that is even more systematically long crypto and one with less regulatory protections around senior debt? Why would someone be a counterparty to…

Thanks! You're showing a lot more curiosity and honesty than JumpCrisscross.

>Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem?

They have to set the money aside for the (cash-secured) put they're writing, out of their control, so no, you don't depend on any later solvency of that counterparty to honor the put. And, as above, customer access to these assets survived even the FTX bankruptcy, since they're not recognized as exchange assets in the first place.

>Why would someone be a counterparty to this trade? It seems like they are trading a lot of downside risk to get cash equivalents upside.

Same reason anyone else sells cash-secured puts.

>I’m sure I’m not understanding something about this setup but it certainly seems worse in all ways than an exchange actually enabling more traditional shorting.

Except that you, the person taking a short position (by buying puts) actually get a payout in the worst-case scenario, and have effectively no counterparty risk. That's at least one way that it's better.

Also, I don't know what's "non-traditional" about buying puts as a means of establishing a short position. It seems that, like JumpCrisscross, you're being sloppy about the difference between short-selling (borrow an asset to sell) and a short position (any position that increases in value as the underlying decreases).

Edit: Also, one thing that bothers me here is the lack of a coherent model behind the objections. On the one hand, you both want to claim something is impossible, but when I show it is, you want to insist that that way is "worse in every way". What?

Re: A systematic critique of Bitcoin's value proposition

#119

Post by JumpCrisscross »

SilasX wrote: post #118
kasey_junk wrote: post #116

Earlier quoted context omitted.

I don’t know anything about LedgerX or Crypto trading but do have a fair bit of fx experience so have a few questions about what you are describing. Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem? One that is even more systematically long crypto and one with less regulatory protections around senior debt? Why would someone be a counterparty to…

Thanks! You're showing a lot more curiosity and honesty than JumpCrisscross. >Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem? They have to set the money aside for the (cash-secured) put they're writing, out of their control, so no, you don't depend on any later solvency of that counterparty to honor the put. And, as above, customer access to th…

> have to set the money aside for the (cash-secured) put they're writing, out of their control, so no, you don't depend on any later solvency of that counterparty to honor the put

There is no legal mechanism for them to insulate that cash from creditors.

Re: A systematic critique of Bitcoin's value proposition

#120

Post by SilasX »

JumpCrisscross wrote: post #119
SilasX wrote: post #118

Earlier quoted context omitted.

Thanks! You're showing a lot more curiosity and honesty than JumpCrisscross. >Doesn’t this just move the counterparty risk away from the exchange and onto another participant in the crypto ecosystem? They have to set the money aside for the (cash-secured) put they're writing, out of their control, so no, you don't depend on any later solvency of that counterparty to honor the put. And, as above, customer access to th…

> have to set the money aside for the (cash-secured) put they're writing, out of their control, so no, you don't depend on any later solvency of that counterparty to honor the put There is no legal mechanism for them to insulate that cash from creditors.

I guess I can't say I'm surprised by yet another confidently wrong claim on your part. This is one of the most high-profile cases of bankruptcy, where very determined creditors are hellbent on pulling out every penny from a very obvious fraud. And in this case, we already know that -- right in line with my claim -- depositors at one arm of the debtor did in fact have their deposits legally insulated from the (very extensive) creditor claims.

And yet you are claiming, in this very instance, that that is not possible, even as it already happened. You couldn't be more wrong on the facts here.

Perhaps you could have limited yourself to a lesser claim that, under specific conditions, that you enumerate from actual knowledge, depositors can't step ahead of other creditors. By being open and honest, and revealing the full basis of your belief, you could have said something at least true, even if you were (very honorably) wrong about the applicability to this particular case.

You didn't take that route. You instead went with the tried-and-true "if I say it confidently enough, I have to be right". Sigh.

In the other thread[1], you claimed I'm upset at you for your views on crypto. This is childish and false. I love to hear meaningful corrections to my worldmodel. Your comments aren't doing that. You're instead finding the most solid parts, and baselessly asserting things about them that are demonstrably false. I can't actually learn from that sophistry or meaningfully update my beliefs. No one can.

[1] https://news.ycombinator.com/item?id=35559836

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