Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Bitcoin Matters

mobile.nytimes.com

Post reply on HN
Print view View original

71–80 of 268 posts

Re: Why Bitcoin Matters

#71

Post by Guvante »

> The practical consequence of solving this problem is that Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.

But bitcoin doesn't do this at all. This is what makes Bitcoin amazing, but it doesn't solve this issue yet. Bitcoin is interesting since it is a minor revelation from providing this, but it seems incorrect to assert that this is the cool thing about Bitcoins right now.

Re: Why Bitcoin Matters

#72

Post by mr_luc »

thinkcomp wrote: post #27
minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

This is absolutely correct. One other key point: Marc and his portfolio companies (among others) are deliberately evading regulations. Those regulations have real costs, which is why they are worth evading at all. Were companies like Coinbase to actually comply with U.S. law, they'd each have to spend $20 million on money transmission licenses and associated bonds (not including legal fees). These costs are not prese…

Huh. An 'unfair competition' lawsuit by someone with a nominally competing payment product ('FaceCash') ...

After reading your CrunchBase profile, where I saw that you have your own competing product, and looking at the list of defendants in that lawsuit, may I just say that while I don't bear you any ill will (and in fact I wish you well), I don't hope that you win this.

That doesn't mean much since I base that opinion on so little, but here's my thinking, in case it's useful to you in communicating to others:

We need innovation in this space in the worst way possible. The VCs are showing up, and I'm nervous about their interaction with BitCoin. But however unsavory or unfair their motives or tactics, in the fight between traditional 'money transmitters' and bitcoin, the VCs find themselves on the side of the angels, fighting against premature regulation of a potentially world-changing technology.

BitCoin is a completely new and different thing, and it provides a lot of capabilities to companies that use it that those companies would otherwise have to do themselves -- and that central banks have to do, as well.

Sure, if BitCoin didn't exist, you'd have to do a lot of things yourself that the BitCoin network now makes trivial. But why should those companies be forced by law to pretend that BitCoin and its network don't exist? And don't have the properties that they have?

Re: Why Bitcoin Matters

#73

Post by simondlr »

nhaehnle wrote: post #61
hooande wrote: post #40

Andressen is making bitcoin out to be a decentralized paypal, when it was more intended to be a form of currency. It makes more sense as a long term investment or speculative bet than it does a way to transfer money from point A to point B. An analogy would be if person A and person B conducted a transaction by converting their money from dollars to euros or vice versa (assuming A and B are both in the same country).…

The micropayments claim is a red herring. If Bitcoin were to actually take off for micropayments, it would no longer scale, and/or the operation of Bitcoin nodes would be limited to people with very serious hardware. At that point, we're back to the game that is currently being played by banks, just with different players in charge. So it's understandable that many people hope that such a transition will happen and t…

Micropayment channels do provide very small payments without flooding the network: https://code.google.com/p/bitcoinj/wiki/WorkingWithMicropaym...

Re: Why Bitcoin Matters

#74

Post by tripa »

venomsnake wrote: post #65
Lambdanaut wrote: post #49

Earlier quoted context omitted.

Define "value", because I'm pretty sure that 99% of globally used currencies won't have this magical "intrinsic value" that you speak of.

The usd has intrinsic value - it saves you from years in jail if you cough up as much as Uncle Sam requires of you every year.

You've only claimed it had value to Uncle Sam here, we're far from “intrinsic”.

Re: Why Bitcoin Matters

#75

Post by wmf »

jellicle wrote: post #37
dragonwriter wrote: post #18

Earlier quoted context omitted.

> But fiat currencies are simply currencies that aren't backed by collateral. That's the looser definition, the narrower one (from which the name comes) is that that it is currency not backed by collateral but backed by a government's designation of it (by fiat) as legal tender. Given the absence of significant non-representative non-government-issued currencies prior to modern cryptocurrencies, the looser definition…

So what's the term for something shadier than fiat currency, something not backed by collateral NOR by government dictate? It should convey all the scorn directed at "fiat currency", but moreso.

Cryptocurrency.

Re: Why Bitcoin Matters

#76

Post by gojomo »

tptacek wrote: post #7
eatitraw wrote: post #6

Earlier quoted context omitted.

> I don't understand this. Someone is taking the risk right now. Correct. > Currently it's the exchanges and merchants directly, because they rely on the exchanges. Incorrect. There is the solution: https://bitpay.com/ , which automatically does conversion for a small fee. Buyers pay in bitcoin, but sellers receives fiat money(e.g. USD). The risk is taken by bitpay, sellers always receive fixed amount in fiat money,…

"Fiat money" is as I've seen it used a political message, used most often to assumptively introduce the idea that government-backed currency is suspect. But fiat currencies are simply currencies that aren't backed by collateral. To the extent that you believe it's a currency and not a tradable instrument that happens to have interesting barter and liquidity characteristics (right now), Bitcoin is a fiat currency as w…

'Fiat money' in derivation and use means something more and somewhat different than simply 'unbacked by other collateral'. For example, the word 'fiat' alludes to a decree – as in a legislative or military 'fiat' – that the money is valuable and should (or must) be used.

It so happens that the biggest implementation change between plain 'money' (which for a while implied collateral backing) to modern 'fiat money' was the removal of official asset backing, leaving only the government decrees that such money was 'legal tender'. And the theory of why this works relies on the traditional role of government, to enforce behaviors or collect taxes. (Academics discussing 'fiat money' use the term simply as a contrastive category, without the political-implications-of-suspicion you've seen elsewhere.)

But Bitcoin doesn't map easily into the 'fiat money' categorization, either way. No legal authority bootstrapped Bitcoin into money by decree, nor requires its use. Bitcoin is not redeemable by some issuer for some other backing asset... but by Bitcoin's design there is no issuer who could even contemplate such a policy.

And also by design, Bitcoin's limited-supply and counterfeit-resistance make it potentially self-backing, in a manner similar to gold. Gold was the traditional backing for non-fiat monies... and even though gold could circulate as currency, gold was not itself backed by other collateral. The reductionist definition of 'fiat money' as "simply currency that isn't backed by collateral" would make not just Bitcoin but also circulating gold a 'fiat money' – a fairly useless categorization at odds with historical meaning.

So is Bitcoin a 'fiat money'? I could buy the answer 'no' – Bitcoin doesn't affirmatively fit the old category or usage. I could even buy the answer 'mu' – it's so different that it neither fits nor not-fits the old category, so the question is meaningless or irresolvable. But the answer 'yes' requires both an oversimplification of the 'fiat money' term, and premature conclusions about whether Bitcoin will achieve its design goals.

Re: Why Bitcoin Matters

#77

Post by thinkcomp »

mr_luc wrote: post #72
thinkcomp wrote: post #27

Earlier quoted context omitted.

This is absolutely correct. One other key point: Marc and his portfolio companies (among others) are deliberately evading regulations. Those regulations have real costs, which is why they are worth evading at all. Were companies like Coinbase to actually comply with U.S. law, they'd each have to spend $20 million on money transmission licenses and associated bonds (not including legal fees). These costs are not prese…

Huh. An 'unfair competition' lawsuit by someone with a nominally competing payment product ('FaceCash') ... After reading your CrunchBase profile, where I saw that you have your own competing product, and looking at the list of defendants in that lawsuit, may I just say that while I don't bear you any ill will (and in fact I wish you well), I don't hope that you win this. That doesn't mean much since I base that opin…

There's a lot of complexity here. Aside from the list of defendants, you may find some of the lawsuit filings of interest. And you may be surprised as to which companies are really for and against over-regulation of the payments space.

Re: Why Bitcoin Matters

#78

Post by vladd »

Guvante wrote: post #71

> The practical consequence of solving this problem is that Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to over…

The reason I feel bitcoin is a scam is due to such misunderstandings. Bitcoin is not what makes any of this possible, the research happening for 20+ years in the background is.

Bitcoin is just a marketing term, a specific implementation of those principles that derives its power just from the number of clients installed across the world with it. All the arguments that Andreessen gave are not Bitcoin's, but are rather characteristic for all altcoins out there.

When you leave the research out, all you end up with is a term which denotes the first runner in a long-tailed race - http://coinmarketcap.com/ . And when you compute the long-term value, being today's winner of the race in terms of marketing and clients user-base is totally different than the open-sourced research that happened and what Andreessen invoked.

Fiat currency is sustained by our obligation to pay taxes in it and the legal tender notion that the law offers to it. Bitcoin is not offering such uniqueness, nor in the law nor by being the only system which provides the features involved in the article. It's only power comes from the specificity of its installed client-base, and anyone who sustains otherwise is either too less technical to notice the difference or comes close to border-line fraud to manipulate its interest in this bubble, at least in my book.

Re: Why Bitcoin Matters

#79

Post by plock »

ye wrote: post #63
pyvpx wrote: post #46

Earlier quoted context omitted.

does bitcoin have an intrinsic value? if so, what?

Does dollar have an intrinsic value? Actually, can you even define "intrinsic value" without going in circles or defining it simply as current value?

If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes.

Re: Why Bitcoin Matters

#80

Post by sigil »

Bitcoin is the first practical solution to a longstanding problem in computer science called the Byzantine Generals Problem.

Wait, isn't Paxos arguably the first practical solution to BGP? [0] [1] It's been in production use at Google since at least 2006. [2]

Furthermore, Paxos actually has a proof that timely consensus will be reached. Do we have the same level of rock-solid mathematical certainty about Bitcoin yet? The Eyal-Sirer paper [3] from late 2013 raised some concerns about a new mining strategy that might lower the attack threshold from 50% to 33%. Ed Felton's group at Princeton responded with some interesting analysis from game theory [4], but AFAIK there is no rigorous proof yet that the selfish mining equilibrium isn't a real threat.

If Bitcoin is The Way of the Future (I hope it is), we need to be sure about these things. Hand-waving statements about how Bitcoin isn't vulnerable because no one has found an exploit yet [5] are ridiculous and dangerous.

[0] http://en.wikipedia.org/wiki/Paxos_(computer_science)#Byzant...

[1] http://read.seas.harvard.edu/~kohler/class/08w-dsi/mazieres0...

[2] http://research.google.com/archive/chubby.html

[3] http://arxiv.org/pdf/1311.0243v2.pdf

[4] https://freedom-to-tinker.com/blog/felten/bitcoin-isnt-so-br...

[5] https://twitter.com/cdixon/status/412447615331360768

Post reply on HN