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Cryptocurrency in the 2020s

blog.coinbase.com

241–250 of 278 posts

Re: Cryptocurrency in the 2020s

#241
post #156

Earlier quoted context omitted.

> No vendor for your products is accepting these magical tokens. No one in the economy except vanishingly small fractions accept digital tokens for trade. MakerDAO has a list of vendors who accept Dai today [1]. The list also contains a number of payment processors that enable businesses to accept Dai. It's true that it's not widely used now, but every product has to start somewhere. I don't think I'm going to be get…

The products being sold by vendors that accept these tokens still price their products in real currencies, and I'm assuming they immediately exchange it as soon as the transaction completes. With that in mind, accepting cryptocurrencies is just a technicality and doesn't reflect any acceptance of it as a real currency. Are there any vendors who actually price their products in a cryptocurrency?

> With that in mind, accepting cryptocurrencies is just a technicality and doesn't reflect any acceptance of it as a real currency.

As a currency sure, but it reflects acceptance as a means of exchange. There are actually big segments of the crypto community who find the latter much more important

Re: Cryptocurrency in the 2020s

#242
post #112

Earlier quoted context omitted.

> It places Bitcoin on the side of personal freedom and on a collision course with some of the world's biggest governments, including the US. And until and unless you can use it to purchase the goods and services needed for daily life, and the military and police forces needed to secure the supplies lines of those, it will be at best a theoretical form of personal freedom. Even if Bitcoin doesn't rely on trust, the r…

Not sure I understand how the military is going to stop individuals from exchanging goods within a country, are you suggesting the US/Chinese/Some other military would stop the flow of everyday goods into its own country to prevent Bitcoin transactions?

If the volume of crypto currency transactions ended up becoming a threat to the functioning of the state (through loss of the power of taxation), then yes.

But anyways, isn't that pretty much the anarcho-capitalist vs statist conflict that cryptocurrencies are ultimately trying to aim us towards?

Re: Cryptocurrency in the 2020s

#243
post #242

Earlier quoted context omitted.

Not sure I understand how the military is going to stop individuals from exchanging goods within a country, are you suggesting the US/Chinese/Some other military would stop the flow of everyday goods into its own country to prevent Bitcoin transactions?

If the volume of crypto currency transactions ended up becoming a threat to the functioning of the state (through loss of the power of taxation), then yes. But anyways, isn't that pretty much the anarcho-capitalist vs statist conflict that cryptocurrencies are ultimately trying to aim us towards?

Yes meaning the military would starve a country to root out crypto users? In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)?

Sorry if I'm completely misunderstanding your argument, but having trouble reading it in a different way.

Re: Cryptocurrency in the 2020s

#244
post #217

Earlier quoted context omitted.

It doesn't matter what Satoshi said five years ago, it matters what he would say now, given what we've learned about Bitcoin since. His old opinions are less and less informed each year. Increasing block size utilization has series tradeoffs for decentralization, privacy and reliability. Each year we learn and understand those tradeoffs better. Pro block-size increase people never seem to directly address them though…

What you meant to say is the propaganda has tried, and quite successfully, to make his opinions seem less informed each year. It's funny you say that pro block-size increase people don't understand the decentralization, privacy and reliability trade-off, while the people against a block-size increase have never defined or quantified these trade-offs. And very often they also have the notion that "everyone must run a…

It’s a complex socio-economic-technical system, which probably can’t be perfectly quantified. Same as with the weather or the larger economy. We can understand it to some degree, but lack of perfectly predictive models does not invalidate these concerns, as you imply.

“Everyone must run a full node” is aspirational but not realistic. It’s nevertheless extremely valuable to continue working on ways of reducing the expense of running full nodes. MimbleWimble, Coda and others are doing a good job of exploring that problem space, as are some projects in Bitcoin that may take longer deploy.

When HN first started discussing Bitcoin almost a decade ago, the smartest skeptics here main objection was the obvious one that a distributed database where all the data is replicated across every node and which grows infinitely is likely not viable. They were right then and right now, it’s a hard problem and arguably the main existential risk to Bitcoin.

Throwing caution to wind so Bitcoin can have fast payments Now at the expense of failing at sound money later is short-sighted and irresponsible.

Re: Cryptocurrency in the 2020s

#245

Earlier quoted context omitted.

> The point of bitcoin is that everyone should have a copy of every transaction (excluding lightning network transactions). Is that the point of bitcoin? Satoshi said: > Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12KB per day. Onl…

> (He also didn't say anything about "lightning network transactions".) Correct. I'm not going by what Satoshi said, but by what development the bitcoin core team is aiming to create now. > If blocks had been 10 times bigger, the blockchain would still be less than 3 TB Correct. The aim of the project is to keep it as small as possible. 3 TB may not seem prohibitive today, but that's because there's hardly been any u…

So you admit that increasing the block size by 10x would solve the current congestion/fees problem without needing the complexity and changed incentive structure of the Lightning network, and that bitcoin doesn't compete with Visa/Mastercard yet so it doesn't need a 30 TB blockchain (which would fit on two hard drives, which many consumers have).

To give an analogy, it's like saying that there should be a law limiting people to only buying 5 books, because if there wasn't a limit then someone could buy a quadrillion books, which would require cutting down all the trees in the world. You're trying to prevent a problem that won't exist, by introducing a restriction that causes a very real problem instead.

Re: Cryptocurrency in the 2020s

#246
post #242

Earlier quoted context omitted.

If the volume of crypto currency transactions ended up becoming a threat to the functioning of the state (through loss of the power of taxation), then yes. But anyways, isn't that pretty much the anarcho-capitalist vs statist conflict that cryptocurrencies are ultimately trying to aim us towards?

Yes meaning the military would starve a country to root out crypto users? In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)? Sorry if I'm completely misunderstanding your argument, but having trouble reading it in a different way.

> In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)?

The state will take over the entire supply chain to ensure that it transacts in a currency that it controls, crypto or otherwise.

Without that, the shared physical and legal infrastructure that supply chain depends on would cease to exist, and with it the supply chain.

Individuals, or the small communes that act financially as individuals in the crypto based trading system would have to trade in the simplest raw materials and finished products would be all have to be made hyper locally. Otherwise what entity would secure the transit of high value finished goods from supplier to customer?

I understand that it's a vision of the future that many people relish for its "freedom" from the state (but not so much from the local tribe). But universal crypto based transactions are not a drop in replacement for what we have now that keeps everything else the same. They come with their own radically different future-primitive vision for the world.

Re: Cryptocurrency in the 2020s

#247
post #112

Earlier quoted context omitted.

> It places Bitcoin on the side of personal freedom and on a collision course with some of the world's biggest governments, including the US. And until and unless you can use it to purchase the goods and services needed for daily life, and the military and police forces needed to secure the supplies lines of those, it will be at best a theoretical form of personal freedom. Even if Bitcoin doesn't rely on trust, the r…

Not sure I understand how the military is going to stop individuals from exchanging goods within a country, are you suggesting the US/Chinese/Some other military would stop the flow of everyday goods into its own country to prevent Bitcoin transactions?

> Not sure I understand how the military is going to stop individuals from exchanging goods within a country

States stop the exchange of goods within, into, or out of their jurisdiction of types or in manners not sanctioned by the state all the time, it's called “law enforcement”, and either the military or paramilitary police forces or both are often involved in it. It's never airtight, but it doesn't have to be to have a big effect.

Re: Cryptocurrency in the 2020s

#248
post #246

Earlier quoted context omitted.

Yes meaning the military would starve a country to root out crypto users? In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)? Sorry if I'm completely misunderstanding your argument, but having trouble reading it in a different way.

> In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)? The state will take over the entire supply chain to ensure that it transacts in a currency that it controls, crypto or otherwise. Without that, the shared physical and legal infrastructure that supply chain depends on would cease to exist, and with it the supply chain. Individuals, or the small commune…

Taking over the entire supply chain is completely impossible though, black markets will always exist, and not just for simple raw materials.

Another aspect of crypto is the ability to simply leave the oppressor's territory, taking your money with you.

I'm absolutely not saying this is a perfect solution, or that government is powerless in this situation, but it seems hand wavey to say they'll just seize control of every economic transaction. That's a VERY difficult thing to do.

Re: Cryptocurrency in the 2020s

#249

Earlier quoted context omitted.

Well, first, "censorship-resistant" doesn't imply "censorship-proof". Second, I don't think we can conclude what would happen if China tried to censor. China certainly has 51% attack capability against Bitcoin, but the only implication that of that which is clear to me is that they could potentially execute double-spends. Using 51% attack capability to orphan transactions is different. With a double spend, there's tw…

>You know the transaction exists, and at some point (i.e. after a certain number of blocks), if the transaction isn't included in the chain, you can conclude with reasonable certainty that the transaction is being intentionally orphaned. This allows you to reject the chain that doesn't include the transaction as invalid, and choose the longest chain that does include it. So you are going to reorg after many blocks (e…

It delays finality, but it doesn't kill it. Reorgs are already possible, this is why we currently wait for some number of confirmations (6 last time I checked) to say a transaction is complete. Adding the condition of requiring all transactions you've received to be included in a chain means that you need to wait for more confirmations to reach the same level of confidence that the chain is final, but it doesn't mean finality will never happen.

With a perfect network where everyone receives all transactions immediately, and where transactions are prioritizes for inclusion by transaction fee first, and order received second, we can conclude after ONE block whether a transaction with a high enough transaction fee is being excluded. But the network isn't perfect. There's some network analysis to be done here to gather probabilities, but for the sake of simplicity, let's say the network is reliable enough that we can reasonably conclude whether a transaction is being excluded in 5 blocks (I think the number is actually lower, but let's go with 5 to be safe).

So basically, what we're saying here is that if we reject the fifth block that doesn't contain a transaction after we see it, then we're forcing a reorg.

The attack you're describing happens when someone waits for China to start ignoring a transaction, then attempts to use the resulting reorg to execute a double spend.

Last time I checked, the recommendation was to wait for 6 confirmations to prevent double spends, because it would be unreasonable for an attacker to attempt to catch up to the main block chain when the main blockchain has a 6-block head start. But if China forces a reorg after 5 blocks, then the attacker attempting to execute the double spend only needs to catch up 1 block.

Trivially, all this means is that we have to wait for 5+6 = 11 confirmations to achieve the same level of confidence that we got from 6 confirmations when China couldn't force a reorg.

But wait: China actually can't force a reorg that quickly with 100% probability. In order to force this reorg, China has to mine 5 blocks in a row. China only has 66% of hashing power, so the probability of China mining a given block is P=0.66. The chances of China mining N blocks in a row is P=0.66^N. So the probability of China even being able to force this reorg is P=0.66^5=0.13.

That's not nothing, but that's a lot of effort for China to put in just for a 13% chance of delaying a transaction. Given China can't actually censor the transaction, only delay it, why would they spend all those hashing cycles to do this? The incentives don't line up.

Re: Cryptocurrency in the 2020s

#250
post #246

Earlier quoted context omitted.

> In that scenario, you're unable to use crypto because no goods exist to buy (meaning dollars are useless as well)? The state will take over the entire supply chain to ensure that it transacts in a currency that it controls, crypto or otherwise. Without that, the shared physical and legal infrastructure that supply chain depends on would cease to exist, and with it the supply chain. Individuals, or the small commune…

Taking over the entire supply chain is completely impossible though, black markets will always exist, and not just for simple raw materials. Another aspect of crypto is the ability to simply leave the oppressor's territory, taking your money with you. I'm absolutely not saying this is a perfect solution, or that government is powerless in this situation, but it seems hand wavey to say they'll just seize control of ev…

> Taking over the entire supply chain is completely impossible though

And it's unnecessary. Black markets exist today and always will. The state would need to merely take over the major suppliers of raw inputs to all products, and major finished products, and that will be enough to keep crypto only relevant on the margins. If black markets become a problem due to crime (i.e. the mafia) they can be dealt with using law enforcement action.

> Another aspect of crypto is the ability to simply leave the oppressor's territory, taking your money with you.

I agree, and you will also leave behind many of the benefits that come from societies that have centralized organization, like i.e. roads and a justice system. No territory with a state that provides infrastructure is going to allow you to operate there indefinitely without paying for the privilege of using that infrastructure.

You will have to find a place with effectively no state, and provide the basics for yourself. But it would be hard, and it's not something that can scale to our current society's scale or prosperity, though.

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