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Why Bitcoin is a significant breakthrough, but perhaps not as a currency

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Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#31

Post by gwern »

> This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem.

He was well aware: he posted a short essay to bitcoin.org explaining how Bitcoin is a general solution to the Byzantine Generals problem, and if you read his early cryptography/p2presearch ML threads, he specifically says that digital money is but the earliest and most obvious application, and that far more could be built on top of it, and he hoped there would be, and included the dangerously-complex scripting language specifically to support more complex functionality than simply a global ledger.

It's not his fault if everyone else was more interested in applying Bitcoin to financial transactions than exploring approaches like Namecoin.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#32

Post by jere »

richcollins wrote: post #29
jere wrote: post #26

>This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem. Why oh why must every mention of Nakamoto imbue him/them with certain politics? We're led to believe Nakamoto is a subversive anarcho-capitalist libertarian who wants to overthrow go…

Pretty sure Satoshi had political motivations: https://en.bitcoin.it/wiki/Genesis_block

Perhaps, but that's kind of thin:

>This was probably intended as proof that the block was created on or after January 3rd, 2009, as well as a comment on the instability caused by fractional-reserve banking.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#33

Post by maratd »

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

> You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year.

You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum.

This would make it into a realistic currency, where people get annual raises in their salary, prices gradually climb making merchants happy, etc.

You need to conform to basic human psychology for wide adoption. And don't worry about the miners, they will mine regardless, even if it's worth less and less each year ... now the speculators? Those will be gone and good riddance.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#34

Post by bachback »

Anyone interested should study the script system and Namecoin.

"Restricting transactions to such a simple form would restrict Bitcoin to exactly the possibilities traditional currencies had (though decentralized). However, Satoshi saw the potential to allow it to do more, and introduced a script system. He wasn't around anymore to bring it to practice, but Mike Hearn wrote down some of the things Satoshi had in mind on the Contracts page of the Bitcoin wiki."

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#35

Post by SwellJoe »

bachback wrote: post #27
SwellJoe wrote: post #12

Earlier quoted context omitted.

It's not a theory I have ever heard, and I think there's sufficient reason to rule it out. Swartz never really professed an interest in currency or monetary policy, etc. that I am aware of. He was an extremely prolific individual who worked on many very public projects. Transparency was clearly one of his core values, and never exhibited more than passing general nerd interest in cryptography, anonymity, or the techn…

Who are on your list? Nick Szabo. Mike Hearn. Hal Finney. Wei Dai.

Yes.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#36

Post by hendzen »

gwern wrote: post #30
T-A wrote: post #3

Naive question from total outsider to both contexts, popped up while reading this: has there been any speculation that Aaron Swartz = Satoshi Nakamoto, or are there good reasons to exclude it?

(If it helps, I have some private information on this topic which ~100% rules out Swartz as Nakamoto, but I'm afraid I can't tell you it. If you don't trust me for other reasons, feel free to ignore my claim.)

Can you post a hash of the info for precommitment?

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#37

Post by coderzach »

lifeformed wrote: post #18

Sorry to be a bit off-topic, but is anyone else's browser having difficulty rendering the text on this page? http://i.snag.gy/SK7NX.jpg I've noticed this on a few sites, and I'm wondering if the problem is on my end, or if it's a problem with the website.

You're probably on chrome for windows, which does a really poor job of rendering webfonts.

https://code.google.com/p/chromium/issues/detail?id=137692

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#38

Post by rthomas6 »

maratd wrote: post #33
rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

> You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum. This would make it into a realistic currency, where people get annual…

I can see this once it's up and running with a large market cap, but in my opinion you need the deflation in the beginning to attract users. There's much less of an incentive to use the new 'coin if it doesn't appreciate over time.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#39

Post by api »

A bit reason I think Bitcoin is a fundamental innovation is that nobody quite seems to know what it is. It's clear to me that it is not a currency in the classical sense in that it does things that no classical currency does, but it's also not just a payment mechanism or a wire service or anything else simple and easy to define.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#40

Post by johndevor »

maratd wrote: post #33
rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

> You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum. This would make it into a realistic currency, where people get annual…

> You need to conform to basic human psychology for wide adoption.

I don't think inflation is a part of basic human psychology.

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