Earlier quoted context omitted.
So you are saying that drcode means cryptocurrency has value as a ponzi scheme?
?!? No.
Then how could you possibly think I have "shifted the goalposts there from "has value" to "value for the economy as a whole""?
Is Blockchain Really the Killer App?
91–100 of 103 posts
Re: Is Blockchain Really the Killer App?
#92Earlier quoted context omitted.
Fiat is just an IOU, it's worth exactly what it's worth. There's a small admin cost to e.g. printing notes, but it's tiny in proportion to the overall currency value. Bitcoin is unique because it has a big negative externality - a huge amount of energy is simply thrown away, powering computers to do something non-worthwhile. A bitcoin is an IOU for something that's already been spent.
I would point out that you're not making a fair comparison to the cost of administering a fiat system. In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there…
> In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there in exchange for appointments and other policy stances.
Sure - the physical printing is just one of the many overheads of the monetary system. But the point is that these costs are small and, importantly, more-or-less constant. Whereas with Bitcoin the costs scale up (and inherently have to scale up) with the Bitcoin economy. Indeed, if we assume rational miners with accurate price predictions, then the amount wasted on mining Bitcoin always exactly equals the total value of bitcoins in circulation.
(So far we don't see this because the price is much higher now than it was when most of the coins in circulation were mined. On the other hand, if the Bitcoin price drops to e.g. $10, then the current expenditure on ASICs is going to look even more extravagantly wasteful).
> You're right that Bitcoin by nature includes a huge energy cost, but when you take the narrow view that it's simply being thrown away, it's both short-sighted that it ignores the theoretical possibility that its heat "waste" could be channeled into something economically desirable (e.g. steam to drive turbines)
Even if you find a way to use the heat, you're wasting the computational power that could be allocated to something more productive e.g. protein folding.
But even more importantly, and what I expected to be half the point of the article, the work put into validating the blockchain inherently has to be wasteful. If it isn't, the economic incentives against cheating no longer apply - you can just do a leveraged buyout of a huge turbine company, put their heat generators to work doing a 51% attack, and double-spend all your bitcoins.
Whenever someone comes up with a way to do hashing for half the energy, the Bitcoin network doesn't start using half as much energy - it starts doing twice as much hashing. The wastefulness is built-in and unavoidable.
Re: Is Blockchain Really the Killer App?
#93TL/DR: the Blockchain only wins if Bitcoin wins, because miners need an incentive to mine. "...the Bitcoin Blockchain cannot win without Bitcoin as a currency winning too, but if the Bitcoin price languishes, the incentive mechanism backstopping the Blockchain will be weak and therefore unreliable, ..."
Why wouldn't companies who rely on the blockchain step in and incentivize the miners to ensure the health of the network?
But if they did that, what would the mechanism be? The simplest way to incentivize the miners is to... buy bitcoins.
Re: Is Blockchain Really the Killer App?
#94Earlier quoted context omitted.
I would point out that you're not making a fair comparison to the cost of administering a fiat system. In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there…
> In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there in exchange for appointments and other policy stances. Sure - the physical printing is just one of t…
To play with that idea and rephrase it: Fiat-currency is backed by a potentially-repayable debt held by a government, the original credit having been spent on infrastructure, social services, weapons, etc.
Bitcoin is backed by an irrecoverable debt held by... an abstract math problem, because the original credit spent on computing answers (of no external use) to that arbitrary problem.
Re: Is Blockchain Really the Killer App?
#95Earlier quoted context omitted.
Thus highlighting the difference between monetary value and what is actually useful. It's a difference people get confused about too often - thinking that the most important thing on the planet is the economy; thinking that everything is fungible because it has dollar value. It's all fun and games until we hit resource limits of the planet. Or kill someone. Our economy sucks at pricing in the fact that while we can s…
Your definition of 'actually useful' is going to be different than everyone else's. Economic value is the only objective value we have.
Assuming that humans make rational economic decisions. Which is false.
Re: Is Blockchain Really the Killer App?
#96> I am presently incapable of seeing how any token other than Bitcoin will be the one that wins. In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence. In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" becau…
To be clear, I don't claim that non-Bitcoin cryptocurrencies do not have value. You're right that their de facto value is revealed through trading activity on exchanges. I view value as subjectively revealed by market prices, not through any sort of labor theory of value or other nonsense. I'm arguing that non-Bitcoin CCs don't really add any marginal value to the CC ecosystem, and that it's inherently unstable for m…
Hey, can we get you on our TechCrunch bitcoin podcast this or next week? email me at john @ techcrunch dotter com
Re: Is Blockchain Really the Killer App?
#97I don't necessarily agree with the conclusion at the end. Supposing that sidechains can be mined simultaneously with the bitcoin at no additional cost, and that there is a fixed bitcoin sidecoin conversion ( not market based) built in to the protocol, bitcoin would never completely lose its value, because it could be converted to sidecoin at the same rate it would be before. The market price would be fixed to some sm…
Is that really what Sidechains are aiming for? If so I need to go back and reread their paper more carefully. What I'm hearing you describe is that the token used by a Sidechain is not one iota different from any other Bitcoin, except perhaps that its latest output script includes some new weird feature we haven't seen yet. It's like my sending you 1.0 Bitcoin through a vanilla BTC transaction and you telling me that…
The main purpose of adding sidechain support to bitcoin is to allow coins to be "burned" on sidechains in order to get them back on the bitcoin blockchain. It's already possible to have unidirectional burning from bitcoin to other chains, but not bi-directional. There are lots of things to get right though which is why it's taking a long time to do.
It's not necessarily the case that it's permanently pegged to an exact bitcoin amount. Perhaps they way that miners of the sidechain are rewarded is by inflation/devaluing how much bitcoin the sidecoin can be burned for. The point is though, it's not market effects that are causing it.
Re: Is Blockchain Really the Killer App?
#98I don't necessarily agree with the conclusion at the end. Supposing that sidechains can be mined simultaneously with the bitcoin at no additional cost, and that there is a fixed bitcoin sidecoin conversion ( not market based) built in to the protocol, bitcoin would never completely lose its value, because it could be converted to sidecoin at the same rate it would be before. The market price would be fixed to some sm…
> Supposing that sidechains can be mined simultaneously with the bitcoin at no additional cost Which is obviously not true. Extra storage and bandwidth at the very least.
Hash rate is independent from bandwidth/storage. Assuming you can do N hashes/s, you can still do N hashes/s with merged mining of multiple sidecoins.
Also, presumably any bandwidth incurred by a sidecoin would have been incurred by bitcoin if the sidecoin didn't exist, so total bandwidth/storage would be similar.
Re: Is Blockchain Really the Killer App?
#99Earlier quoted context omitted.
> Bitcoin code, protocol and marshaling formats are a mess. Which is why people are working on e.g. Libconsensus. There are dozens of functional Bitcoin clients based on entirely different codebases, which indicates that it's entirely possible to start from scratch. >payments with a single token. While the Bitcoin transaction format is a bit inflexible, you're wrong about the assumptions it makes. Even from the begin…
You can find a list of Bitcoin script shortcomings in the Ethereum whitepaper and Ethereum Design Rationale document. Writing a BIP to add a new opcode for every possible transaction type is not the answer. And still I don't see how multisig or P2SH can use something else than BTC tokens (colored coins require external asset registries).
>You can find a list of Bitcoin script shortcomings in the Ethereum whitepaper and Ethereum Design Rationale document.
Ah, Ethereum, the ultimate crypto-currency vaporware. When did vbuterin announce it, over a year ago now?
There's a reason the Bitcoin script is simple; because it does everything we want Bitcoin to do (facilitate economic transactions) and it's simple enough that we can be sure it works properly.
If Ethereum actually releases, I'll take that into consideration for my judgement of more complex script schemes.
Yes, Bitcoin is "single-token". What's the downside of this? Why do I care if I need an external registry for non-standard tokens? For tokens to have any effect in the real world (e.g. economic value), you need some form of "external asset registry" no matter what. In most cases, this comes in the form of the seller passing judgement on the value of the token.
Re: Is Blockchain Really the Killer App?
#100Earlier quoted context omitted.
Your definition of 'actually useful' is going to be different than everyone else's. Economic value is the only objective value we have.
Assuming that humans make rational economic decisions. Which is false.
The only way to define an economic decision as rational is if it optimizes for the market value. The rational thing to do in the bulb mania was to produce tulip bulbs.