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Your dismissal of the problem with forks is missing a big danger to users. You say that market forces will control it, and people should just use what works best for them.

The problem is that you might guess wrong; you might look at the two forks, make your best guess as to which side is going to win out via the network effect, and put your money there. If you are wrong, and your fork dies out, there goes all your money. The market forces did their thing, and they wiped you out.

Yes, the 'users' are the ones who decide how the system develops, but that doesn't mean you as an individual user have any say; your voice will be overwhelmed by the crowd.

Of course, these risks aren't any different from the risks we face in the rest of the world. You can lose money by making the wrong choices, and your choices often get forced because of the decision of the crowd. However, we don't really face that risk using a stable national currency BECAUSE of the very things bitcoin fans tout as reasons to use bitcoin.

The reason using a currency like the US dollar is so popular is BECAUSE of the fact that the government forces everyone to accept the currency 'for all debts, public and private'. People are FORCED to accept the currency, so you can have confidence that you aren't going to be left with useless money if you accept dollars in payment. You don't have to worry about some other currency winning out as the defacto payment system, and losing all your wealth.

Of course, you have to put faith in the US government to maintain the currency, but it has a pretty strong track record of doing a fairly good job at that. I can't imagine a cryptocurrency every being able to be as stable as the dollar for hundreds of years; I mean, just look at the price volatility for bitcoins.

Ya, I was going to point out there's a lot of faith with normal currency too - I think bitcoin still is a grand experiment. So far, when there have been forks, a winner has emerged very quickly (see Ethereum), but the UASF is going to be an interesting test of this. I think it's in everyone's interest for the decision to happen quickly and stay sticky though, so it's hard to imagine a drawn out fork battle, but could be interesting. Also interesting, I suppose we're incentivized to get in before any forks, wonder if any of the run lately could be attributed to that.

Forks tend not to die out. See ethereum classic. As long as people are using the currency that you use, your currency will have value. Also, if your currency is losing traction, the value will decrease gradually, not evaporate to zero all at once.

Well, highly speculative currencies can tumble dramatically, but as we've seen with Bitcoin, as the legitimate use cases grow, so to does the price stability.

The idea that a currency will never decrease at such a rapid rate is a bit naive. There is nothing so fundamentally different from bitcoin that it is immune to panics and a 'bank run'. If a panic starts, and people are trying to pull their money out, you could have the same effect as a bank run, as the transaction rate becomes higher and higher (the digital equivalent of a line at the bank).

Bitcoin may or may not stay stable, but you can't know that any more than you can know it about any other currency, with the additional caveat that there is no central authority with a track record to base your decision on.

You have to put your faith in something.

I suppose it's not surprising that people with strong affinities for computing systems would rather put their trust in a computing system than a government of people. They understand computing, and so they feel more confident they can understand and mitigate its risks. They might not feel that way about the solvency of the Federal Reserve, or the fiscal health of the U.S. federal government.

It doesn't mean they're right. Blockchains might be objectively riskier than central banking. It's just that we each see the world through the filter of our own experience.

The entire point of the article is that it might FEEL like you are putting faith in a computing system when you use bitcoin, but really you are still putting your faith in a group of people. It doesn't matter how well you understand the mechanics of how bitcoin works, what really matters is the mechanics of how the people involved with bitcoin works, and that is the same as people everywhere.

You just can't escape human social politics.

I agree, and I think the article is essentially right. But again, not everyone is going to see it that way, depending on their inclination.

I think this is the point though - for something like bitcoin, this tension is ok. It's when you start getting into things like blockchains for real estate in developing countries (I think there are a few startups working on this) when it becomes an issue. Someone still fundamentally needs to issue the blockchain deeds, or ok that you, in fact, own the property you are claiming to own. At that point, you have a central authority, and a normal database with some sort of public backup or checkpointing would be as good as a blockchain solution.

So, I'd agree bitcoin doesn't want central governance, and that's a feature not a bug, but for other block chain solutions this article makes a very good point.

Agreed, and it is a reason why I am holding back on Etherium so far. I don't know if they have a proposed solution to that, tbh, but it seems pretty impossible to solve.

Although, to be fair, "classic" contracts also need that someone to enforce them. Maybe Etherium & the likes only replace one aspect of it, not the whole process. If company X publicly announces that they'll adhere to a certain contract in the blockchain, they can be held accountable for it and transactions can be completely transparent.

Haha, my issue with Ethereum has always been that, as a software engineer, I know it's impossible to write bug free code. It's a great idea to have a code driven contract utopia, but our first experiment with that model proved we still need human intervention. If it were that simple, we would just have hyper formalized real world contracts (in an almost mathematical notation) - but that obviously never happened. Frankly, hand written contracts are already incredibly decentralized, it's only enforcement that is centralized.

Slightly pedantic, but you and your parent did this, and people do it all the time.

It's Ethereum, not Etherium.

True, I worry about that, too. And in case of the DAO, that issue hit home big time.

There are efforts under way to create contracts with formal verification, but I remain a bit skeptic. It is difficult to write complex software that way afaik.

On the other hand, a lot of contracts are maybe not very complex. I thought about a bank account recently (receive and send money). That could perhaps be done in 100 lines of code? (I don't know the programming language yet, but their basic token creation example seems to be short, and it is kind of like a bank account). That seems impressive compared to the effort banks probably spend on IT.

You'd only be able to use a blockchain for land ownership of the government agreed to unconditionally honor whatever appeared in the blockchain. And even then, the government found change its mind at any moment.

So really, it would not work well unless your whole government was also properly decentralized.

agreed on land (to an extant, I think a digital contract would be a good legal basis if things go to court), but what about virtual land? Or digital tokens that control access to things like a house, car, logins, etc for that matter? Now must there be M:N escrow keys etc.?

It is not even ok for bitcoin if you want to use it as your primary currency, for both conducting transactions and for storing liquid wealth. It paints a nice picture to say 'the market will work it out', but as an individual, that market can wipe many people out. Sure, it might work out as a whole, but the volatility is too much for something that needs to be as stable as currency.

>But it is also not true that it would be a huge problem if there were forks. Why would it be? People will simply use what works best for them, controlled by market forces (they need other people to use the same fork).

It's a problem for any tech that aspires to go mainstream and thus must contend with the already high cognitive loads on the majority of people who don't follow the tech in detail, don't know what a hard fork/chain split entails, what it means for their money, or the economy. Most mainstream users, when confronted with having to understand something like that to safeguard their money, will conclude, rightfully, it's best left in a traditional bank or under the mattress.

Maybe true, but in a way, classical investments are even more complicated. Some of them are even deliberately complicated to obfuscate their risky nature to naive investors.

I don't think the predatory complexities found in some shady securities are a very prudent way of "excusing" the technical complexities and consequences of BTC, or any other cryptocurrency.

"Not as bad as" is broadly fallacious, anyway.

OK then, explain to me: what is money?

I'm probably not the person to ask, because my "succinct to the point of sounding flippant, but offered completely honestly" answer is: a profoundly destructive social fiction whose time is well past. The notion and role of a medium of exchange are things on which I have ... divergent views.

It's a human invention we have collectively chosen to value more than the thing it was presumably created to serve — you know, "humanity". Any tool that becomes more important than the lives and well-being of the folks that tool was invented to benefit (that is: all of us [0]), I'd submit, needs some serious critical re-examination.

I'm not holding my breath on that happening any time soon, though.

Your question is a complete non-sequitur, anyway. It's entirely possible to create systems and stores of value that aren't as abusable, abusive, exploitable, exploited, and just generally bad (or at least less good) for the overwhelming majority of the monkeys involved in its circulation and use, as compared to "money".

[0] If your counter is that it doesn't have to serve all of us, then I'd say it was the wrong tool out the gate.

I just meant to illustrate that money is actually quite complicated, even though we use it daily without giving it much thought.

And my original response merely suggested that using the ethically compromised complexity deliberately introduced into one of the more obscure forms of "money" we have to justify the technical complexities and their attendant consequences in yet another is at best fallacious.

That is: "But CDOs" isn't materially responsive to "BTC is complicated."

If by classical investments you mean vanilla stocks and bonds, those are heavily regulated with strict disclosure and transparency requirements, heavy penalties for cheating (insider trading), and standardized reporting for de-obfuscation as much as possible.

If you're referring to more exotic instruments, those are off limits to mainstream folks, only available (in the US at least) to accredited investors with enough discretionary wealth they won't go homeless if they lose their investment.

In either case, a lot of effort goes into mitigating the cognitive load for mainstream non-expert investors.

What about those things that produced the last financial crisis? Reselling bad credits b mixing it with good credit and so on. Maybe it was only accessible to the pros, but then if they got it wrong, and they probably bundled it up with other things that they were then able to sell to the public.