What did Bitcoin Core contributors ever do for us?
medium.com
medium.com
Most of the arguments against the core team revolve around the economics and future of the coin, but the tech team seems to think that somehow their coding experience gives them insight into that.
Bitcoin seems like technically great but it fails on many of the economic aspects (e.g. making a currency with a fixed amount basically ensures it can never be used to write long term counteracts in).
I guess I'll give the blunt answer: many proponents of cryptocurrency have views on economics, politics, society, law, and contracts that are ignorant of the way those things really work. Many really do believe that currencies, transactions, and contracts can be implemented entirely by computer programs and that governments and courts should have no jurisdiction over such things.
If you don't believe me, go to some of the active crypto forums and get involved in political discussions. You'll see an astounding mix of techno-utopianism, extreme libertarianism, and baseless conspiracy theories about fiat money and governments in general.
The blockchain is an interesting technical achievement, and so are smart contracts, but they are not a replacement for laws and governments. Unfortunately, a lot of people think they are. Some people even insist that bitcoin doesn't have governance, but that's clearly not the case because the current controversy about the core developers is exactly about governance.
I bring this up because these kinds of beliefs are the reason people in the bitcoin community think the programmers who implement bitcoin are capable of solving the economic problems -- they reject the idea that there are any economic or social problems facing bitcoin that can't be solved with the underlying technology. They don't accept that these are social problems with social solutions.
If that's the case then it certainly does the job.
There are a lot of people out there who are very aware of how their saved money loses value and actively want an alternative that feels "safe". I don't know that Bitcoin is that alternative, but it's definitely trying to be and even I have to admit has been far more successful than I ever would have expected.
Inflation can be a good thing. It can be used to combat deflation, and the absence of inflation can lead to stagnation via the paradox of thrift. There are certain central bank policies that encourage inflation and are known to work pretty well, including QE, which was demonized by a lot of people but has now been proven an effective aid in the recovery from the 2008 crash.
The bitcoin approach focuses on the money supply only, but there are other factors to inflation. There is general agreement among economists that the money supply is the key driver of inflation in the long term, but in the short term, other factors can be involved.
Inflation is possible with a static supply of money, because the amount of money in circulation (versus the amount of money in savings accounts or bonds, or otherwise locked up) can change.
Inflation can also happen even with a static supply of money and no changes in the amount of money in circulation. An example is an oil price shock, caused by an embargo: oil is an input into many manufacturing processes, as well as people's cars, so a general increase in the prices of goods and services can be expected.
So, the bitcoin approach takes away some valuable monetary policy tools and it doesn't actually prevent inflation in the short term. People shouldn't believe that their bitcoins are protected from inflation.
Inflation the Hidden Tax
In addition to that, it makes it painfully obvious that someone out there, is through some means, conjuring money out of thin air. The thing each of us sweats and toils every day to earn? Someone gets the privilege of printing it and injecting it into the economy. I simplify it a bit, but that's essentially the gist of the criticism.
That last part sounds like an appeal to emotion. Being able to do things the rest of us aren't allowed to do is pretty much the whole point of having a government. They get to create money, levy taxes, imprison people, wage war, etc. Looking at all the special privileges the government has, the privilege to create new money doesn't seem particularly special.
- the 2% inflation number is completely wrong and real inflation is around 5%~10%
- with no government monetary intervention we should have deflation let's assume around 5%
the delta is now 10%~15% looks less insignificant.
Unfortunately currently don't have the links, I will try to post it later.
I can't find any evidence-based reason to believe that.
Inflation-linked government bonds (e.g. https://www.treasurydirect.gov/indiv/products/prod_tips_glan...) are extremely safe, and specifically protect against value lost to inflation.
There are some problems solved by bitcoin, but needing a stable store of value certainly is not one of them.
[0] http://www.investopedia.com/articles/investing/092215/top-5-...
Put money in wallet. Forget password. Destroy currency forever.
Not a well thought out ideal.
A lot of Venezuelans would disagree with you there. History clearly shows governments fail to act responisbly with currency. In the last 25 years, 21 countries experienced hyperinflation. What do you propose people in those counties do?
Your comment was big on problems but offered no solutions. Cryptocurrencies are a solution for many.
Take off the developed world rose tinted glasses for a moment and see that for a large majority of Earth's population their government and courts do not serve them well.
And this is not just poor countries, a woman in Saudi Arabia cannot open a bank account without a mans permission. That same woman can create a bitcoin wallet in one minute.
But when she needs to turn it back into fiat, guess what, she's going to need a bank account to receive the funds from the exchange.
The whole idea is to create a new financial ecosystem that doesn't rely on old fiat currencies.
[0] - https://blogs.wsj.com/moneybeat/2014/10/15/inside-hudson-riv...
I say BTC lack economic understanding not from some theoretical view but from some of the almost religious decisions that comes from the project (fixed issue, low tx volume, etc). It is almost like they don't want people to use it for anything important.
But i will search out Alex's posts more often though.
However, the fixed supply does incentivize holders (ahem hodlers) to increase the value of the coin - whether that is by starting companies that use BTC, spamming HN with BTC/Reddit related posts, etc. It's an interesting way of arranging a bunch of people in a sort of distributed boiler room.
That said, once the mining subsidy completely ends (assuming BTC is still actively used then) its possible we will see some calls to increase the supply. Otherwise the transaction fees will need to become huge (or the price will need to rise 1-2 orders of magnitude) to support current levels of mining activity.
That however, is irrelevant to its lack of utility as a unit of exchange. In particular, if Bitcoin is "going to the moon" - i.e. expected to always increase in purchasing power superlinearly, why is it ever rational to spend a Bitcoin (or a Satoshi)? This is the problem with hyperdeflation.
See: https://bitcointalk.org/index.php?topic=1842146.msg18340002#...
Bitcoin is digital gold. The idea that is should be used as currency only seems plausible to the biggest proponents of a return to gold standards.
But for everyone who believe in inflationary currency, bitcoin is still a viable value store, which definitely can be used for all sorts of contracts.
Imho on average it's easier for computer scientists and engineers trained and practiced at algorithmic/systems/recursive thinking to learn (and invent) the relevant economics than it is for economists to learn computer science. The emerging field of cryptoeconomics is an amalgamation of high-assurance systems engineering and mechanism design (applied game theory), and computer scientists and engineers are on average better equipped to understand both parts of it than most economists are.
There's also an invaluable degree of street smarts and intuition in people who build and work on complex systems of varying non-/determinism and value-at-risk on a daily basis than in folks who just study/model them.
>Bitcoin seems like technically great but it fails on many of the economic aspects (e.g. making a currency with a fixed amount basically ensures it can never be used to write long term counteracts in).
Fwiw Bitcoin's issuance model is what it is b/c Satoshi wanted a strong incentive for people to bootstrap Bitcoin in the early days via mining, and a scarce deflationary currency was a simple and effective means of achieving that. He succeeded obviously. Any problems down the road resulting from that can theoretically be fixed with some kinds of derivatives, or worst case-scenario with a non-contentious hard fork to change the issuance model. But that would require a clear crisis affecting the value of the currency that everyone could agree would need solving, which likely won't be the case for as long as there are non-trivial mining rewards.
Does it? It seems horrendously, even criminally, inefficient to me.
1. The value (not necessarily price) of the currency will fluctuate wildly since they money supply cannot grow and shrink along with demand for it. The fixed supply will make these swings even wilder.
2. In a currency which is constantly deflating at say 3% a year, you would never want to take a loan unless you can cover that 3% plus any other return on capital you require. You're going to be paying back BTC that is going to be more expensive every year passing. Imagine a 5 year contract for 10 BTC a year. The next year is it 10.3 BTC (deflation adjusted). And at year five you are paying back BTC worth 11.6 BTC.
3. If you are on the other side, any counter party (default) risk is also huge since you are losing an asset that you could have held on to for zero risk and still gained 3% a year.
To enter a contract you need a stable currency. It is like building a house with a yardstick that keeps getting longer and longer. And it is very difficult to figure out what the value and exchange rate of BTC will be in a year from now, much less longer.
The argument is that they've moved too slow on important things like scalability, blocked a simple blocksize increase hard fork that would have added capacity, and that as a result Ethereum is catching up and on the verge of overtaking Bitcoin (http://duckduckgo.com?q=flippening).
The counterargument is that there's no other technically credible team in Bitcoin, despite all the prior attempts to "fire" and replace Core - Bitcoin XT, Bitcoin Unlimited, etc. - and that "firing" Core is akin to killing the goose that lays the golden egg.
You forgot the most important counterargument. That they _did_ move extremely fast on scalability. They released a masterpiece of engineering, SegWit, which doubles the blocksize, improves efficiency, enables future efficiency gains, and a laundry list of other improvements ... all while being a softfork. And, IIRC, that was all developed, tested, and released in _very_ short order.
Three years. People have been making issue tickets for three years about Bitcoin's block size.
"Core's" response was always to suggest an indirect fix to this by enabling SegWit.
>a masterpiece of engineering
Substantiate your claim.
>doubles the blocksize
Incorrect. 140% is the common number floated around.
>doubles the blocksize
140% block 'capacity' while using 400% more bandwidth. That is terribly inefficient.
>enables future efficiency gains
Substantiate your claims.
> and a laundry list of other improvements
Substantiate your claims.
>developed, tested, and released in _very_ short order.
Funny how Core halted development of Bitcoin for several years now up until now.
Now there is a frantic dash to get SegWit implemented as a fix to the block size issue even though it does not directly address it. What SegWit DOES directly affect though is the ability for Blockstream(Core) to roll out for-profit products that use Bitcoin as a settlement layer. This is the vision AXA[1] Strategic Investments and others have for Bitcoin and they are using their investments in Blockstream to make it happen.
[1] http://www.coindesk.com/investment-bank-axa-eyeing-bitcoin-f...
Ironically, scaling ethereum seems a lot dicier than scaling BTC.
For technical background, I recommend these two posts by Mike Hearn, who has since left the Bitcoin community [1] [2]
Now, what the original article is talking about is the "Core" development team--the people who have commit access on the Bitcoin Github repo. The whole debate has essentially become Core vs. some other factions, mainly miners. You'll see the arguments in [1] and [2].
(Keep in mind, Mike Hearn is strongly on the anti-Core side of the argument. But those articles should give you an idea of what to search for, if you want to hear arguments on the other side.)
[0] https://www.bloomberg.com/news/articles/2017-07-10/bitcoin-r...
[1] https://medium.com/@octskyward/on-consensus-and-forks-c6a050...
[2] https://blog.plan99.net/the-resolution-of-the-bitcoin-experi...
> In a soft fork, a protocol change is carefully constructed to essentially trick old nodes into believing that something is valid when it actually might not be.
The soft-fork protocols used for upgrades are specifically designed to ensure nodes are not tricked into believing something is valid when it might actually not be, as there is a well-defined mechanism - the block header nVersion field - that both co-ordinates soft forks and ensures that nodes that are unaware of the specifics of a given soft-fork know that there are new rules in effect. This is why at present, Bitcoin Core nodes/wallets loudly warn you that unknown rules may be in effect that your node does not understand, because the BIP91 soft-fork just activated that Bitcoin Core does not recognize. (BIP91 is a temporary hack to activate segwit at 80% rather than 95% threshold; in a few weeks it'll no longer be relevant to consensus)
Hearn is misleadingly confusing the adversarial case where a majority of miners may try to change the rules without consent of the community in an undetectable fashion, but that's simply a 51% attack. At present, preventing such attacks is an open research question; conflating the 51% attacks and soft-fork upgrades is very misleading.
In Hearns "resolution of the bitcoin experiment" Hearn states that:
> Bitcoin Core has a brilliant solution to this problem — allow people to mark their payments as changeable after they’ve been sent, up until they appear in the block chain.
and
> How many people would think bitcoins are worth hundreds of dollars each when you soon won’t be able to use them in actual shops?
Here he's referring to zero-confirmation payments and BIP125, Opt-In Replace-By-Fee. First of all, opt-in replace-by-fee is actually derived from Hearns own proposal to re-enable transaction replacement by nSequence. Specifically, Hearn proposed to re-enable an old feature in Bitcoin Core - originally written by Satoshi - that allowed transactions to be replaced if they signalled a higher sequence number. This creates a DoS attack, which I proposed we fix by ensuring that replacements paid a higher fee than the replaced transaction.
Opt-in replace-by-fee is a combination of Hearn's proposal and my own: transactions can signal that they are replacable, and if they signal replacability, can be replaced by transactions paying a higher fee. The combination implements Hearn's desired transaction replacability behavior, while fixing the DoS attack.
The bigger issue is that zero-confirmation transactions are simply not secure: even without the opt-in replace-by-fee that Hearn criticises Bitcoin Core for implementing, it is very easy to double-spend unconfirmed transactions. Soon after Hearn published that post, I did a study which found that every half the wallets tested could be double-spent trivially with nearly 100% success rates, and the other half with about 25% success rates: https://petertodd.org/2016/are-wallets-ready-for-rbf
Unfortunately, Hearn is simply being dishonest on both counts here, something that got him wide condemnation in the technical community.
You just cherry picked one (minor) point from each article, and then used an argument against those points to claim that both articles are incorrect in full. I think that is a dishonest form of argument.
Furthermore, it's worth disclosing your own personal dislike of Mike Hearn - you guys have spent a huge amount of time attacking one another... so I'm inclined to discount any of your statements on him.
Secondly, in claiming I have a personal dislike of Hearn, you're actually making a clear ad-hominem attack. My personal feelings are irrelevant to whether or not Hearn's arguments are correct.
In any case, Hearn is quite a nice guy in person, and fun to hang out with; I used to often chat with him on IRC. It quite frankly saddens me that I'm in a field where I'm not able to do what I'd much rather do - be friends with him - because of professional ethics. This is far from the only time when this has happened - repeatedly I've had to end friendships in the Bitcoin space because friends of mine got involved in scams and other dishonest behavior; in another context where the public wasn't being harmed I could be much more forgiving, but here I can't be.
This isn't actually how mathematics functions as a profession: small technical faults are routinely pointed out without discrediting the bulk of the work and at times, major works are submitted without all the technical details actually being accounted for.
Mathematicians are capable of understanding the main thrust of a work without getting bogged down in technicalities, and usually try to "ironman" the work -- seeing the main thrust in the best light possible, rather than the worst. (In contrast to "strawman".)
> Secondly, in claiming I have a personal dislike of Hearn, you're actually making a clear ad-hominem attack. My personal feelings are irrelevant to whether or not Hearn's arguments are correct.
It actually is relevant, considering that you "refuted" Hearn's arguments through the flimsiest of means -- pointing out a small flaw and saying he's not technically correct -- without every addressing the core part.
The heuristic of personal bias is a fine way to assess the genuineness with which you presented a heuristic argument (since you didn't address the core points), and assess if we want to take your heuristic point at face value. It's anything but an ad hominem to provide a reason you might be trying to present a faulty heuristic in response to you presenting a heuristic argument.
So... since you were wrong on both points here, we should discount the entirety of your posts on this topic -- at least, by your (poor) logic.
(I don't actually have any opinion on the topic, but your reasoning here is bad.)
Regarding your first contestation, I think as another commenter said, you are cherry-picking. He explains soft forks well and isn't attempting to mislead. That's why I refer folks to the article.
> This is why at present, Bitcoin Core nodes/wallets loudly warn you that unknown rules may be in effect...
Hearn mentions this mechanism three times in the article. He even discusses the tradeoffs of ignoring this versus rejecting the block. Hardly misleading.
> The soft-fork protocols used for upgrades are specifically designed to ensure nodes are not tricked into believing something is valid when it might actually not be...
He said "essentially tricked", and I think his explanation is clear.
Using segwit as an example, if my understanding is correct, there is an edge case where non-upgraded nodes may try to mine an invalid block, which will consequently be rejected by the majority of the network (assuming the majority is using segwit).
Since segwit transactions look like an "anyone can spend" output, a non-segwit miner could be sent a transaction that spends the output to somewhere it's not supposed to go, and that would be considered invalid by segwit-supporting nodes. Therefore I think it's fair to say non-upgraded nodes are "essentially tricked", and it's a good way to explain the distinction between hard and soft forks.
I don't know as much about replace-by-fee so won't attempt to counter you.
But I will just add that this type of cherry-picking behavior has consistently been coming out of the "Core side", and I have rarely seen strong, clear counter-arguments from that side. Combine that with the very silly censorship stuff on Reddit, and one can understand why Hearn and others have become so frustrated.
Again, I am a fan and a neutral observer. But unless I am looking in the wrong places, the only side being "widely condemned" is the Core side. Perhaps you could point me to the strong, clear counter-arguments from Core? I'll start with the link you posted and check out the rest of your site!
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EDIT: Corrected "reply-by-fee" to "replace-by-fee"
Hearn mentions the nVersion mechanism? Specifically in https://medium.com/@octskyward/on-consensus-and-forks-c6a050... ?
Maybe I'm missing something, but I don't see any mention of the word "version"
> He said "essentially tricked", and I think his explanation is clear.
I think you're misunderstanding my point: everything you raised above is negated by the fact that the soft-fork mechanisms we use are designed to give warnings to users and miners who are not running the new(1) protocol. For example, in addition to the nVersion mechanism I mentioned, segwit transactions are intentionally designed to be not standard transactions, and thus non-segwit miners will reject them. This is an important feature to ensure that those miners don't unintentionally create invalid blocks.
1) I say "new" rather than "upgraded" to avoid making the claim that soft-forks are necessarily an upgrade.
After re-reading it, I was absolutely mistaken. Hearn did mention a functionality to alert you when your node detects an invalid block. But he was trying to make the point that this was only possible with hard forks. It looks like the nVersion mechanism you mentioned negates his point.
Glad you mentioned that, you made it very clear to me that he was indeed being misleading there! I will edit my parent comments to indicate that.
For reference, here are the quotes I was referring to (again, his claim is that this is only possible with a hard fork):
> ...you will be alerted in some way, like via SMS or email if you configured that, and you get to decide what to do.
> ...if a user complains that their payment didn’t go through that’s a signal that you’re out of date, even if you forgot to configure your full node to email/SMS/phone you. But if you prefer to take the chance you can always configure your full node to act as if there was a soft fork whilst simultaneously trying to get your attention as best it can.
> ...a hard fork is still better. Firstly, it’s detectable, so a properly configured node can email/SMS/phone you to let you know it’s out of date.
Regarding your second point, you have not convinced me that I misunderstand. However you've been gracious enough to discuss it on HN thus far, so I won't press :) Perhaps point me to a link or start a convo with me through my contact info in my profile?
Thanks again!
EDIT
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Did not realize I could no longer edit my parent comments. Hope everyone who is interested reads all the way down.
For the rest of the context, check out most of the Bitcoin posts that have made it to HN over the past month. They're almost all about the current issues in the system and community.
Edit: typo
This really gets at the heart of my dislike for cryptocurrency -- most proponents believe it's supposed to be decentralized and free from the control of government, but it's actually centralized under the control of a small group of unelected programmers (who seem to misunderstand how human societies, currencies, and contracts actually work), and there is no recourse when they make bad decisions except to fork the blockchain and the code. It's really a step backwards in terms of governance compared to, say, fiat currency with democratic governance. This applies to most cryptocurrencies I've seen, not just bitcoin.
Problem is they have -not- been killing it 24/7.
This block size debate has been going on for years with Blockstream(Core) refusing to do anything about it aside from indirect fixes. Well before Bitcoin's 1MB blocks were full people were getting dismissed/deflected/denigrated due to bringing the subject up to the developers.
As the issue climaxed earlier this year Blockstream only proposed SegWit as a fix[1]. Segwit isn't even related to the block size issue directly. It is more applicable to Blockstream's business plans for rolling out for-profit Lightning Network nodes that use Bitcoin as a settlement layer.
So for years now Blockstream has done what? Threatened to edit[2] Satoshi's whitepaper while ignoring public consensus unless the public accepts their kludge of a 'fix?'
Fire Core. They are overtly driving Bitcoin away from the purpose it was created for, a "peer to peer electronic currency." They halted Bitcoin development after investment by AXA and others, turning their focus into creating for-profit products that use Bitcoin.
Fire Core.
[1] https://github.com/bitcoin/bitcoin/issues/10028 [2] https://github.com/bitcoin-dot-org/bitcoin.org/issues/1325
It's not the words of somebody who wants to help anybody, just somebody wanting the power.
If the US dollar forked, or an EU country left the Euro, it would widely be considered a disaster and a failure of politics and governance. Why should bitcoin be held to a different standard?
This is part of the reason why bitcoin remains highly speculative. People point this out like it's a bad thing - the only people who have it are just investors, speculating. But this is part of the process that bootstraps bitcoin's value, so that when it does become more practical to use, actual value is being transferred.
Let's use the US dollar as an example. In what ways do you think it could be improved if people could fork it?
What follows a fork is a competing variant. From a consumer's vantage point, this is almost always good. More competition creates such a great incentive structure that usually(but not always) serves the customer well.
However, the if you look at it from the vantage point of a stakeholder such as an active developer, speculator or an investor, then a fork seems unquestionably detrimental. You'd want a monopoly in this case.
In what may seem to many as a severe case of cognitive dissonance, I'd submit that both of these scenarios are useful and that the only caveat is that they apply at different stages of an endeavor's development i.e. in the early years when a product is nascent, I think competition is actually good. By giving consumers choice, the best product naturally rises to the top. In later years when a product/market is mature, I personally don't mind a monopoly because it grants advantages of scale that would otherwise not be available to a smaller outfit.
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