What Goldman Is Telling Big Money Clients About Bitcoin | Hacker News Reader

What Goldman Is Telling Big Money Clients About Bitcoin

bloomberg.com

91 pointsivorium89 comments

Bear in mind that Goldman Sachs is now about making Goldman Sachs money. For well over a century, they were about making rich people richer and taking a cut. That's no longer the case, and their advice to their clients is no longer particularly good. It's now just usual sell-side broker "analysis". Read "Why I am Leaving Goldman Sachs."[1]

A friend who was a Goldman Sachs client noticed this when, around 2011, they started suggesting dumb deals. He pulled all his money out of there.

[1] http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-g...

I was a very small Goldman client for a while (they typically don't take people with less than $10M and I was way less than that). A buddy of mine got them to let me in as a client.

He had $110M with them and he thought that would be enough that they'd treat him well. Not the case, they tried to sell him crap. He thought, at the time, that you had to be worth $1B before you were "in the club". He was pretty disgusted and moved elsewhere.

I'm not really sure why anyone would want to be a Goldman client.

Every time I've seen them recommended a target price far below what the current rate is for a stock recently, it's tanked, and then come back to higher than it was before within a couple weeks. I have to wonder if they've been taking advantage of this (illegally) or if they've just got some incompetent people working for them that have no idea how much AMD is worth, for example. Seems like saying "that was just one of our analysts, others who disagreed still thought buying was good at the time" could be their cover for manipulating stock prices to their benefit.

Why do people say it 'Cant be tracked'? Its a fully public ledger. I would think that it could be tracked much easier than dollars that remain liquid or laundered.

The problem is the difficulty of tying an arbitrary amount of addresses to a person.

Anyone can generate any amount of addresses instantly out of nowhere and be paid to them. Lets say you have x btc that you received as payment from some illegal activity. You can make any number of payments to any number of addresses of your choice, some of which are yours (new addresses, so they're not associated with you yet), some of which are not. You still have control over all your btc but nobody knows what is "you" and what is someone else. While it's everything there in the blockchain for anyone to explore, if properly managed the address system does provide a high level of anonymity by current standards.

edit: a btc address is effectively just calculating a hash, behind it you have good old public key cryptography so it's very easy to generate and can even be done offline.

Because that's why they want it over anonymousish paper money.

It is actually pretty difficult to track, if you know what you are doing.

All you have to do is use a mixer.

The advantage that it has over paper money is that I can almost instantly send it anywhere in the world, for cheap.

I've heard that bitcoin mixers can take care of completely/somewhat obfuscating coin ownership.

> According to Wikipedia: User can send his bitcoins on this service, pay small commission, and then receive the same sum of utterly different bitcoins.

If they're paid out to one address it still wouldn't provide the desired level of anonymity, if however they are paid out to multiple addresses belonging to the same user, I would imagine the anonymity level would increase but not totally since one could still add up payments made to different addresses whose total should amount to a given range.

Yes possible but impractical when you split the new payments to multiple new addresses, in unequal amounts and at random times....

This has been what I've read as well. Unless a massive and coordinated entity like Five Eyes has decided to focus a significant amount of its resources on you, bitcoin mixers seem to provide 'adequate' levels of obfuscation.

I wonder how much of BTC's $71bn market cap is eternally lost coins.

Count my 10 as lost! To be fair they were worth a few bucks at most when I lost them.

I personally saw someone accidentally wipe 150 or so when they were around $10.

It was fairly big news in the UK when somebody announced he had thrown away a hard-drive containing 10,000 coins. He considered searching through the dump but didn't bother in the end.

That's about $40,000,000.- I would do more repulsive things than diving into a dumpster for that kind of money.

It wasn't just a trash can, it was an actual garbage dump site he'd have to search through. Chances of finding something there are slim I'd say. IIRC there was a photo with the article of the guy standing at a dump site - not sure if he didn't actually go look for it a bit and gave up when the reality of the situation hit him.

It just adds more appeal to the deflationary flavour of Bitcoin.

I lost two a long time ago. Broken harddrive and as they were only worth less than E20 at the time, I put off retrieving them. Moved house and lost the drive :(

Unfortunately, this is a pretty standard fluff piece with not much information. Would love to know what Goldman actually thinks about the prospects of cryptocurrency and distributed ledgers, but"real dollars are at work here and warrant watching" is the only shred of information this article give.

What use case is there for a distributed ledger that is superior to a centralized ledger?

As soon as a critical mass is formed around a particular use case, consortiums, i.e. governments will form to regulate and enforce trust and the system will move to far more efficient centralized ledgers.

The main use cases for decentralization are: absolute control of your money, and censorship resistance.

Think deeply about what this means. Most people have no idea. Just a few examples (typing on the phone): no company or system can accidentally/intentionally deny your transactions, no merchants can charge you against your will, harder for oppressive government to seize wallets of targeted citizens/organizations, etc.

I see the appeal in those things for some people.

But I think most people are happy to forego those things and not have to worry about losing significant chunks of cash to fat-finger mistakes or hacks.

When most people barely know what a browser is, illuminating them to the intricacies of bitcoin seems a tall task. And if they can just use some system like Coinbase and "not even know they're using bitcoin," then they're essentially just using Paypal.

It's hard to see how it ever goes beyond a very niche market, and as long as that niche market is in a speculative frenzy it's hard to see how it becomes of much use to that market beyond a vehicle for speculation.

And should some group trade amongst themselves while avoiding censorship from some other group, the persecuted group as it grows in number becomes likely to use it's numerical sway to influence the govt doing the censorship in a new direction, or form a new govt that facilitates more efficient trade between the group.

And efficiency here refers not just to a couple ledgers instead of thousands, but also the massively reduced overhead of every member not having to do extensive security themselves, but rather offloading the security to central authorities.

Trust is beneficial to society, the more trust in a society the better a society scores on a host of other metrics.

Bitcoin and other blockchains enable more or less trusted associations to form using side channels. A typical example is using off-chain collaboration to exchange signed transactions of deposited funds. It seems reasonable to consider trustless cryptocurrency as a base layer for "international settlement." Coinbase is significantly different from PayPal because of this final public settlement layer that is open and well-defined, unlike the proprietary bank systems.

That was my point. I don't see how using "side-channels" or "off chain" systems are materially different from using the Visa or the Kroner system, and then when you want a public settlement layer that is open and well-defined converting some funds from those systems to a crypto system. What's the difference?

Can't off chain systems be seen as simply analogous to transacting in deposited funds with paypal where your paypal password is the signature?

Maybe these systems send something out to a public blockchain, but you're still trusting them to honor withdrawals of your deposited funds in the same way you would with paypal, correct?

What is the actual use in practice of side channels and off chain systems these days?

Blockchain payment channels can have security properties that go way beyond just trusting a third party with deposits.

Here's a little example of setting up a reasonably secure payment channel with the help of an Ethereum smart contract: https://medium.com/@matthewdif/ethereum-payment-channel-in-5...

The problems with this vision are manifold.

1. Governments have laws backed by guns to prevent things they don't like (like transactions or investments escaping taxation). If you want to change the system of governance, that's fine, but a currency is not going to do it alone, because they will mandate control over your currency or ban it outright. You can't opt out of government. Perhaps we need a new form of government people subscribe to rather than are opted into at birth, but I don't see bitcoin as a step on that road, as it tries to ignore the question entirely.

2. A cryptocurrency in no way gives you absolute control over your money - like any other currency you are buying in to a system, which has points of control - for example in bitcoin those points of significant control are currently the small group of devs who decide on the rules, and the miners who run the network. Both have the ability to manipulate the currency or lead it in directions you don't like. Past that the currency is a system of trust influenced by everyone who buys it or transactions in it - if that trust fails your money is worthless. So like fiat you have very little control over your money and its value.

3. Censorship resistance - this is the strongest point but still vulnerable because transactions can be traced, and anything you do in the real world can lead them back to your addresses. Given sufficient importance and interest from state actors, I doubt anyone could remain anonymous for long.

4. You seem to be assuming companies and systems will be forced to accept bitcoin (or some other flavour), they can easily deny your transactions by refusing to accept it without validated identity (for example KYC laws).

1. Decentralized cryptos certainly do help evade oppressive authorities. It's easier to discover & seize a bank account than to discover & seize someone's memorized warpwallet password. Compare that to Chinese using VPNs to evade the GFW. Sure, the GFW is pretty good at blocking VPNs (see my experience: http://blog.zorinaq.com/my-experience-with-the-great-firewal...) but they certainly do help evade it.

2. I think your are being pedantic on the definition of "absolute". For all practical purposes, in the entire history of Bitcoin, its users have had absolute control over their money. There has never been a single documented event of a protocol change to block, or miners colluding to block a particular transaction (except obvious bugs like the 2010 int overflow where someone created X billion illegitimate bitcoins.)

3. Again, decentralized cryptos certainly do help evade censorship, compared to traditional centralized financial systems. A bank account is trivial to seize. A Bitcoin warpwallet, not so much.

4. No I don't assume that. I had more in mind the example of a user wanting to donate to wikileaks, and credit card companies deciding to block these transactions. Bitcoin prevents this from happening.

except obvious bugs like the 2010 int overflow where someone created X billion illegitimate bitcoins

QED. Also see the recent Bitcoin cash fork, and the severe volatility caused by the speculation in the currency, which is a problem for anyone holding it.

A Bitcoin warpwallet, not so much.

I disagree. If it lives on a server a warrant will force them to give it up, if it lives on your computer, a warrant will force you to give the physical computer up (which can then be destroyed or kept indefinitely). It is thus as trivial to seize as the places it is stored, and as your physical being is (pretty trivial).

No I don't assume that. I had more in mind the example of a user wanting to donate to wikileaks, and credit card companies deciding to block these transactions. Bitcoin prevents this from happening.

I agree it was useful for that, but mainly because laws have not caught up with reality. If this were a widespread problem there are of course lots of avenues governments could use to shut off the funds, not least simply outlawing bitcoin, wikileaks, or both. I'm not saying that to be pedantic, but to point out that you're using technology to solve a social/legal problem. It may work for a while if it is not widespread, but laws are enforceable even against unbeatable cryptography because everyone lives in physical space.

If you want true change in your relationship to government, bitcoin won't get you there, because though it seems superficially useful for avoiding government scrutiny, it doesn't address the fundamental problems with it.

"QED"

Err, this bugfix doesn't show people don't have absolute control of their bitcoins.

"Also see the recent Bitcoin cash fork"

Still doesn't demonstrate that people don't have absolute control of their Bitcoins.

"the severe volatility"

Still doesn't demonstrate that people don't have absolute control of their Bitcoins.

You look ridiculous trying to argue Bitcoin doesn't give absolute control of one's money. That's the one thing Bitcoin does perfectly well and that is universally recognized.

"If it lives on a server"

The point of a warpwallet is that it doesn't live anywhere. It's a passphrase you memorize.

I think we have different definitions of absolute control.

By absolute control I take it you mean control of the private keys and thus who can use the money those keys control (regardless of whether that currency is worthless, difficult to exchange, outlawed, or taxed as an asset)?

For me absolute control means control over the rules for exchange (set by devs), control over fees (set by miners), control over the rules for ownership/use (set by governments), and control of the value vs real world goods (set by other users). I would say bitcoin gives you the illusion of control but very little actual control - it's similar to fiat in that regard.

I think that's important because absolute control implies something you simply can't come close to with any currency - absolute control over a worthless resource is not control in any meaningful sense.

Re the warpwallet, you're saying it lives in your head only, if so, the same arguments apply - they seize your person till you give it up (see rules in the uk on not divulging passwords, people have been locked up for this). You can't work around laws with technical solutions.

Sort of. You can implement a KYC layer on too of Bitcoin, and have government-sanctioned "clean" versus illegal "tainted" coins.

What it literally says isn't important- what is important is that it represents GS acknowledging crypto as an asset class in a non-dismissive way

> Unfortunately, this is a pretty standard fluff piece with not much information.

Imagine if you had to write articles everyday to earn your paycheck.

Whether it is bloomberg or daily youtube vloggers, they have to put out fluff to make a living. You quickly run out of material and you have to sell fluff.

99.99% of media is useless fluff to sell you ads. Heck a lot of the articles themselves are ads ( for example, Tesla ads masquerading as articles ).

That's why the media are like a herd moving from one clickbait craze to the next. Many times they create the craze just to sell ads if nothing eventful happens.

How to do an ICO totally legally?

Is it even possible to register these securities without "going public"?

You create a new type of coin, sell it to investors for dollars and put it on the blockchain. What rights the owners of these coins get is up to you to decide, there is no regulation at play.

It seems Ethereum, Bitcoin and Litecoin are correlated but how will they do with a stock market downturn?

Probably poorly given they have a disproportionate number of retail investors and if these people lost their jobs crypto would undoubtedly be the first thing they liquidate to make ends meet. It also is unequivocally correlated to the market no matter what people will say.

My guess is they will tank since their value is driven by speculation right now.

Hard to say, more and more BTC in particular is being used as a shelter from the woes of fiat currencies. It's not the first time that a downturn in a fiat market leads to btc price increases as some players exchange their assets for btc.

How can you identify what growth is a 'shelter from fiat' vs mere speculation on technology ect when it's growing super fast all the time? There's no correlation with fiat currency value (except maybe in Venezuela) as far as I can tell

I think that use case is oversold in terms of what's driving the price up this year.

So far I believe cryptocurrency is one of, if the not the most, uncorrelated asset class.

https://www.forbes.com/sites/laurashin/2016/06/02/4-reasons-...

Yeah cause it's going through wild price swings due to idiosyncratic factors (Mt Gox, "Civil War", Coinbase decreasing purchasing frictions etc) which are pretty orthogonal to the stock market.

Regardless I think the wild price ride crypto has been on this past year is primarily driven by speculation (and possibly market manipulation), and as such when the recession comes and investors face a liquidity crunch they will sell their BTC.

But they seem to be correlated with one another - look at the similarity between ETC, BTC and LTC

What do people in the Bitcoin community think of this being perceived strictly as an investment vehicle?

That's a totally valid use case. Bitcoin can be many things simultaneously.

strictly as an investment vehicle

If by strictly, he means solely, then something that is strictly an investment vehicle makes no sense. The piper must be paid at some point.

I can invest in shares of a company, but the shares aren't strictly an investment vehicle, they serve as a way for the company to acquire capital to put toward it's mission.

Gold is strictly an investment vehicle for all intents and purposes. The vast majority of its price is due to recognition as a store of value vs inherent utility.

It doesn't require a 'mission' to have value- the fact enough of society (still a small minority which actually invests or knows the price) recognizes that others recognize it has value allows it to fulfill exactly this function

Doesn't gold's role as a store of value ultimately rest on it's underlying potential utility and it's material scarcity. Crypto currency is anything but scarce these days, certain brands of crypto may be more or less scarce, but gold is not separated from other elements by a brand name over-top of substantially similar functioning and composition.

Gold's value is ostensibly about it's utility but the price is completely disconnected from said utility. A massive amount of the supply is devoted to speculation and jewelry, which itself is a reflection of the arbitrary value and price vs any actual physical properties of it. In many ways its value is still a function of properties it had hundreds of years ago that made it eminently suitable for coinage and the belief networks have persisted.

If we weren't using gold in this way the price would indisputably be a fraction of what it is vs if the industrial applications stopped it would definitely still retail value.

Bitcoin is limited to 21M coins and we are at 19M of them. It is functionally more scarce than gold in that once we hit 21M that's it- we can't develop some new technology that unlocks more gold like asteroid mining.

Broadly speaking, isn't it possible for Bitcoin to be largely an investment now whose true usefulness is still to come?

It's a good cover story for the non-cognoscenti.

ctrl+f, "finite": 0 of 0 ctrl+f, "supply": 0 of 0

Very disappointed by the quality of the discussion in this thread.

You seem to complain but not contribute. Can you explain maybe why the discussion around the funniest supply important?

"If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry."

As a long term owner of Bitcoin, I can say this is the absolute worst time to start investing in it. It's development has been taken over by a group of mentally unstable developers with weird personal agendas and beliefs. The official Bitcoin website and subreddit are heavily censored and are no longer a reliable source of information. It's widely reported elsewhere that their moderator stole millions of dollars worth of Bitcoin from users.

There are other cryptocurrencies that deserve attention but I won't mention them here so I don't look like a shill. Be wary of the 4chan crowd who seem to be everywhere hyping obscure currencies to get rich off of pump-and-dump schemes.

If you're going to invest in a cryptocurrency, thoroughly research it before buying. Trust nothing on an official website or forum. Verify everything you read on public forums.

And never leave your money at exchanges. The #1 rule of cryptocurrency is this: Coins are not in your possession until you are the only one with the private keys.

For anyone reading this, don't take this comment as gospel, or the comments disagreeing. There are 2 factions, they both generally hate each other and there's an incredible amount of shilling, astroturfing, etc. From both sides. There are also genuine people in both sides. Blockstream, the company that employs some of the current core devs are the devil for some, saviors for others. That "moderator", Theymos, is a knowledgeable and fair guy for some, a petty tyrant and thief for others. If you go to the main subreddits for both factions, they spent most of their time taking digs at the other faction and quoting whoever supports their position, no matter how silly their arguments are. There's very strong groupthink and tribalism and to me it looks dangerously like the_donald or something like that.

I don't have a dog in this fight. In fact it's so confusing I don't know which of both factions has a better case. But I'm pretty sure the wild accusations both fling at each other are in many cases heavily based on agendas. Take everything you read with a grain of salt.

> As a long term owner of Bitcoin, I can say this is the absolute worst time to start investing in it. It's development has been taken over by a group of mentally unstable developers with weird personal agendas and beliefs. The official Bitcoin website and subreddit are heavily censored and are no longer a reliable source of information. It's widely reported elsewhere that their moderator stole millions of dollars worth of Bitcoin from users.

I don't agree with this. It may be a bad time to start investing, due to the price, but Bitcoin Cash is the corrupted currency in my opinion. Roger and his cronies were spamming the network for months, trying to create demand and when he finally got his big block coin, he wouldn't sell more than a few BTC for it. He's all about the money, along with Bitmain. I concede some core developers (like Luke-jr) are not the greatest, but they've been in control since day one.

> In control since day one

I don't know much about bitcoin, but I do know that the original people who took over from Satoshi (Gavin Andresen, Mike Hearn) were ousted in rather ugly and public ways a couple of years ago. As far as Roger Ver is concerned, I believe he is also one of the earliest people in the space.

EDIT: Come to think of it, the people currently leading bitcoin development originally told Satoshi (on the crypto mailing list) that bitcoin would never work (Greg Maxwell and Adam Back both).

>Roger and his cronies were spamming the network for months

For fucks sake. Show the "spam," track it to an individual. The blockchain is transparent yet no one has done this.

This is what my other comment was about. Named users in the community have been made into horrific caricatures who are the basis for conspiracies no one is able to prove despite the transparency of Bitcoin itself.

https://jochen-hoenicke.de/queue/#all

May was the peak of controversy, arguments and discussions about future of scaling bitcoin. core vs unlimited node count, miner support, vendor/merchant support - nobody knew how would things turn out.

throughout that time one of main arguments was that blocks were full and mempool (unconfirmed transactions) was gigantic.

the moment camps settled on agreeing to disagree - mempool was gone.

feel free to continue pretending this all was simply a coincidence.

No seriously, show the transactions you consider to be spam. Classify them in some tangible way, then identify the users behind them.

The specific claim was that it was from "Roger Ver and his cronies," not that a mempool backlog exists.

Show the transactions you claim to be "spam," and identify the persons behind them. Go do it.

a simple glance on that graph with knowledge of notable events in bitcoin timeline screams that the "omg blocks full mempool gigantic" argument is fishy. i don't really care that i can't convince you without spending hours and hours satisfying your standard of evidence, i have better things to do.

>a simple glance

Show the damned transactions.

> with knowledge of notable events

The claim was very specific, show the damned transactions.

>i don't really care that i can't convince you

Because you can't show what the "spam" is let alone show who is "spamming."

I can't prove the transactions were Ver's anymore than I can prove some are yours.

But as keymone said, the timeline of events is fishy. How come they stop when the block size debate does, or Roger uses them as examples in post after post of why Core needed to be replaced because of this huge backlog. When, you can look at the transactions yourself, most are dust, and they peak when the debate does.

I can't prove it, sure. But myself and many others think this because it is logical, and it sounds like there is no changing your mind so we'll stop here.

> It's development has been taken over by a group of mentally unstable developers with weird personal agendas and beliefs.

They literally want to edit Satoshi's bitcoin whitepaper[1]. One of the supporters of editing the paper is theymos, who runs the censored Reddit sub.

I was banned there after reporting a violent user who was urging the torture of Jihan Wu[2] of Bitmain. Violent invective and hate directed towards races & nationalities somehow are not insta-moderated while mundane comments about Bitcoin itself get mod-queued forever? Its out of control there.

That lot is not to be trusted.

[1] https://github.com/bitcoin-dot-org/bitcoin.org/issues/1325

[2] http://archive.is/oDdq5

This is a great breakdown of the history of recent craziness:

https://np.reddit.com/r/BitcoinMarkets/comments/6rxw7k/infor...

>It's development has been taken over by a group of mentally unstable developers with weird personal agendas and beliefs.

Weird personal agendas like thinking SegWit is a good upgrade for Bitcoin? Skip the ad hominem.

>It's widely reported elsewhere that their moderator stole millions of dollars worth of Bitcoin from users.

Is this about theymos being donated a ton of bitcoins to host and improve some forum software back when they were worth nothing, and then using it for that? People are still on that witchhunt after all these years?

https://www.reddit.com/r/Bitcoin/comments/2mcdb4/thermos_is_... https://www.reddit.com/r/Bitcoin/comments/23crla/rtechnology... https://www.reddit.com/r/Bitcoin/comments/23o0hs/an_rbitcoin...

>There are other cryptocurrencies that deserve attention but I won't mention them here so I don't look like a shill.

Shit, I'd appreciate it if you named some. I'm actually planning on putting my entire next paycheck towards crypto. Currently eyeing Neo even though I apparently missed the boat by not buying it when it was called ant.

I'll name one: Monero. It's not a fork of Bitcoin. It's based on CryptoNote. Unlike Bitcoin which is public and traceable, Monero's address balances are private and the transactions are not traceable. It is fairly mined (no premine or instamine).

There's a lot of interesting tech/code behind it. Check out the Monero subreddit and/or start here: https://www.monero.how/

I learned about Monero when someone else mentioned it in a comment here on HN earlier this year. After doing my own research, I believe Monero was and still remains the best solution available to fulfill the requirements of a decentralized digital currency.

Litecoin is extremely undervalued. Ethereum has an incredibly bright future, Monero is an incredible tool for privacy.

Check out bitfinex.com and start trading pairs there. They have a description under every currency that should help.

It wasn't long ago that crypto prices on Bitfinex were quite a lot higher than other exchanges because you couldn't withdraw national currencies [0].

Are their banking issues all resolved now?

Also, if you're domiciled in the US, Bitfinex won't even do business with you [1].

For US customers who what to be legal, Gemini seems pretty solid and verifies new accounts quickly, though they only support Bitcoin and Ethereum [2].

[0] https://www.coindesk.com/spreads-widen-bitcoin-exchanges-ami...

[1] https://www.bitfinex.com/posts/216

[2] https://gemini.com/

I know this, but you can still use Bitfinex by depositing crypto and using a VPN. Not really "illegal".

Gemini is great, but they are slow to verify and as you stated very limited on your trading pairs.

> Litecoin is extremely undervalued.

How did you decide this?

It is faster that Bitcoin (~2.5min avg block time vs ~10min), has a vibrant community, and still very secure. Easier entry price, and you can spend $5 without a $3 fee, or any fee at all.

It also already has SegWit and has for months.

"Easier entry price" is a non-argument, it's always been known Bitcoin would become expensive and trading in single BTC would not be viable; that's why BTC and other cryptocurrencies are expressed in floating point numbers / Satoshis. You can buy 1 Litecoin or 0.01 Bitcoin (example), doesn't matter that much other than having a full number. But the investment price is the same.

Hopefully transaction fees will start to go down once off-chain transactions start becoming a thing.

I keep looking at Neo but not sure I've already missed out

it's showing a little dip now as of writing, if that's what you wanted.

Read this until fully understood

https://github.com/EOSIO/Documentation/blob/master/Technical...

And decide

For investment only outlook

Token Model and Resource Usage

PLEASE NOTE: CRYPTOGRAPHIC TOKENS REFERRED TO IN THIS WHITE PAPER REFER TO CRYPTOGRAPHIC TOKENS ON A LAUNCHED BLOCKCHAIN THAT ADOPTS THE EOS.IO SOFTWARE. THEY DO NOT REFER TO THE ERC-20 COMPATIBLE TOKENS BEING DISTRIBUTED ON THE ETHEREUM BLOCKCHAIN IN CONNECTION WITH THE EOS TOKEN DISTRIBUTION.

All blockchains are resource constrained and require a system to prevent abuse. With a blockchain that uses EOS.IO software, there are three broad classes of resources that are consumed by applications:

Bandwidth and Log Storage (Disk); Computation and Computational Backlog (CPU); and State Storage (RAM). Bandwidth and computation have two components, instantaneous usage and long-term usage. A blockchain maintains a log of all messages and this log is ultimately stored and downloaded by all full nodes. With the log of messages it is possible to reconstruct the state of all applications.

The computational debt is calculations that must be performed to regenerate state from the message log. If the computational debt grows too large then it becomes necessary to take snapshots of the blockchain's state and discard the blockchain's history. If computational debt grows too quickly then it may take 6 months to replay 1 year worth of transactions. It is critical, therefore, that the computational debt be carefully managed.

Blockchain state storage is information that is accessible from application logic. It includes information such as order books and account balances. If the state is never read by the application then it should not be stored. For example, blog post content and comments are not read by application logic so they should not be stored in the blockchain's state. Meanwhile the existence of a post/comment, the number of votes, and other properties do get stored as part of the blockchain's state.

Block producers publish their available capacity for bandwidth, computation, and state. The EOS.IO software allows each account to consume a percentage of the available capacity proportional to the amount of tokens held in a 3-day staking contract. For example, if a blockchain based on the EOS.IO software is launched and if an account holds 1% of the total tokens distributable pursuant to that blockchain, then that account has the potential to utilize 1% of the state storage capacity.

Adopting the EOS.IO software on a launched blockchain means bandwidth and computational capacity are allocated on a fractional reserve basis because they are transient (unused capacity cannot be saved for future use). The algorithm used by EOS.IO software is similar to the algorithm used by Steem to rate-limit bandwidth usage.

It feels like I've missed out on a ton of boats as well but someone pointed out to me a few days ago that three years from now it will feel like today's price was very cheap. If you think about it, cryptocurrency has a relatively minuscule market share compared to fiat. This can be tracked using the M1 rank, as per zero block app, bitcoin currently ranks at 41 with a market cap of 70B. The US dollar in US alone is about 3.5 trillion. One could try to hypothesize just how much of that will be translated into BTC or altcoins but it is obviously very difficult to predict the future in exact terms. It does however signal that cryptos are at a nascent stage.

That said, there are still relatively young coins I'm really looking at investing in this week including NEO and Golem. I'm still trying to get more information on Golem because I think the idea of shared computing power globally is one of the most understated computing revolutions in our age. If anyone has any digestible information on the brass project (Golem), please point it out to me; I still find it a tad arcane.

Other coins to watch/buy are welcome.

No one can control or take over Bitcoin development. Similarly, there is no official website or subreddit. This system has no authorities.

btc seems like a great way to spy on everyone using it.

Unless state is replace by message handling

https://github.com/EOSIO/Documentation/blob/master/Technical...

I've been reading through the paper. It looks fundamentally like Ethereum, but with a runtime environment with specific functionality baked in, and some kind of ongoing voting system for governance of the chain. It doesn't seem to have anything novel in way of privacy: the references to a user's "private database" seems to be using "private" in the sense that only the user can update their own database, not that their database is out of view of other users. This seems to support that:

>All state communication among accounts must be passed via messages included in the blockchain.

As far as I know, blockchain-based cryptocurrencies so far only seem to be able to achieve privacy through ring signatures or zk-snarks, and that link doesn't feature either. Additionally, it's prominently built around enabling arbitrary computation like Ethereum, and arbitrary communications that have to be executed by every node have to use something like fully-homomorphic encryption to be private from the nodes computing them, which is presently impractically-inefficient for this use-case and not featured in the link.

I like that he calls Bitcoin an “anti-currency” since, all too often, it seems people view Bitcoin as just-another-currency, when it’s fundamentally different from the national currencies we’re used to using every day.

National currencies are backed by government bonds, while Bitcoin is commodity-like, in that it’s not backed by anything — it’s a monetary unit in its own right. This avoids the recursive relationship between national currency and the government bond, which exists because government bonds are denominated in the very currency whose backing is that bond. So currency is valuable because it’s backed by bonds, which are valuable because they’re denominated in that currency, which is valuable because it’s backed by bonds... etc.

The problem with a currency backed by bonds is that the value of a bond depends on the rate of interest which, in turn, means that the value of the currency depends on the rate of interest. Traditionally, bonds were denominated in gold, which avoids the recursive definition of the value of money, because it ensures that the value of the monetary unit does not depend on the prevailing (bond) interest rate.

Currencies aren't backed by bonds.

Bonds comprise the vast majority of assets on the balance sheet of the central bank, so why not?

When gold was the primary asset on the balance sheet of central banks, we said that their currency was backed by gold. So why isn’t it backed by bonds now, when they have replaced gold in this regard?

When the dollar was backed by gold, it was possible to go to the central bank and redeem a fixed number of dollars for a certain amount of gold. While central banks do hold bonds on their balance sheets, it is not true that an investor can convert a predetermined dollar amount into a bond at the central bank: bond prices are determined by the market.

https://en.wikipedia.org/wiki/Fiat_money

Bonds have value because we assign a dollar value to them. The dollar value itself is fiat currency. The bonds do not value to dollar, the dollar values the bond.

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