Unforeseen Consequences and that 1929 vibe
antipope.org
antipope.org
> we're going to run out of new BTC to mine sooner or later
as it's not a question of "sooner or later", the supply schedule is fixed and well-known. But even more:
> At that point, the incentive for mining (a process essential for reconciling the public ledgers) will disappear and the currency will ... will what?
... will be driven by mining fees. Or maybe it won't, which is also a reasonable guess. But suggesting that we have no idea and no plan is disingenious.
Also:
> if, as I think, BTC doesn't deliver, then the bubble will eventually burst.
It's not necessarily an all-or-nothing thing. Is 10'000 USD overvalued? Maybe, but that wouldn't mean that the actual value is 0 USD, only that it's somewhere between 0 and 10'000.
And:
> A working distributed cryptocurrency model is inimical to the interests of billionaire monopolists who want to get rich by imposing rent-seeking practices [...followed by regulatory phantasies]
I also think this argument is mistaken. The easiest way of rent-seeking for billionaire monopolists would be to buy Bitcoin and just wait and reap the rents.
errm.
>The easiest way of rent-seeking for billionaire monopolists would be to buy Bitcoin and just wait and reap the rents.
Pretty much all of them realize that the speculative bubble is built on nothing.
Please elaborate your objection? I'm happy to reiterate that it's clear that we can't predict the future, but that it's intellectually dishonest to suggest that we don't have plans when in fact we do. (It's fine to criticize the plans, but that's not what Charlie did.)
> Pretty much all of them realize that the speculative bubble is built on nothing.
That's no reason not to profit from it while it lasts, if you're a rent-seeking billionaire who can afford to lose their investment. It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
I was just noting that you didn't seem to have an especially clearer picture than Charlie did, while claiming he was wrong to say the future was unclear.
>It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
You don't seem to understand what rent-seeking is. Rent-seeking is when you seek out particular privileges that enable you to gain an advantage. A "sure thing" if you will. By controlling asymmetric information, the levers of government, cornering the market, or controlling exclusive rights over naturally scarce opportunities.
They are greedy, but not stupid. A greedy person may play slot machines, but would not be intelligently directing their avarice. This is ultimately what you are suggesting they do.
I'm not sure what to tell you if you don't see a difference between "there are clear plans for the future, but of course plans are no guarantee for what will happen in the year 2100" (my point) and "there is no plan for the future, nobody has any idea how to incentivize mining, what a bunch of idiots" (Charlie's statement). In fact, the plans do not only exist as plans. They are implemented in software that is deployed on a huge network of machines.
But then, remember, Charles thinks that pepe is a nazi symbol! He's not exactly among the rational.
"we're going to run out of new BTC to mine sooner or later"
Not for about 100 years.
Either put a cogent article without innuendo to make a point or nothing.
To quote a wise man, "this is not an argument, its a slur".
This is meaningless; you can substitute any other ideology you dislike (socialism, conservatism, anarchism, liberalism, whatever) and it makes just as much sense.
There's nothing at all morally or ethically bankrupt about it. If anything, libertarianism holds higher moral and ethical ground than any other ideology.
Capitalism is about voluntary transactions that are mutually-beneficial.
Examples of rent seeking that come to my mind are things like obligatory licenses (license owners can charge higher prices because possible competitors are shut out of the market); excessive zoning (property owners extract value because no new property construction is allowed); subsidised production.
What's an example of rent-seeking caused by someone having a pile of capital much bigger than small companies, that does not happen through lobbying for regulation?
> What's an example of rent-seeking caused by someone having a pile of capital much bigger than small companies, that does not happen through lobbying for regulation?
It seems like you mixed the discussion of rent seeking with a separate discussion of the competitive advantage of big companies.
> Rent seeking and hoarding demonstrably harm others.
I don't agree with the other party that libertarians hate rent seeking, though. The most obvious example of rent-seeking is, well, rent - and I've never heard a libertarian speak against landlords.
Also, what actions are you prohibited from taking now that you could do under a libertarian system?
Driving a car on the public highway without insurance.
Buying some marijuana to smoke in the privacy of my own home.
Buying scrap metal from a stranger without taking down his ID.
It's mainly (but not exclusively) things that are correlated with wrongdoing, but don't actually harm anyone in and of themselves.
I'm all for punishing people who are doing harm (e.g. in the above cases: pretending to be a competent dentist when you're not, or running into someone's car and not paying them for the damage, or robbing some shops to pay for your marijuana, or stealing copper to sell for scrap), but I don't like punishing innocent people who are doing no harm, merely because they're trying to do something that is also done as a byproduct of harm.
Driving on the public highway with no insurance and no way to financially settle any potential accident is not an innocent person doing no harm. They're externalizing their responsibility onto whoever they collide with.
I know this is an ideological discussion and not a practical one, but my response to that is a lot of laws are in place because the harm the bad actors do when there are no consequences outweighs the potential benefit gained from a lack of regulation.
Something like 90% of libertarians I speak with are in favour of social safety nets (guaranteed basic income comes up a lot) and progressive taxation.
Everyone believes in collective effort for the greater good. People just disagree about the best way to achieve this collective effort.
On the second point, that's true. The same or similar outcomes can be achieved with different policies/incentives.
The privatization of everything including the social safety net.
> Have fun enforcing your property rights when the guy with more capital can drain you dry in the private court system
Users of the current court systems are having "fun" too, you know. What's the benchmark here?
Robber Barons, Gilded Age. <--- Read about this era before advocating for libertarian ideas
It's hard to have discussions about the present if you don't understand the past.
The most rapid increase in prosperity in the history of mankind, where millions of people were lifted out of abject poverty. Currently repeating in other countries that embrace free-market capitalism. What's your point?
[1] https://en.wikipedia.org/wiki/Execution_of_the_Romanov_famil...
If the rich were interested in self-preservation they'd treat wealth inequality as an existential issue.
The lesson here? Libertarians have good ideas about: The war on drugs,
Add this to your list: blowback.
I don't want to downvote because I dislike what it says. I want to downvote because its poorly researched and full of hyperbole.
I'm anti-BTC. The energy consumption is increasing on a linear curve at best. And we're at a point in our history where we need to reduce our atmospheric carbon drastically... BTC is only increasing it based on the speculation of a very small portion of Earth's population and provides little value to us in any meaningful way.
Also I'm not a free-market libertarian so there's that.
The intention is that by that point, the transaction fees alone will be sufficiently high to incentivise mining.
The security of a Proof-of-Work network is proportional to the amount of work you put into it. You can call the work electricity or computation, but ultimately the work is money. And the money spent securing Bitcoin will be basically the mining rewards. Right now, at $10,000 / BTC, that's about $6.5 B / year (10k$ / BTC * 12.5 BTC / block * 144 blocks / day * 365 days / year).
If you want to maintain the current level of security on the Bitcoin blockchain, you need to continue to pump $6.5B / year into mining rewards. You could spend less, but then you get less security. Right now BTC is pumping that money in through inflation and investment in the currency through exchanges. If you wanted to put that money in through transaction fees, then you need to have $6.5B worth of transaction fees per year.
That is a lot.
VISA has a yearly revenue of $13B, and a lot of that is interest charges and bullshit fees, not transaction costs. Mastercard and Paypal have yearly revenues of $10B.
It's still not impossible. If Bitcoin processes a similar number of transactions to one of the major credit card companies at a similar fee level, that would probably work out. It would need to process significantly more transactions to make a lower fee work, and if it can't match the transaction volume, it needs a significantly higher fee.
If the fees are insufficient, the size and security of the Bitcoin network will fall to match. How much security are you comfortable with? $1B / year? $100M / year? $1M / year?
By itself, I'd say $1B / year might be enough security. Any malicious nation-state wanting to attack the network through mining power would need to spend on the order of a billion dollars, which is a lot even for a large government. On the other hand, if you did have a sharp discontinuity, and not a gradual turn-down in spare capacity over many years as the mining reward gradually decreases, you would have a unique opportunity for attackers: a huge amount of mining equipment would likely be dumped on the market at once, and an attacker might be able to build up their own capacity quickly and cheaply.
The Lightning Network helps with scaling the number of transactions, but it doesn't change the need for an adequate amount of work to be done to secure the core network; you still need to spend a large number of dollars (or Bitcoins, if you prefer) each year mining, so that attackers cannot afford to attack the network through that venue. The Lightning Network gives you a larger tax base for this security tax to be levied on, but it doesn't change the fact that when you ask the question "How much money should we spend mining Bitcoin?" the only secure answer is "As much as we possibly can.".
1) The new Bitcoin supply is tightly managed and the miners maintain the current deflationary pressure, ensuring a continued rise in Bitcoin's value.
2) The new Bitcoin is tightly managed, but with the aim of some modest amount of inflation akin to what most central banks aim for. In this model, transaction fees dominate mining profits since Bitcoin's value will stabilize or drop.
3) The new Bitcoin goes into hyper-inflation Weimar Republic-style, eventually becoming worthless.
I think it will be number 3. There is too much money to be made by attempting to time the inflationary spiral, and miners essentially acting as Bitcoin's central bank are in a perfect place to take advantage of it.
Unless a critical mass of actual users want the fork, it will never succeed, because the fork will not have enough value to be worth mining.
also I've never seem a response to this paper here from the Eth crew https://download.wpsoftware.net/bitcoin/pos.pdf
Bitcoins will continue to be valuable, short of some security flaw wrecking them, simply because of scarcity and functionality. But if they can't be used for a majority of (legal) financial transactions, the value will be limited. And as long as the exchange rates are highly unstable and exchanges are unreliable/untrustworthy, mainstream banking won't touch it with a ten foot pole. They don't want the risk.
You do not understand mining difficulty adjustment
If we're in a speculative bubble (we are), it justifies the mining. But bitcoin will never, ever be a viable global currency if it's deflating 500% a year, like it is right now. Mainstream reserve currencies are designed and carefully regulated to inflate at 1-4% or so, slowly losing value - inflation encourages investment, because sitting on cash hurts. What could someone invest their bitcoins in that could justify giving up the possibility of a 500% annual return just for the techno-equivalent of stuffing them in a mattress?
Bitcoin mining, apparently.
See where I'm going with this? Investing outrageous sums in bitcoin mining makes sense when it's a massive deflationary bubble. It makes almost no sense at all when it's slowly inflating like a grownup currency does.
The electricity cost of mining bitcoin is directly related to the transaction fees, once all bitcoins are mined. This is because if mining is very profitable (transaction fees >> electricity cost), more people are incentivised to mine, thus raising the hash rate and difficulty, thus making mining more expensive. If mining is very unprofitable (transaction fees << electricity cost), people turn off their machines, hashpower and electricity cost drop, and mining becomes easier.
Thus if successful BTC has ~300k on-chain transactions a day, transaction pays average $1 in transaction fees, you expect ~$300k of electricity to be used a day.
--
No one expects BTC to keep deflating 500% once it reaches saturation. Currently all of BTC value is speculative - based on the 0.1% change it'll become successful and be worth $MOON, against the 99.9% change it'll fail and be worth 0.
In the end-game scenario where it's an established global exchange network, with all the coins available already mined, it's only as deflationary as other currencies are inflationary.
The 'inflation causes investment' theory only applies to investment that has expected return of 1-2%; given that the stock market return is estimated at ~7%, and yet people still hold cash, it seems hard to believe that inflation has significant impact on investment.
And contrast the low risk / high liquidity / near zero return behavior of cash with bitcoin. With bitcoin, you have very high risk (speculative bubble) / limited liquidity (can't be used for most transactions, must exchange) / absurdly high returns. It is in no way like cash. It's pure speculation.
A medium of exchange needs to behave like cash. It needs to be highly stable and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to replace cash (and cash-equivalents like credit cards), it's doing an absolutely shitty job of it, and will continue to do so until the price stabilizes.
As for inflation's impact on investment... read the WSJ or Forbes regularly for what the mainstream financial industry thinks about that. They're absolutely inflation-phobic. I'm old enough to remember late-1970s stagflation, which made basic investments like real estate totally absurd and nearly wrecked the economy. No one wants to go back to that. But if there's one thing worse than high inflation, it's deflation - when cash actually increases in value. It radically disincentivizes investment, when you can just stuff cash in a mattress and make a real return doing so. Why take a risk if you can make money without it?
How many mainframes keep track of money at banks? How much paper is used for ledgers? What % of internet traffic is about moving money? How many vans of cash move through cities to fill ATMs?
But I'm addressing the argument that the energy consumption for bitcoin mining and the energy consumption of the mainstream financial system is directly comparable (they're not).
In a competitive market we should expect that mining costs (energy consumption) would converge to the mining reward, which is currently at 12.5 bitcoin per block. (I don't know how competitive mining really is at this moment though)
Of course, it is important to remember that if the mining difficulty becomes too low it gets cheaper to launch a 51% attack on the network.
You are correct that people have a higher incentive to obtain Bitcoin than to spend it. It doesn't follow that there is no incentive to obtain it.
1. 'bitcoin delivering' and bitcoin value crashing are orthogonal concepts. Store of value and hoard-speculative aspects of bitcoin are probably the worst parts of bitcoin.
2. Non regulated cryptocurrencies are not exactly anti-oligarchs. Absence of regulation would set them free to prey the weak. Goldman Sachs and all of the finance innovators who participate in disaster capitalism would love cryptocurrensies if they take off.
You have got to be kidding me. After druglord/pedo/(eco-)terrorist money, now it's the Nazi currency.
Is there a Bitcoin smear left that we haven't used yet?
Edit: Somebody also alert Olaoluwa Osuntokun to what he's getting involved in. He promptly should go back to `foo/bar` instead of `kek/kek`.
Also makes sense it would draw interest from anti-government types. I do happen to agree with the two points the author makes at the end of the article: either Bitcoin succeeds and gets invaded by corporate money / power or it fails and something takes its place, but there are going to be a lot of tears either way and people are going to blame the politicians because that's what they do.
In 2012 HSBC was fined and settled for having laundered $7 billion of drug money between 2007 and 2008 and $19.4 billion of Iran related funds.
In 2017 Deutsche Bank paid $630 million in fines and settlement for having laundered $10 billion of Russian assets. Explain to me how can launder that kind of money using BTC?
But we don't even have to follow him on his "BTC-->another Holocaust!!1!" route to see he's nuts.
That's because "don't use BTC because it's less efficient than VISA" is already nuts. BTC and VISA aren't performing equivalent functions, so he's comparing apples to oranges. For those who prefer decentralization, the only relevant comparison is between systems that deliver decentralization.
That said, as I've pointed out elsewhere, bitcoin does not currently behave even remotely like a useful medium of exchange. The price needs to be be rock-solid stable, the way the dollar or the euro or the yen is stable, and it needs to be extremely liquid, usable for most transactions. When bitcoins are generating 500% annual returns relative to stable currencies simply by existing, spending them is actually irrational (although unloading and getting out while the getting is good might not be). Until it's stable, forget government interference... the banking system won't accept bitcoin.
Can you expand on this thought? What is the difference between "spending" bitcoin and selling it?
I wrote that comment while munching on a bagel and a diet coke, for which I paid $5.26. The transaction took only a few seconds. I can do that partly because I know the five bucks I spend today would still be worth about five bucks six months from now, would still buy me a bagel and a diet coke. I spent five bucks. I did not "sell" five bucks. That's not how a medium of exchange works.
If I reasonably suspected that the five bucks I'm spending on the bagel would be worth ten bucks in a few months, I'd be very hesitant to spend it.
On the way home from the bagel shop, I gave another five bucks to a homeless woman. Could I have even done that with bitcoin?
And in fact it is much easier to send bitcoin to a homeless person than it is to send them a bank transfer, as it is extremely difficult for a person without an address to even get a bank account.
How does anyone reach adulthood and clutch this kind of fear of Internet assholes? Embarrassing.
Why the hell did this even make it to the front page???
Garbage blogpost.
I dislike the bitcoin and cryptocurrency industry & communities in general, but this is just ridiculous.
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Two friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:
Hey Satosh... I have a genius idea Yeah, what is it? You know that app you coded...the one that churns out the useless SHA algorithms? Yeah? LOL...lets sell them as digital currencies! Dude...you are fucking wasted, here, have another bong No, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals! Dude... you are insane! What kind of moron would buy something like that? Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW? They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughter They are still laughing today. The rest is history
The rest of the first chapter is pretty interesting. The domme/sub relationship thing is well written although the sex act depicted sounds implausible. The second chapter also has an interesting scene where Macx is rescued by Anette with the recording earrings. Not long after we have a rant by an Italian politician that already showcases most of the Strossian School of economics. Then the book gets muddled but that's arguably part of the concept.
Basically people keep listening to Stross for this sublime sentence: "Manfred is on the run, making strangers rich."