Comment by aws_ls | Hacker News Reader

Comment by aws_ls | Hacker News Reader

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Yes, that's why it highly irritates me when people repeat the Tulip bulb analogy. Bitcoin may be in a bubble, and it scares me. But it amazes me how little people think, before that kind of pattern matching.

I read the paper about 2 years back, after reading Nathaniel Popper's book 'Digital Gold...' which presents the history of cypherpunks, leading upto Satoshi's white paper. The book was enjoyable to read. And the paper's brilliance was stunning.

That said, when I think of it deeply, it does seem to me similar to pyramid schemes. The early adopters have a unfair advantage.

Also, its better that an alternative to proof-of-work is found. Although the argument is support of that, is that, it perhaps takes more energy to sustain the present financial system, the base of which Bitcoin intends to replace.

So I find myself in a curious position of being in the Blockchain camp, and unwillingly though. Which is because people who typically are in that camp, say the tech is good, but Bitcoin is not. But I believe Bitcoin by itself is a fantastic and disruptive thing. Without that app there is no platform (blockchain) evolution.

But of course Bitcoin has flaws, and we could be in a big bubble. But no half baked Tulip bulbs analogy please+.

Another flaw which I find with Bitcoin is the ownership is very fragile, compared to real world ownership. In these days of phone cameras, all it takes is an accidental photo of my secret 12 words, for my satoshis to get compromised. Or there is no alternative, if I lose my private key. Real world banks have ample ways of addressing the identity and tend to offer more robust possession safety.

+ - I have not seen that analogy on HN, thankfully, but its there every where. Yesterday, I saw a respected VC making it on LinkedIn.

Edit: minor

> The early adopters have a unfair advantage.

That's absolutely true but consider this: early adopters always have an advantage, in fact just being born earlier than someone else gives you an advantage. Family wealth, real estate ownership, rent seeking, tenure and so on are all linked because of this.

Always is a big word. So you are saying people living today have a disadvantage against people from 200 years ago? I mean I get where you are coming from... less competition and more room left to explore but there is also less knowledge to start from and less people to cooperate with. The advantage depends not on time but on how resources, in particular knowledge, is distributed in a society - bitcoin makes a design decision which undouly favors early over late adopters but it wouldn‘t necessarily need to.

> bitcoin makes a design decision which undouly favors early over late adopters but it wouldn‘t necessarily need to.

Explain please how it would be possible to create something like bitcoin which does not in some way or other favor early adopters over later ones, I really can't see it so this is a genuine question. Not 'pre-mining' is roughly equal to simply not adopting it at all. I see it analogous to a founder not believing in their product to the point that they will not use it. Of course 'Satoshi' could have not pre-mined as much but who is to say whether those coins are even accessible today?

And anybody that joined in later than that already lost that early adopters advantage compared to those that joined earlier.

Which probably means that (wild hyperbolic assumption following) if you haven't done anything with it so far you'd look at me and my miserly number of coins as an 'early adopter' whereas I was - and still am - pretty skeptical about bitcoins long term viability.

Bingo. Love the theory. It should work. Let's see.

Sorry for the late reply, I am not a regular poster so I forgot about the comment :(

I didn‘t say that there wouldn‘t be any favoring towards early adopters... a „better system“ will by definition always favor early adopters at least through efficiency gains accrued through the usage of the system over users who have not yet adopted. BUT bitcoin is crazy in terms of „value“ increase that is not related to any real gains in practice. People buy tokens because people invest money to find tokens because people buy tokens. And because everyone seems to be „making money“ from that things just continue... It‘s like with the rat who can control its own cocain supply...

So what I meant to say is - this specific system design is madness!

DLT in general is very interesting and I am playing around with some ideas regarding currency pegged tokens that increase in value if empirically verifiable achievments/improvements have been made. The goal is to create common-interest communities that are rewarded for realizing real-life impacts. So even people not participating profit. People who join in profit a little more. The goal is to have sustainable growth and predictable prices.

Furthermore, I've tried to pay lots of people in bitcoin over the last couple of years, and often the response is "fake money? no thanks, I want real money please".

Largely from the same people who complain most loudly about inequality. You can lead the horse to water, but you can't make it drink...

And your secret 12 words, even if never revealed to anyone, presents to you considerable frailty:

https://www.youtube.com/watch?v=foil0hzl4Pg

That's a talk about brainwallets, which is something else. Brainwallets are generally chosen by humans; you can't rigorously prove how much entropy they have, and in practice it's usually much less than people realize.

With a proper 12-word phrase, each is randomly chosen from a list of 2048 words for 11 bits of entropy per word. That's 132 bits of entropy, which is not crackable. (With a 24-word phrase you subtract 8 bits for a checksum; I'm not sure about the 12-word format, but 124 bits of entropy isn't crackable either.)

Ah, I did not realize that. Thanks for clarifying for me!

These are all important considerations that any investor in bitcoin needs to consider.

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