Hostility toward a community in which the target currency is particularly popular.
“Some men just want to watch the world burn.”
Mind you, I say this as a crypto currency outsider.
That's true as long as cryptocurrency itself is seen as fringe; it's less true if cryptocurrency becomes generally accepted.
Of course, a nation-state or other actor interested in preserving the role of fiat and keeping cryptocurrency on the fringes is also a possibility.
If a bank is critically hit so bad funds become impossible to correctly attribute to people (Fight Club type unrealistic scenario), at least in the US FDIC would probably come in to play. The bank might even have to be treated as a failed bank.
People wouldn't stop using banks, but they would stop using that bank.
I'd really like to live in a world where that's true, but I don't see Equifax going anywhere. PayPal does a form of this as well, except it's the central system and not a rogue actor that locks your money away. Well informed users avoid PayPal, but there appear to be many more uninformed users.
A major hack against Visa would absolutely tank the value of Visa the company however, and if people who believed they were paid weren't made whole somehow then it would also tank the acceptance of Visa.
And it would be an ongoing devaluation without Visa being able to show they'd fixed the underlying flaw - which you can't with a 51% attack.
I have a shift card, bought tacobell with bitcoin.
And that's not even considering the transactions fees it costs to get the Bitcoin to your account.
Then there are the transaction fees for using the card, which coinbase says is free "for now".
Sure, transactions are intermediated through some consensus denomination for exchange. So?
He still lost bitcoin and gained tacos. Just as someone else might lose a portion of a credit balance and gain tacos. You get just as full either way.
Credit and debit cards are just a way of shifting dollars around. Bitcoin is more a commodity than a currency. Yes, you can convert gold or oil to dollars and buy things, but you can't walk into a store and give them some gold flake or a quart of Texas crude in exchange for a candy bar.
A credit card is shifting a line of credit, an intangible promise to pay, a form of trust, that happens to be denominated in dollars.
We can pretend it's just a balance of dollars, even though it technically isn't, because it makes conversations easier, and in practical fact that's how it appears to work. But that's just a shorthand.
We can use the same shorthand to say someone bought something with bitcoin.
There's no reason to demand perfect technical precision with bitcoin and no similar pedantic precision with lines of credit.
> you can't walk into a store and give them some gold flake or a quart of Texas crude in exchange for a candy bar
I think this is the best test. Here the guy has done that. He walked in with bitcoin and walked out with tacos. When you say that's not really what happened, it feels like a no true scotsman response.
Bitcoin is not a currency. Plenty of other things are true currencies, so there's no fallacy here.
If you insist that the guy paid his beer with USD, it is going to be very difficult to discuss about anything as the meanings of the concepts are so twisted.
It is quite obvious that using a credit card that then accepts BTCfrom you does not mean that you use BTC to pay for anything but your credit card bill.
It's a useful currency.
Amazon alone probably handles more transactions over the course of a couple of weeks.
[1] https://www.quora.com/How-many-credit-and-debit-card-transac...
Even prominent Bitcoin advocates agree it's not effective as a currency: http://avc.com/2017/08/store-of-value-vs-payment-system/
Also, all systems that pay taxes are negative sum as well! Utility is not measured in money.
You're also wrong about taxes. Consider my local taqueria. They buy raw materials and create value by making ready-to-eat food just when people are hungry. They receive cash in exchange, a portion of which they pay in taxes to fund the infrastructure their business depends upon.
That is positive sum for all participants. It has to be. If taxes tipped it into the negative sum category, they'd eventually close down.
If you buy 50 dollars of taco materials, then taco materials seller makes likes than 50 dollars ,because the state will charge a tax on him. If he didnt sell 50 dollars worth of raw materials, he would have 50 dollars of raw materials to consume, instead of less than 50 dollars.
On the other side, making the taco, you have the same issue: if you sell 100 dollars of tacos, and someone pays you 100 dollars for them, you then pay taxes.
You earn less than 100 dollars, and someone else lost 100 dollars. Repeat the proces ad-infinitum and your holdings go to 0.
If you buy 50 dollars of taco materials, then taco materials seller makes likes than 50 dollars ,because the state will charge a tax on him. If he didnt sell 50 dollars worth of raw materials, he would have 50 dollars of raw materials to consume, instead of less than 50 dollars.
On the other side, making the taco, you have the same issue: if you sell 100 dollars of tacos, and someone pays you 100 dollars for them, you then pay taxes.
You earn less than 100 dollars, and someone else lost 100 dollars. Repeat the proces ad-infinitum and your holdings go to 0. (assuming for simplification, any rate of positive taxation on income).
Most economic activity is positive sum. When I'm hungry and on the go, a taco is more valuable to me than raw taco materials, so I pay more for it. Value has been created. The taqueria owner takes money in, pays their expenses, and is left with a profit. Taxes are paid out of that profit, and you could just as well model it as another kind of expense, a societal infrastructure fee.
Many countries use value creation as an explicit taxation model: https://en.wikipedia.org/wiki/Value-added_tax
Those are still positive-sum interactions in the economic sense: https://www.tutor2u.net/economics/blog/qa-what-is-a-positive...
But not dollars, which is what you are using to classify gambling as negative-sum.
> Many countries use value creation as an explicit taxation model: https://en.wikipedia.org/wiki/Value-added_tax
If the gobernment collected that tax but didnt spend or issued money, even VAT ends up capturing all the money supply.
This is an unnecessary long argumentation. Gambling is not negative sum because they provider entertainment that has utility.
I understand you are claiming the entertainment value outweighs the harm of exploitation and addiction. I strongly disagree.
Expected value is not the only thing to consider. Higher moments matter.
Insurance typically has negative expected value but it’s rational to buy it (in conjunction with owning the insured object) to reduce one’s variance.
Gambling will increase the variance of one’s portfolio at the cost of expected value, which can be rational depending on one’s situation.
Apart from weird edge cases where an actor needs to double their money overnight to return to solvency in order to have a chance of benefiting from an income stream in future, there aren't many cases where it makes sense from a portfolio allocation basis given the existence of non-negative expectation bets in other markets with a wide range of possible variances. The insurance and investment management industries are built on the principle that economic rationality works in exactly the opposite way to gambling: that inherent value exists in reducing risk.
Also, consider ghash.io or the odd OKPAY double spends.
They have an underlying value/utility. People have a real, tangible need _outside of the use of those products_ to get them fixed. Can you say the same for a cryptocurrency?
Zero.
Edit: any crypto-currency you can exploit gives you option to print yourself money.
First of all, the value of a currency that could be printer on any printer might not actually be even 0.
Secondly, cryptocurrencies do not operate in vacuum. Its not as simple as "printing yourself money".
Second, if I went to a store spent 199 dollars and those 199 dollars magically reappeared in my hand, didn't I create money out of nothing and reduce dollar value? Yes I did. Even if I never cloned any money I reduce the expectations of future stores that their money won't magically disappear.
And yes, I am aware banks do this, but they are regulated and when they abuse it, you get a financial crisis.
It’s more like being able to write two checks for your whole bank balance and having them both clear.
So very relevant are:
- whatever goods you bought with the checks need to be impossible to recall. So, like you need to find (two) someone’s who will effectively cash your check. You can’t buy a house because the police will come take the house back.
- you need to do it fast. The second you make are the first transaction you need fork and start mining hard. 51% gives you a speed advantage, but it’s very small. It still takes time to get the network to follow you.
Double spend is a very specific heist. Even if someone did it, it wouldn’t mean Bitcoin is valueless, it would just mean a certain class of heist is somewhat more probably and people need to adjust their security practices accordingly.
Tricks like waiting for extra confirmations, requiring identification before accepting payment, etc, are easy remediations.
https://en.wikipedia.org/wiki/The_Diamond_as_Big_as_the_Ritz
I think people need to be concerned that Governments, at any point of time, with their incomprehensibly huge computation power, can use it to crush bitcoin. Not only that but they can pass laws that allow them to forcibly seize the fattest wallets. Which ultimately ensure's that the Government can, behind the scenes, kick the scaffolding out from beneath us. All I see right now is state level actors experimenting in this regard, because seriously who single handedly has the computation power to take control of these cryptocurrency's if its not the government or a company like Google?
But fortunately, these state actors seem to have no interest in attacking crypto.
It seems like the governments that matters IE the 1st world, are perfectly happy to allow people to have access to a censorship resistant method of financial transactions.
This makes a certain amount of sense. The governments of the 1st world claim to care a lot about freedom. And it seems that they are getting us have it.
I don't see any of these privacy coins being banned yet, so.....
But anyways that is besides the point.
The argument that the OP was making was that governments are areal threat to crypto. And MY point was that these governments are NOT actually attacking cryoptocurrencies so I guess things are going to work out fine for cryptocurrencies.
To the extent there is a legitimate threat to dollar supremacy, it is in the Chinese renminbi. The U.S. dollar is ascendant because of the huge base of American consumers, who buy stuff with dollars others then need to find investment for. Plain and simple network effects.
The US dollar is useful to countries like china is because the US government acts as a debtor of last resort, allowing them to park surpluses in treasuries.
Which ultimately derives from our mammoth consumption. If Chinese consumption eclipses America's and their economy rebalances, they will have lots of Chinese consumers buying goods with renmimbi, leaving sellers offshore with boatloads of the currency to find investments for. (I consider this to be a moderate risk, and not one which would supplant the U.S. dollar but instead cause it to share the world stage.)
TL; DR Bitcoin is not a serious threat to the U.S. dollar. It promises huge profits to banks, which is why they're salivating over it.
The Chinese government is not interested in filling this same role, even if now anemic Chinese consumption somehow picks up, they will probably still want to maintain absolute control over the exchange rate.
https://datahelpdesk.worldbank.org/knowledgebase/articles/11...
If you look at the original paper, it's pretty clear that Bitcoin was meant to be peer-to-peer electronic cash: https://bitcoin.org/bitcoin.pdf
In practice, it has failed at this aim. I don't think that was necessarily so; plenty of things start out rough and become more useful over time. But the mechanics-adorers I've talked with seemed willfully blind to all the practical issues. We can't fix problems we refuse to see, so Bitcoin has preserved its machinery at the expense of fulfilling its vision.
I use technology to solve problems for people. The few niches Bitcoin has found (e.g., speculation, money laundering, ransoms, light drug crime) are not really what I would call solving problems for people.
Bitcoin has property similar to cash to many extend. It was not technically possible before its invention and as such as it is a real intrinsect value (dont ask me to quantify it)
Regardless, your point doesn't make a lot of sense, because many Germans surveyed on this say they use cash because it gives them better control over spending and more clarity as to where their money goes. Bitcoin is in no way superior to a debit card in that regard.
The value of new possibility isn't really intrinsic; you measure it through seeing if people actually use it. With Bitcoin they mostly don't, which suggests that it is at best more useful to a small slice of people.
Really, though, I think the closest financial match is a private currency: https://en.wikipedia.org/wiki/Private_currency
These are illegal in most places because they historically have caused a lot of problems without much in the way of redeeming value: https://en.wikipedia.org/wiki/Banking_in_the_United_States#1...
Digital currencies can be used via computers and networks while physical currencies such as banknotes and gold requires sneakernet.
Besides, AirBnb didnt even fail in providing accommodation for conference goers with included breakfast. It still works perfectly in its original intended use.
Bitcoin was a political experiment before it was a technological one. You don't pivot political beliefs the way you pivot a business. The technological experiment is still ongoing, but the political experiment has failed its goals.
They succeeded by expanding the mechanism to support actual discovered user needs. Which is what Bitcoin signally failed to do.
Then it hits the real world, and suddenly what people actually do with it and its valuation is dependent on how the exchanges operate (are exchanges even mentioned in the original paper?), energy prices in China, media coverage, interactions with alt-coins, etc.
I'm asking what the long game is? You haven't helped.
There would seem to be organizations (states?) that can wield tremendous resources to mine Bitcoins. I would think this would devalue the currency and, as is so often the case in life, fuck over the little people.
Never mind the insane amount of actual energy resources needed for this virtual currency. It almost seems immoral.
And with exploits like the one in this article, how can anyone continue to have confidence in it? It feels more akin to Confederate money printed during the U.S. Civil War.
2. Rent 51% and mine a fork in secret for a week
3. Wreak havoc
4. Collect money
Only if you make it public. A 51% attack works at a poker table too, but only if the marks don't know the game is rigged.
A successful double spend makes it public, as well as announcing your intentions to get to 51%. If you're quiet and can pull off a successful 51%, you can create the double spend before anyone knows.
If renting asic miners becomes vogue (and it might because it makes the computing market more efficient) then it might be possible just to rent asic miners for nearly free, since you'd be acquiring bitcoins while you were amassing the 51% computing power.
So why the pow? Is this stabilizing the actors somehow? It seems like an explicitly managed network would be no less centralized, way more efficient, and way more user friendly.
> Any non-colluding ecosystem should have centralized.
Not exactly. There's real laws and borders and market realities that prevent the ultimate centralization of hashpower but what's clear is that centralization is works, centralization is extremely profitable, it's happening and it will continue [1]. Centralization, I would suggest, is the true goal of bitcoin and is the inevitable conclusion.
> So why the pow?
I see what you're getting at but it should be obvious. The miners are paid very, very handsomely not to collude. Bitcoin miners charge fees that are effectively far greater than any centralized authority. They reap billions in profit each year [2] for turning on a bunch of computers and plugging them in. A cynic might say the "proof of work" is a marketing tool to disguise what is really just the mass transfer of wealth to the miners. Certainly, bitcoin holders believe that miners have somehow "earned" these outrageous profits.
[1] https://blockchain.info/pools
[2] http://fortune.com/2018/02/24/bitcoin-mining-bitmain-profits...
In addition to this you have to do it on margin, and most exchanges have a history of dubious liquidation of margin positions.