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Comment by DenisM | Hacker News Reader

The most remarkable thing about BTC is diffusion of responsibility. If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws. However here we had one non-affiliated group of bigger miners issuing the coins and another group of volunteer enthusiasts hyping them up. Since the second group was not hired by the first, the first group cannot be held accountable, while the second group has agents too numerous and too small to go after.

This is similar to the housing bubble, where the industry collectively hyped up the "investment" promising huge returns, yet no one was to blame when the music stopped.

Watch out for mo ways to diffuse responsibility, that's where "action" will be. Maybe we can nip it in the bud sooner if all keep an eye out.

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Preston Byrne pointed out since there is no pyramid, this can’t be called a Ponzi scheme. It deserves a new name, the “Nakamoto scheme”:

https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

Isn't most of the scheme the classic pump and dump?

"Scheme" implies a unified/central schemer, though. We can already call it a fad, or a mania (a la tulip mania).

It certainly does seem to be a "scheme" but I wonder how it compares to other fiat or gold currency when looked at through a "scheme" lens.

Fiat currency generally has some military, militia, or at least a police force and a tax payable in that currency. Gold is somewhat similar historically, though has been abandoned for that purpose in recent decades.

There is. The Schemer is Satoshi Nakamoto and anyone else involved with bitcoin's initial creation. They stand to profit handily by selling off their coins at many times their original, minimal value. But unlike a ponzi scheme or pyramid scheme, one can't trace fraudulent transactions directly to the schemers. It doesn't mean that it not a scheme.

Bitcoin isn't just a fad, it was clearly designed to enrich the original founders and early adopters at the expense of whoever is left holding the bag when the bubble bursts.

When does it stop being a fad?

When it wins and/or is popular enough to dictate rules and write it's own history.

I guess you can say it's less like a scheme and more like a meme.

why not call it a bubble, just like everything else like it that has come before in history?

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

Maybe bubble implies that the asset or resource has some actual value but the value was being over inflated.

Do cryptos have any real value?

Moving money around without an authority to stop you does have value. The question is whether that value is very high at all - in current society, probably not, and in a futuristic society I’d hope we’d develop trust mechanisms that don’t require the expense of total global order to move money/tokens/whatever around.

It’s an open question how the value of the infrastructure for doing this would be determined. Ideally the infrastructure would approach zero in cost and the value would be preserved for the participants in any transaction, not the rent-seeking hodlers.

Hodlers don’t extract rents.

Zero-point energy bubble.

Because it's not just a bubble. Bitcoin is, on a technological level, specifically designed to be an inflationary digital asset that primarily benefits the founders. Whatever utility it has as medium of exchange is incidental to its primary purpose which is to enrich the founders.

*deflationary

Disinflationary

Sure, there have been multiple bubbles. Always good to see the tulip posters keeping at it.

I assert that the diffusion of responsibility is a key feature of decentralized technology precisely because it renders us unable to "nip it in the bud".

Unfortunately, it does so for everybody. Including people who have a strong interest in the world not seeing Bitcoin as scam central. It all strikes me as a classic tragedy of the commons.

Not really. When the MPAA wanted action taken on torrented movies, they didn’t just throw their hands up in the air and go “whelp, it’s decentralized!“, they went after the authors of the protocol, the ISPs, hell even domain name registrars (that listed torrent websites). You can still torrent films, but you could get prosecuted or fined. Furthermore, some content is completely censored from torrent sites.

All that to say, it’s not clear to me that “decentralized technology” can prevent the very human process of holding others accountable. It does slow down that process for now, since the software obfuscates what’s going on (who’s doing what), but regulators will understand how the tech works eventually...

I think that in very high-level terms, you're quite correct. You say, for example, 'it’s not clear to me that “decentralized technology” can prevent the very human process of holding others accountable' - I mean, yeah. That's a good starting point.

On the other hand, your comment betrays some of the underlying revelation here: indeed, the MPAA has gone after the centralized components of peer-to-peer file sharing, as you point out. Yet, the bit torrent protocol remains as strong as ever (which, to be fair, isn't terribly strong in the first place).

The internet has learnt and will continue to learn from this, and the next generation of censorship resistance will decentralize some of the points of failure you have listed (which we centralized in the bit torrent iteration).

As for your last point: regulators understanding how the tech works is not meaningful if regulators are no longer the ones making decisions about the world. That will be a wonderful shift if our goals include peace and justice, which governments have consistently and correctly seen as threats to their existence.

At the end of the day, my point is really this: even in the most wild-eyed crypto-anarchist fantasy, everything is fine. There's no need for the doom and gloom that we're routinely seeing on HN in threads like this.

Sorry but I don’t buy this anarchist ideology. Evidence shows that these are the most peaceful times in human history, and governments are bigger than ever. Sure, we need to be smart about keeping leaders in check, and progress is jagged, but overall, aren’t you much happier to be born now than 3000 years ago? Would you have preferred to be born at any other time? Because if not, then you must realize that we’re here due to our capacity to unite and form a government that on average contributes to our progress (even if that progress is, admittedly, jagged rather than linear).

> aren’t you much happier to be born now than 3000 years ago?

Indeed I am - this is the most exciting time I can imagine being alive.

And I agree in full with everything you've said.

However, I think that governments, which have been essential for many of the developments we've enjoyed so far (and this is despite their reliably selfish and monopolistic tendencies), have largely run their course and are less useful with each passing day.

I am thankful even for my own government (in the USA), despite it being run in a completely childish fashion at this moment. But recognizing the importance of something doesn't mean that I want it to live forever. Indeed, I think it often means being willing to let it go.

Governments might be bigger, but they are a lot more limited. Indeed, we consider the Chinese and North Korean governments to be an aberration, even though they would have been considered ridiculously progressive 3000 years ago.

Also, let's not forget the 100+ million people governments still managed to kill in the 20th century, even with all those handicaps.

>You can still torrent films, but you could get prosecuted or fined.

You could, but national laws still vary a lot, and in some countries, the MPAA simply has no power to do anything. Routing BT traffic through those countries with a VPN makes it pretty difficult for them to take action.

>but regulators will understand how the tech works eventually...

Maybe, but they have no power over laws in different countries.

And yet, should it become illegal for people to exchange fiat for crypto and for domiciled entities to own crypto all the decentralisation in the world wouldn't help.

I don't really see the connection.

It seems to me that such a move will make decentralized money more valuable and more likely to be used, not less.

Most people don't care about decentralised money.

Stop the on/off ramps they currently use for speculation and the vast majority will stop speculating, as they were only in it for the get-rich-quick factor.

Again, I don't think that making it illegal to transact in crypto will have the effect of "stop[ping] the on/off ramps" - I think the opposite is far more likely.

So you think that if, say, coinbase and others are made to stop accepting deposits, Joe and Jane Retail-Investor are going to seek illegal methods to continue 'investing'?

I am think you overestimate people's interest, and underestimate just how much of a get-rich-quick bubble this has been.

You are talking about an extreme edge case situation, where the entire world declares crypto to be illegal.

I will agree that in this situation, crypto is probably dead.

The much more likely scenario, though, is that a couple countries try to make crypto illegal, and other countries don't, and the decentralization of crypto makes it very difficult for the attacking country to stop it.

The banning country isn't going to be able to target miners in other countries or take down exchanges that aren't located there.

Crypto is still useful in this much more likely scenario.

Think countries like Venezuela. They don't want people moving money outside the country, and yet people are doing that right now, with crypto, and the Venezuelan government can't stop it.

Nhawww - I was thinking about the USA doing it...

The USA has proven to be extremely friendly to crypto, actually. The SEC supports it.

So once again, this hypothetical seems very unlikely.

Yep, you are completely correct - so far. My reading is that they have decided that crypto is not a threat to their tax raising powers and it might provide a useful mechanism for a para-cash economy which enables more overall economic activity and yet is more amenable to monitoring and tracking and in the limit enforcement.

> If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws.

What laws are being violated by Bitcoin's participants?

Certainly not any SEC laws. Jay Clayton, SEC Chairman, has explicitly said that Bitcoin is not a security: https://www.investopedia.com/news/sec-chair-says-bitcoin-not...

If they were in violation of SEC laws, the parent comment is still be inaccurate since Bitcoin's immutable ledger would mean the SEC would absolutely be pursuing violations, like they are with other ICOs.

> This is similar to the housing bubble, where the industry collectively hyped up the "investment" promising huge returns, yet no one was to blame when the music stopped.

Except with the housing bubble the hype was generated by the government, with Republicans touting an ownership culture party line and Democrats applauding expert control of the economy by genius planners.

Secondly, in the housing bubble asset prices were pumped by leveraged (debt-based) transactions. The Hallmark of this is a collapse that happens twice as fast as the run-up. While certainly some people made leveraged plays on crypto I doubt it was very many, which means that the damage is contained to the sector (less domino effect of defaulting entities causing their lenders to default), evidenced by how the crypto collapse is twice as slow than the run-up.

This articulates the situation perfectly. A clear lack of checks and balances.

The entity behind BTC was smart to remain kind of anonymous.

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