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Comment by skohan | Hacker News Reader

The story of cryptocurrency over the past couple years has been a really interesting case-study in the application of Libertarian principals.

It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.

To me it's evidence that some form of governance is required to build something which can actually serve the greater good. I also would like to see a stateless currency work out, but there are clearly still quite a few problems to be solved before that will even seem like a possibility.

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> It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.

Care to elaborate? Some examples?

The ten MB block size limit lowers the number of transactions that can occur in a single block therefore inflating what miners can charge for a transaction. Increasing the blocksise would require miners to choose to mine a hard fork. See the DAO hack for what can happen with strong governance.

Without a small block size you would end up with a centralization of nodes onto datacenter servers.

We anyway have ended up with a centralization of nodes onto datacenter servers, so it's hard to argue that it would have made a difference.

The Bitcoin block size limit is not 10 MB.

> design has given way to a clear power structure

Example? Community decision making when forks occur.

> largely used it to pursue their own personal enrichment

I'll let someone else provide examples of that one :)

Well, as one other commenter mentioned, with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.

Another example would be exchanges: a vast majority of people do not use cryptocurrency in a peer-to-peer fashion, but instead go through a small number of centralized exchanges, which have been known to freeze withdrawals, have been riddled with theft, fraud, and a playback of all the financial schemes dreamed up in the last few centuries which have not yet been regulated against in cryptocurrency (pump and dump, Tether etc.).

On top of that, the crypto media sphere seems to be completely unreliable: I've seen many headlines which are deliberately misleading with the intent of stoking a one-sided, glowing narrative about cryptocurrency (I.e. a crypto startup opens their account at Chase bank and the headline reads: "X Coin Begins Partnership with J.P. Morgan Chase", and related online communities are heavily moderated to support the official viewpoint while silencing others.

Long story short, when I bought a little bit of Bitcoin to play with a few years ago, I could buy a coffee with it, and I could even make purchases with it on Amazon. Since then it's gotten much less useful to the average user.

> , with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.

>Another example would be exchanges

Interestingly enough, with regards to bitcoin, there was a huge powerplay that happened a couple years ago. And this debate proved who had the real power.

A couple years about, almost every major exchange, bitcoin company, merchant payment processor, and bitcoin miner, wanted increase the bitcoin blocksize, in order to reduce transactions fees to users and help adoption.

(Even though this directly hurt the miners, the miners still wanted it, because they supported adoption. Crazy, I know)

But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.

And this was in spite of the fact that almost every single major player in the space wanted this change.

So crazily enough, the central authorities of the bitcoin protocol, are the couple people who hold the keys to a github repository.

> But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.

This is blatant re-writing of history.

A fork was written, Bitcoin Cash, but most people/miners/companies didn't want to use it. It was widely known and the differences/advantages/disadvantages were discussed ad nauseum for months/years.

A Github repo can't force people to run it's code instead of another.

> And this was in spite of the fact that almost every single major player in the space wanted this change.

So why did they keep running Bitcoin Core instead of the fork?

> So why did they keep running Bitcoin Core instead of the fork?

Because it turns out that controlling a github repo is a very powerful power.

> A fork was written, Bitcoin Cash

This has nothing to do with Bitcoin Cash. This has to do with 2XSegwit. An initiative that was supported by every single major miner, all of the exchanges (coinbase, gemini, kraken, ect), as well as the major merchant payment processors (IE, bitpay, and all the others).

There are statements after statements made by all of these players, where they stated support for it. Unfortunately, it seems like the people who control the bitcoin protocol, the developers, had too much power, though.

Did you disagree that every major miner, and Bitcoin business like coinbase and BitPay, put out messages in support of the 2X Segwit agreement?

Sorry to be "that guy", but libertarianism != laissez faire, it's a principle about governance of people. The gold standard is just as libertarian as cryptocurrencies, and that doesn't require governance to function, and governance through a private centralized bank that everyone opts into is also libertarian. Governance certainly helps in making things more convenient, but it's not required or necessarily desired.

For example, if there are problems with scams or whatever (e.g. impure gold scams, or cryptocurrency manipulation), people may choose non-coercive governance, like banks (e.g. through something like GNU Taler with a bank-backed currency). You could do this with any currency you choose, so which currency you use has little impact on the structure of government and how it interacts with the population, provided the government stays out of it. Because of this, fiat and resource-based currencies are equivalently acceptable for libertarianism.

So yeah, maybe cryptocurrency is tangentially related to libertarianism in that many libertarians are interested in them as an alternative to central, coercive banking, but that's about where the relationship ends. Libertarianism doesn't care if you have governance, as long as that governance doesn't use force.

And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.

your definition of libertarianism is off by a century

> And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.

They used to be. I made online purchases and bought coffee in real life using Bitcoin just a few years ago. The evolution of Cryptocurrency has been away from any real-world usefulness, and toward its current incarnation as a largely speculative instrument.

And I would argue that in fact this has been the result of a Libertarian experiment playing out. Everything about Bitcoin has been opt-in: in principal anyone is free to own a node, and the community would have been free to opt-in to a governance structure which would have discouraged actions which made Bitcoin less useful to the majority of users, but this is not what happened. Instead power was consolidated in the hands of a few, who chose their own self-interest to the detriment of the larger community.

I am not a fan of coercive government, but I struggle to see how the story of cryptocurrency to this point does not provide evidence that some strategy is needed, beyond maximal personal liberty, to discourage bad actors from causing disproportionate harm to the collective.

> those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole

You say this like it's a fact but I feel like it's the opposite. There aren't many compelling examples of this. And to the extent that there are, they exist in a competitive market and their fate is determined by users and investors, who weigh the cost of the greed vs the benefit of the technology and reward/penalize accordingly.

What decentralization of power has occurred in a way that significantly different than any other market? Exchanges presumably control most of the coin. Pump and dumps seem to been extremely likely.

It might not be worse but IMO it hasn't proven to be better.

How are you going to hold any amount of digital money without entrusting another organisation to hold it for you?

That's the decentralisation of power that has occurred.

You don't have to prove your identity. You don't have to prove anything to anyone. You just download some software and generate a private key. Bitcoin is to money what the internet was to book publishing.

Its not anonymous. Its the opposite, in fact. Every transaction is recorded and traceable.

I didn't say anything about anonymous.

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