Comment by unhashable | Hacker News Reader

Comment by unhashable | Hacker News Reader

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To address your point more directly: many think that Bitcoin isn’t tangible because you have to trust that the network of full nodes are verifying transactions, and if they stop then Bitcoin ceases to exist.

Full nodes have financial incentives to run and they do so today at a scale that rivals the internet. It’s not a favor to Bitcoin, it’s a business. They would only stop if the financial incentive ceased to exist. I can’t think of a reason node operators would cease to care about their own financial well-being. That’s baked into our species.

Note that your reservations apply equally (and potentially more so) to fiat. USD is a virtual currency. Cash is on the way out. You will not be able to spend your USD offline. USD is based on a network of centralized banks. You cannot spend your fiat without a computer asking permission from these centralized systems.

The world stops if the internet stops. That’s not a Bitcoin problem. Bitcoin actually improves on the state of things by replacing encumbant authorities and centralized computing systems with math and a decentralized network.

I’ll add this. It’s not the current state of the world, but there is a very real chance Bitcoin can be made available off-internet via a satellite network. This would prevent state-level censorship like what we see when authoritarian regimes cut the internet.

https://github.com/Blockstream/satellite/blob/master/README....

When you think about it, you realize: USD is also virtual currency. Cash is on the way out. You will not be able to spend your USD offline.

I mean by that definition anything past barter economies are virtual, so sure if that's your definition then your statement stands. It's completely incorrect by any meaningful definition of virtual though.

Are you actually taking issue with the fundamentals of my argument or just annoyed by my equating USD to a virtual currency?

> You will not be able to spend your USD offline. USD is based on a network of centralized banks. You cannot spend your fiat without a computer asking permission from these centralized systems.

Yes, I can, as long as I have it as physical currency, and regularly do. Admittedly, this relies on confidence of all participants that eventually systems (banking, etc.) which are as you describe will work or be replaced/retooled without he online dependency (and there is plenty of historical precedent of systems working with fiat without digital backup which could be reverted to in extreme need), but there is no real-time dependency on online systems for use of physical currency, and as long as systems are up and working it's easy for fiat users to adjust their risk profile regarding potential future system failures by moving funds into or out of physical currency.

Physical cash is not long for this world. We are rapidly moving towards always-online and fully-digital ledgers controlled by governments and central banks.

You will not be able to get a hair cut unless you are an outstanding citizen and have your governments blessing.

I wish this were a joke.

> Physical cash is not long for this world.

Maybe, especially in some places, but even if that is the direction of digital financial transformation, the US is decades behind on most levels of that transformation and has cultural issues that that even if it was caught up on other aspects would make retirement of physical currency harder than it might be in other places.

This is wishful thinking.

I will be surprised if central banks don’t use the ushering in of the next monetary system as an excuse to go full-stop 100% digital.

I get the sense you think this is a far off and unlikely event. I think it’s much more likely and impending than that.

Moreover, even if centralized banking stops functioning, individual banks can continue operations. This isn't true of Bitcoin -- if the network is partitioned, there is no mechanism for it to be resynchronized without massive rollbacks.

Bitcoin would work similarly, but with far less trust in centralized institutions.

Today, central banks acts as a final settlement later upon which the rest of the financial system is built (banks, credit, etc). This makes it impossible for the financial system to “shut off”.

In a Bitcoin world, the main ledger would act as a final settlement layer, and local lightning networks act as the layers on top providing payments, loans, and credit. All transactions would be batched and only get settled so often (once an hour, globally, for example).

This gives you similar local-affinity that today’s financial system offers without relying on governments to award permission to engage in commerce.

> Bitcoin would work similarly, but with far less trust in centralized institutions.

And far more trust in anonymous, unaccountable actors, largely foreign from the perspective of any given trusting party.

Those centralized actors have, in the case of major states, have well established trust and accountability systems that maintain that trust. Bitcoin not only doesn't have that, it is fundamentally premised on preventing it.

There is a certain ideological phyle to which this is appealing, but I'm not convinced that generally it hard an advantage over centralized institutions in establishing user confidence.

In Bitcoin, you trust only your own node. You don't place any trust in particular third-parties - you only accept communication from a large number of randomized nodes in hope that at least one of them is honest, which is sufficient to reveal the dishonesty of all others. (ie, you have not been eclipse attacked).

You then need to have confidence that humans will always act in their own self-interest, and that you are not important enough that a sufficiently large portion of participants would act against their own interest in attempt to try and scam you.

Acting against your own interest means deliberately losing money by trying to coerce a large number of economic participants to act against their own self-interest in order to benefit you.

> In a Bitcoin world, the main ledger would act as a final settlement layer

Keeping the "main ledger" functional requires miners to have reliable communications with each other; I believe Lightning nodes need an up-to-date view of the ledger as well.

> All transactions would be batched and only get settled so often (once an hour, globally, for example).

There is no mechanism in Bitcoin which would provide this functionality. It's not clear that it'd even be possible without a major rework of the protocol.

Batching by definition consolidates the throughput to fewer transactions. That's what I mean with that (unprecise) example.

> there is no real-time dependency on online systems for use of physical currency

You are underestimating degree of our reliance on banking. Stores, restaurants and repair shops don't have enormous vaults with cash — they store money in bank accounts. If banks make cash transactions infeasible, businesses will suck it up. If your local coffee shop stops accepting cash, you will have to find another one, possibly located in different district (or even different country...). Many countries enforce mandatory use of bank accounts for business — companies are literally not allowed to operate in pure cash. When banks conspire to make cash undesirable (via high cash collector fees, shunning low-denomination bills etc.), local entrepreneurs begin go "cashless", a trend already seen in many places.

Never mind that, — even if your local legislators force shops to accept bills, who cares about them? Brick and mortar stores are deteriorating all around the world. A lot of things already can't be bought offline, unless you take an international flight each time you want to purchase. When your local electrical parts shop closes down, will you open your own? Or just order parts online and pay with VISA like everyone already does?

In not-so-distant future you will be able to spend your cash on bread and not much else. Until the backer becomes unable to spend his.

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