Hacker News Reader

The real issue with blockchain is it doesn’t work yet. It doesn’t scale, and complex trustless scalable guarantees aren’t possible yet. The technology is also really new. Bitcoin coin is only ten years old.

I think there's some validity to that view. The Internet was actually 30 years old when it went public.

I find it hard to believe though that VCs are playing that long a game. That's way too long a time horizon for any conventional VC investment.

The iPhone is also 10 years old. It changed the world and has been the most profitable product in human history. What is Bitcoin's excuse?

A few problems I see with your argument.

1) The iPhone wasn't the start of the curve. It was building on the history of mobile phones, PDAs, WAP/mobile internet, portable music players, etc. It was a convergent device which brought together all of these other things, many of which had been successful in their own right. But you couldn't make the same argument about the Newton, or PalmPilot, could you?

2) iPhone is a product, Blockchain/Bitcoin is a network and protocol. Networks need mass adoption to be successful. You only needed one iPhone for it to be useful. Protocols are infrastructure to be built on top of. The iPhone didn't release with Apps (as we know them today) and could have still been successful without them.

I'm not saying Bitcoin will be a success, and what would it be a success at is still the open question. But you can't put it in the same bucket as the iPhone.

I am totally in your camp on this...I'm very interested in crypto from a technology standpoint, but I don't see any viable applications (other than those you mention) on the horizon.

Also, I don't really believe "trustless" is possible, as close as blockchain may get. I'm not an expert here, but don't you still have to trust DNS, certificate issuers, code maintainers, etc.? Can't any of these be compromised with a big enough profit motive?

The use cases that work best would be

- Slow transaction need

- Accounting-related items.

In my mind Supply Chain on a batch scale looks to be the the most promising area, but there don't seem to be many places that can't, or don't want to, manage this centrally. Ergo the network trust is not necessary.

dApps are promising, but why add the extra expense?

> Whenever I hear someone like Andreessen who is still a cryptocurrency believer, I go and really look for what he's talking about. I find nothing.

This interview was in 2014 (not 2018 or 2020, read the introduction). He might have a different opinion now.

Shouldn't the blockchain be the best approach to handle public goverment data?

I mean, project requirements to build infrastructures, for the private sector companies to bid. The results of those adjudications. Civil servants payroll and bonuses...

That would mean no suspicios document shredding when a new party enters the goverment. An open standard way for everybody to access the data. Even different applications on top of those databases.

Setting aside political considerations, what would be the drawbacks of this approach?

All of these things could already be improved by 1000% if the government wanted to. Its not a lack of tools, but a lack of will.

>They're hoping more will buy in so they can dump at a higher price.

We're seeing, right in this moment, why the ability to increase the supply of currency is a necessity for a functioning economy, especially in times of crisis.

Somehow the hodlers take the exact opposite lesson from what's happening.

You're referring to what I call "pop Austrianism," and that's definitely an adjacent issue.

Austrianism is a rationalistic theory of economics. By rationalistic in this context I mean it's not empirical. It's the sort of thing you get when smart people sit around and reason through something and come to a conclusion based on that alone without bothering to observe, experiment, or evaluate their ideas in practice.

A wonderful classical example of this kind of rationalism is Aristotle reasoning that heavier objects fall faster than lighter objects. Of course they do! Heavier objects are subject to more force, therefore they fall faster. It's perfectly rational.

BTW I'm not saying that other economic schools of thought have it all correct either. They clearly continue to make incorrect predictions all the time. I really don't think anyone understands economics very well. It's a subset of complex auto-adaptive systems, but with an added layer of adversarial behavior. In economics when a major economist, government, central bank, or business makes a prediction, the market acts so as to attempt to invalidate that prediction. Economic systems actively attempt to invalidate theories about them.

I may be way of my field here, but my understanding is that the whole point of the Austrian school is that human behavior is (purposeful, but) unpredictable.

This is a testable claim, and you can bother to observe, experiment and test this claim. Austrians should accept they are wrong if you can empirically prove that humans behavior is predictable.

But if this claim is correct, there's no reason for you to do empirical economic observations to prove or disprove economic laws. Any empirical conclusion will have no predictive power as a law, only as a trend.

Not only that, but any logical consequence of human behavior being purposeful and unpredictable is as correct as the original claim.

Is anything here that I am missing?

The thing that really doesn't seem to work in the Austrian model is the whole "hard money" superstition... the idea that money should be an immutable store of value. I really think it is a superstition of sorts, since I don't think the rationale or the underlying model work in the real world.

Not only does this seem to fall down in a variety of ways in practice, but I have philosophical issues with it. The value in the economy is in capital, goods, and services. Money has no value. You can't eat it, drink it, live in it, or use it for anything. It's a medium of value exchange, not a value of its own.

In fact one of the desirable characteristics of money is that it's useless for other purposes, otherwise those other purposes compete with its money use case. Cryptocurrency does check that box, but so far all popular cryptocurrencies are built on hard money assumptions. It would be theoretically possible to build a cryptocurrency that wasn't, but there are issues like how to make the inflation targeting algorithm not be trivially game-able by 'whales.' (Real world whales do in fact try to game central banks, so this is not fiction... of course central banks are AI-complete so they have a better chance of resisting this.)

Most of the affinity for Austrianism is really rooted in a dislike for central banking and the assumed authoritarianism that goes with it, but I am not convinced that these issues are intrinsically inseparable. I don't see why libertarianism necessitates Austrian hard money finance or why hard money prohibits totalitarianism in any way. Since totalitarians have guns they can easily just confiscate and monopolize any hard currency. Cryptocurrency is no different, since rubber hose cryptography is highly effective.

I don't see what is the point of your criticism. Either the epistemological grounds of Austrian economics is correct or it is not.

It should not matter what austrians feel about central banking.

What Austrians fail to grasp is that human behavior is quite predictable at the population level, or for large groups in general. This is the entire basis of game theory, marketing, sociology, etc. Unsurprisingly, Austrians refuse to acknowledge that economics is subject to science and do not recognize entire fields such as statistics.

It's true that the actions of single individuals cannot be fully predicted, but that's not necessary. Any level of insight is enough to form the basis of a scientific theory. In other words, mainstream economists do not claim that they can perfectly model human behavior, but they do (rightly) claim that they can make educated guesses which are correct more often than not.

You can predict trends, not laws, using large groups observation. Austrians would not deny that. Trends are not a useful tool for economic policy, are only good tools for entrepreneurship.

You can model behavior, which is very useful for economics.