Resources for understanding cryptocurrency and blockchain technology
a16z.com
a16z.com
> Blockchain Can Wrest the Internet From Corporations’ Grasp
In a way that doesn't involve A16Z cynically mis-representing blockchain as some people's champion. I don't see at all, how you could claim there's something fundamental to the technology that will lead to more consumer power. Does Facebook's Libra look like a great shift towards an open internet? Does Bitcoin decentralize control? Or does it hand that control to the tiny handful of Bitcoin miners and exchanges that handle practically all of the work?
What this "educational" blog seems to be doing is telling you what the most ambitious claims of crypto are, rather than telling you where crypto actually is today.
That's precisely the game for these funds to keep that illusion up. They buy up a bunch of tokens in a presale discount, pump the price, and then dump it to a bunch of foreign retail investors based on inside information before the inevitable failure of the "product". A16z's crypto fund has made a killing doing just this and it's entirely legal. The SEC is only going to go after the founders and a16z will have long exited their position by the time of the lawsuit.
This is probably one of the biggest misunderstandings in cryptocurrency. Bitcoin does decentralize control, and the miners and exchanges do not have power over Bitcoin. If you control your own keys and run your own full node, then you as the full node operator get to decide what rules you operate by, and therefore what network you participate in.
Efforts by miners to change Bitcoin's protocol rules can be outright ignored (and have been successfully in the past - see the BTC/BCH split), and exchanges can only exert power over entities that are directly dependent on the exchanges.
Blockchains are special because they give each individual user direct control over the exact ruleset of the protocols that they use. To the best of my knowledge, no other type of network is able to give this power to users.
Bitcoin is not really decentralized.
Makes sense a16z is shilling cryptos. They made bets that aren't planning out like the hype predicted. VCs are a lagging indicator for tech.
Cryptocurrency is so last decade
Bitcoin is trust minimizing / decentralized despite the cartel of miners, because Bitcoin has a large number of protections against any actions the cartel could take.
Digital USD will be way more of a deal than Bitcoin.
The one thing about all this I do like is that some nerds figured out how to extract money from suckers to fund basic research. No one in crypto is making revenues the are greater than their costs, except the mining cartel
See how that played out with Bitcoin vs BCash (no I won't stop calling it that). Your hypothetical threat has happened several times before that, too. With the backing of a 'cartel' headed by the former 'chief scientist' of Bitcoin no less and it still failed to hijack the Network/protcol like you think would occur.
Fees are not determined by a single entity, but rather a priority based system determined by the allotted space in any given block and the desired time/fee between the next block being created from the txs in the mempool; so while it can raise the tx costs for a short while, which clog the mempool and slow low mining fee based tx, it cannot itself cause a hostile take over to take place--Jihan and Ver tried this very tactic and spammed the network, in hopes of making users migrate to the bigger block chain they created and it ended up costing them immensely in the end, causing the former to be ousted from his company and losing its dominate hashing power.
A record of a valid blockchain, and thus all of its transactions, exists throughout the entire network to self-validate in a decentralized consensus system between miners, nodes, users; forking it would require an adoption of not just miners magically adopting a new protocol/chain with the fork (Bitmain had a majority of the hashing power on BTC's network) but also the nodes that validate the txs and issue new coins.
The culmination of all of these events gave Nash's Game Theory an empirically proven usecase when those nodes refused to follow the majority hashing power, several big businesses/exchanges and formally reputable members of the community and instead remained with Bitcoin Core's original chain.
> Digital USD will be way more of a deal than Bitcoin.
This is exactly the only kind of mindset I would expect to ever be able to draw these type of erroneous conclusions... never mind the fact the USD is actually already technically digital. Physical cash accounts for such a small percentage of actual tx volume and total currency in circulation [1] most of it exists in ledgers as 1-0s on servers and databases.
A printing press is a mere relic of 19th/20th century's perception of what currency is and bares little to no relevance in the Modern World. And that is actually not a good thing, but I'll spare you the History lesson.
Its like you're truly incapable of understanding the paradigm shift that is occurring before your eyes, and instead you avert your eyes away to what you think you understand and make unsubstantiated claims that clearly reveal you don't have the slightest understanding of the topic at hand given such a statement(s).
> The one thing about all this I do like is that some nerds figured out how to extract money from suckers to fund basic research. No one in crypto is making revenues the are greater than their costs, except the mining cartel
Exchanges. Binance makes WAY more in fees than any single miner on the network ever since Bitmain failed in their coup. Again, stop and actually learn about the ecosystem you are trying, and failing miserably, to criticize.
I'd be way more understanding if you simply said you don't comprehend it, but to make these easily refutable arguments about the USD and its superiority, or any fiat currency in existence to date, doesn't instill any confidence in you even having the slightest grasp of what you are talking about.
I try my best not to be seen as hostile, as no one can understand everything, but this narrative is quicly repeated and accepted as truth around here that its startling to see (mainly) professional tech people make these simply mistakes and no one tries to correct the misinformation at all.
1: https://www.marketwatch.com/story/this-is-how-much-money-exi...
Sorry, forgot about the exchanges, you are right, they make a ton of money by allowing wash trades.
The fundamental reason public block chain will never gain mass adoption is because it fails to meet society's expectations for a financial system.
The FED is preferable to Bitcoin. Private block chain to public. Hyperledger may be the best platform out there.
Please spare me your version of history.
Precisely. It's not just "times like now," but is all of the time. The tool has not stopped being used, even in times of prosperity. The only conclusion we can draw is that the tool is not fit for humans to handle, because they're too self-interested.
The tool in question happens to benefit the early recipients of new money, who get to spend it at full value at time of printing before it gets devalued due to the increase in supply (without corresponding increase in demand, meaning it creates no new wealth). The later recipients of the new money have reduced purchasing power because they have to pay higher prices. This is the Cantillon Effect, which has been known about for centuries.
What governments should do "in times of crisis like now," is have a savings account that they can dig into to alleviate the problems, just like every individual should have too. The future is never certain and if you fail to account for the unexpected, it is nobody's fault but your own. The tool in place now is an unjust tax, because it is taxation without representation - nobody in the FED is elected.
As it happens, sound money is a great tool for planning for the unexpected because it allows people to save money in the long term for a rainy day without having to put that money into high risk investments, which don't provide the liquid money when it is needed in emergencies. Saving with fiat is not possible because the money is being constantly devalued (due to abuse of the tool you mentioned), and so they money isn't worth the labour one exerted to earn it once they come to spend it.
Thankfully, it doesn't matter whether you prefer this or not. All that matters is whether people who want to save money decide to do so with better money, and when they do, you can't stop them. Bitcoin leaves the market to operate freely, and we'll see whether this financial system can replace the one where the government keeps trying to intervene in the market.
Absolutely not, State's have never been able to be fiscally responsible and almost always scheme to devalue the currency for personal largess since at least the days of Rome.
What's worse is the US had a strong mistrust of not just Government in general, Washington's farewell speech is amazing, but Jefferson acutely understood that it could revert itself back to the despotism that they overthrew if a Central Bank model was set in place. He was right. In every iteration of the US' Central Bank (there have been 3) results in a massive devaluing of the currency the current USD has lost over 98% of its pre-1913 value; one could argue the script issued by the 13 colonies under the Articles of Confederation had the same flaws, making consolidation after the Constitutional Convention inevitable and ensuring that the union would have to share a common currency so many colonies engaged in reckless behaviour (again in the hands of local Governments).
So, no, based on 1000s years of History I'd say Government, large or small, cannot be trusted with currency due Man's inherit self-interest and ability to be corrupted.
> Yes the USD is mainly digital, I have been telling people this who ask about digital money since Bitcoin made it popular.
Ok. But then you say something like that and I have no idea how to respond it as your earlier comment suggests you think its not. Again, cognitive dissonance.
> Sorry, forgot about the exchanges, you are right, they make a ton of money by allowing wash trades.
Ok.
> The fundamental reason public block chain will never gain mass adoption is because it fails to meet society's expectations for a financial system.
Hence the paradigm shift part of my argument, People's expectations of a financial system is such that they see Bankers get bailed for reckless behaviour, collusion, corruption abound and they still operate that way because they have access to unlimited Central Bank issued money because 'too big to fail' narratives that makes us afraid of some scenario that has already happened: fiat currency has proven itself incapable of fulfilling this role.
I think you're suggesting most Society cannot comprehend or accept a World in which the entrenched Rich simply get richer by whatever means necessary, and the rest are left to fight for what's left. Not only do I entirely disagree with that premise, I'd say that kind of slave modeled behaviour system ensures another bloody revolution, which is partly why I got involved in Bitcoin in the first place as I want to avoid it all possible costs.
Look at my posts about Mars colonization, do you really think we can do that if we haven't figured this Monetary system out already? What you're advocating cannot scale to the need of a multi-planetary economy, Bitcoin might not be perfect but it has the potential to do that and there have been proposals to put nodes on Martian rovers, full nodes in LEO to pilot-test how that would work. BlockStream currently has a satellites they lease in orbit to help update nodes throughout the World with limited coverage and a low cost receiver setup for terrestrial use. That's the kind of People that are involved in Bitcoin's development.
Where as the financial system you are talking about doesn't even work on weekends, and closes and halts all tx on holidays or delays them if made after hours. Not to mention all the surveillance and confiscation for anyone the State deems unworthy of being able participate in its exclusionary system. This is such an archaic model, that only barely worked in the best case scenario and its precisely because they do not understand the very model they are coaxed into. They may feel ripped off, but don't truly understand the mechanics of how/why as an understanding, especially on Financial matters, its obfuscated it a litany of over-complications and jargon so confusing that no one would bother to try if not forced to do so--I was part of this contingent at one point, too. By contrast try to listen to Cristene Lagarde, or Ben Beranake, that's who you have trust in? Let alone the CCP and their travesty of a system to oppress, imprison and steal People's organs who they deem as traitors to the party.
> The FED is preferable to Bitcoin. Private block chain to public. Hyperledger may be the best platform out there.
I was at IBM and held Blockchain Developer and Consultant status; I can assure you it cannot for reasons I won't explain here.
> Please spare me your version of history.
Sure.
How does the blockchain satellite project developers relate to the people that develop Bitcoin? Are they the same people? Are you saying that blockchain developers are smarter or more enlightened?
Are you done with your opinionating?
The developers who are still around and respected are those who work within the protocol rules which are already laid out. That is, the bitcoin protocol can be modified through soft-forks which add further constraints to the set of rules accepted by some bitcoin clients, in backward-compatible ways with existing clients. The developers who have attempted to go the way of hard-forking themselves away from the rules by attempting to relax them simply get cut off from the larger network and they operate in their own niche (eg, BCH).
Bitcoin is its network, not its developers, miners, exchanges or anyone else who thinks they have leverage.
In 50 years, nobody will be using NASDAQ or NYSE to by shares of companies. Company shares themselves will not exist, there will only be cryptocurrencies and decentralized exchanges. Investors will be paid as capital appreciation through token buybacks.
There are several major financial benefits for this:
- Capital appreciation resulting from token buybacks is not taxed.
- The price of a token accounts not just for the value of the output of its community but also the value of its input since community members must liquidate the token in order to purchase goods or other tokens. Communities which produce more economic value than they consume will have more valuable tokens. It incentivizes not just high production, but also low consumption (which our current system fails to do).
Communities which consume less will hold on to more of their tokens. The market cap of such communities will be more fragile/volatile but overall will grow much faster than that of those communities which which produce the same amount but consume more. This will create incentives for decentralization of wealth because there will be a growth penalty for holding a particularly liquid high-volume token.
I've written a simulation which demonstrates these effect.
They're just financial instruments which allow people to maximize the returns that they can get out of their own decisions. But unlike all these other financial instruments, cryptocurrency actually makes the system fairer, more open, more fluid and it helps to decentralize wealth as opposed to concentrating it. It also redefines the concept of wealth in a better, less black-and-white manner.
What discrete problem does moving stocks onto the blockchain solve?
2. Extremely low entry barriers for new investors. Some tokens representing securities, businesses, assets or commodities can be bought without signing up to any special service if the user already holds some kind of cryptocurrency (of any kind). There are now DEXs which allow tokens to be bought without any signup process necessary. Users can generate passphrases/private keys on the spot and they are never sent to any server so the funds cannot be stolen. The UI can even be web-based so users don't even need to download anything to buy the token.
3. Cryptographic ownership. This is the strongest form of ownership possible. Only the person who knows the passphrase/private key can move the tokens from their wallet. The passphrase is not stored on any server in the network; it is never transmitted over the wire to any service; even when sending tokens - so, if used properly, it's almost impossible for anyone to hack an account to steal funds (way more secure than banks); even developers who work on the project cannot steal the tokens. Nobody, no government or any entity of any kind can separate a token holders from their tokens - It's the only asset in the world which has this characteristic. Contrast this with other financial instruments where the owner is far removed from their property... How does an investor know that they actually own 10 gold bars? Because their broker told them so? Then how does the broker know that they hold 10 gold bars on the investor's behalf? Because a centralized trading platform told them so? How does the trading platform know that these gold bars actually exist and are not full of lead? Because the vault operators said so? Each layer adds risk. If you know anything about human nature and history, you know the reality is that there is probably nothing there. The gold may not actually exist and there is no way for an investor to verify this. On the other hand, deflation created as a result of token buybacks can be verified in a way which is impossible to fake; it's 100% transparent and visible on a decentralized blockchain.
If you think that #3 alone doesn't justify cryptocurrency, then you are severely underestimating humanity's capacity for collaborative deception and ignoring the reality that it's only going to get worse. The only way to solve this is through cryptographic transparency.
Why would we expect the tax code to treat this any differently from share buybacks in the long run?
I'm having trouble understanding why the rest of the argument would apply to crypto shares but not NYSE shares. I don't agree with the statement that our current system incentivizes low consumption; the less you consume the more capital you have to invest or consume in the future.
Also, my simulations show that a cryptocurrency's market cap can be much higher than the value of the underlying assets from which income is derived. It depends on how strongly investors hold onto their tokens. It's a way to maximize net-worth at the expense of accepting more fragile trade volumes.
So token investors can have a higher net worth and better growth of their net worth if they're willing accept more fragility.
To understand this argument (as an extreme example), you can consider what would happen if a group of people were to issue 100 million tokens of a new cryptocurrency and then all together sell only 1 token each day for $1. The cryptocurrency's market cap would be $100 million. It would be extremely fragile in the sense that investors would not be able to cash out anything meaningful without completely crashing the price, but it would have the effect of giving them all a very high net worth. Moreover, my models show that this type of extreme situations with low token supply deliver higher % returns on net worth over time (assuming constant demand) but it requires extreme collaboration between participants.
This is an extreme argument but hopefully it illustrates the point that there is a spectrum of fragility which can be used to gain an economic advantage and that blockchain adds an entirely new dimension to standard economics. The idea of net worth becomes meaningless because it forces you to consider wealth fragility as well.
I think if cryptos had worked out as they hoped, they would have been the next wave of Ventures, but without any pesky accredited investors limits, which is probably great if you're a16z—lots more opportunity to pump valuations and exit early if the things are looking bad from your board seat.
So I’ve always viewed their enthusiasm for crypto as both more genuine and more cynical than they get credit for: genuine in that they really did expect this to become the new mechanism for venture investing, cynical in that it represented the perfect opportunity to introduce more bag holders to the game.
Great way to explain the concept. You could nit-pick all morning if it was strictly "true" in every which way, but this kind of selective simplification is what drives understanding. I'm sure many things which are well understood today, if you look at the way they are understood now, the mental models involved: many wouldn't have been generally be accepted in an initial pre-understanding phase by people with insight.
Can you easily accept this explanation of blockchain?
I think the reference is supposed to imply that the consensus mechanism built into the system is responsible for dictating the validity of a transaction as opposed to a human.
That's the beautiful part. That someone is the end user, who is running a full node. The reason that blockchains require every node to have all the data is so that every end user is in full control of the commitments made by the blockchain.
Efficient? No. But does it invert the typical power relationship? Yes! Blockchains put the user in control.
(fine print: this is not necessarily true for many Proof of Stake chains, also not true many lite client models (including most Bitcoin lite clients), also not true if you have on-chain governance, also not true if the blockchain makes other compromising design decisions such as auto-updating, most cryptocurrencies fall short in at least half a dozen ways)
That it fundamentally isn't true is the basis of the 51% attack which is hardly a "nit".
Overall I find this explanation too vague and abstract to be useful. A blockchain is a computer? Sure, you could perhaps squint and say that it is so in an abstract sense, but it doesn't really tell me anything about it. More concretely, you could say that it's a distributed append-only data structure where conflicts in additions are resolved using a consensus algorithm. You could then go on to explain how this data structure can be used to implement something like a public ledger or a contract protocol.
I realize that the full article somewhat touches on these subjects between talk about "commitment computers" and "idea mazes". By going for a more concrete explanation, the weaknesses of the network would be evident and such simple falsehoods as the idea that a blockchain "removes the need to trust anything other than code" would not be propagated.
There's a kernel of truth in there, but in the end I think this statement is an example of being "not even wrong".
It's not clear what they're trying to say. When you talk about people actually using blockchains, the last mile happens through "traditional computers", so blockchains vs. traditional computers isn't a meaningful contrast. Now if you said blockchains vs. traditional uses of cryptography, then you'd have a point. If they're trying to selectively simplify, then simplifying "traditional uses of cryptography" to "traditional computers" isn't a useful simplification.
Blockchain is a way for software to decentralize decisionmaking. People are still controlling the computers.
If you take away the "decentralize" part, there's plenty of non-blockchain software that does decisionmaking. If you take away the "decisionmaking" part, there's plenty of non-blockchain software that does decentralized stuff. If you take away the software part, email threads, internet forums, and even conference calls accomplish decentralized decisionmaking all the time.
The following sentence is why I think the point is fundamentally wrong:
For the first time, a computer system can be truly autonomous: self-governed, by its own code, instead of by people.
That's just not true. People control the computers that participate in a blockchain. Those computers express the will of their operators, which in this case is participation in a decentralized decision engine. There's nothing keeping those operators from making their computers do anything else, they just won't be able to hijack the blockchain. But that's also not new, your computer acts as your agent all the time in systems where you can't hijack the rules of the system (aka most websites).
I was trying to express disagreement specifically that the text makes simplifications that don't make sense to either consumers using blockchain-derived products or developers thinking about using blockchains.
Regardless of that, I agree with both statements your make on blockchain. I was after something else.
It's always this kind of vague, fluffy language that tells you all you need to know about all cryptocurrencies.
All these companies are trying to fluff up demand for something that is only valuable if (new) people invest.
Please Hacker News: please show me the concrete value of cryptocurrencies, I don't see them.
I only get hypothetical answers, often including paranoid delusions about governments and strange conceptions of freedom.
Cryptocurrencies seem to be an answer to a problem nobody has.
https://louwrentius.com/cryptocurrencies-are-detrimental-to-...
And bitcoin will allow micropayments of a fraction of a cent, which will save journalism and music, eliminating ads, tracking and stifling bundle deals. Just as soon as someone sorts out this $0.30/transaction fee.
/s
Also I like the idea of namecoin, but haven't dug into it.
Timestamps
Voting
The way to properly do this is to 100% avoid the United States, or any western nation, and go offshore to a country that allows this (Antigua, Seychelles).
If you think what I’ve written is a horrible scam - that’s fine! No one is making you buy such an asset. Ignore such assets. But there is a global pool of crypto investors who will, and don’t care about what country such a business is incorporated in or being unable to bring any court action. It’s “buyer-beware” and the industry operates on trust to an absurd level.
There is something to be said for a model where you don’t have to grovel to moneyed VCs to raise funding. It’s alternative and it’s an experiment.
Dodging SEC regulations is one thing, but it’s not an argument for large scale growth and adoption. Heck, you don’t even need a cryptocurrency to do that, just list your stock in they Seychelles instead of America.
Like I said, this is an absurd amount of trust, and reputation is everything. It's simply a different model.
If you used blockchain to raise money for a non-blockchain company, that would be understandable. But that’s not the pattern I’ve observed. Usually it’s “buy token that’ll have functional utility and future monetary value”.
There are good reasons why a traditional stock, like Apple, would be valuable on the blockchain. Imagine Apple stock was just like any other token or cryptocurrency - it could be anonymously owned, traded on any exchange (including ones that just pop up out of nowhere), can be traded 24/7/365, and could be used as payment for coffee just as easily as cash. Clearly this is advantageous for some people who want this. From the perspective of a regulator, or citizen concerned of fraud, this is horrible! A nightmare! But to others, they prefer this situation.
This is what a token is. It's like a traditional stock, but also all of the above. Plus it has utility according to however the project uses it. All of the tokens tend to match the same protocols (on Ethereum it's known as ERC20), so if a new service pops up ("Pay for Coffee with Token Service"), suddenly any new token can be used in it. It's like automated plumbing.
You have to switch to the mindset of someone who is a "crypto native" person. They don't think like a normal person. They have different values and motivations.
It appears that there are two models; stocks on the blockchain, and tokens as item of utility.
Stocks on the blockchain makes sense technically, especially for investing in risky non-crypto small companies. Tiny use case, but reasonable.
I’m super dubious about paying with the crypto equivalent of stocks for purely social reasons; it introduces a lot of exchange risk and negotiation into the process of purchasing goods. One of the reasons money is good is that it creates a common unit of account; I don’t need to find a barista that’s interested in whatever stock I’ve got in order to buy coffee. Sure; I could sell or exchange that stock for something my barista wants, probably money, but the value to the consumers in question is getting pretty thin.
I will say though that stock markets are probably the only model I’ve seen that fits cleanly into the blockchain model; stock trades pretty much stay in the stock exchange itself, eliminating the oracle problem. If blockchain latency could get lowered significantly, I wouldn’t be surprised to see stock markets on the blockchain.
What I see much more of is the “token as utility” scheme. This is usually a blockchain startup offering some sort of token that has a planned utility once the company is operational. Kodak’s coin is on the top of my mind; the plan was that you could use the coins to license work on the chain and pay photographers.
These utility coins always seem super shady to me, and the justifications on why the utility coin should have utility (and thus value) border somewhere between nonsense and insanity.
Then, when the customer pays with a token, protocols just instantly convert it in the background to the exact amount of USD of the coffee.
This stuff sort-of already exists. USDC is a US-dollar backed stablecoin https://www.coinbase.com/usdc and Uniswap https://uniswap.exchange/swap is a decentralized algorithmic protocol for auto-converting between any 2 supported tokens. So if the barista takes USDC and you have some scammy token that few people want, you can instant-convert (well, "instant" in Ethereum is 15 to 30 seconds) from your token to the USD to the coffee.
So what I'm saying is, you need to change your mind from buckets, where assets are only in one bucket. The token is not either a stock or a "utility" token. It's all of the above, simultaneously, and more as the plumbing keeps innovating. As long as someone, somewhere, is willing to purchase it for some price, it can function in a huge variety of ways.
Credit cards work just fine for me, I’m even rewarded 1-5% for using them. I can’t see why I’d want to switch over to this and deal with the nightmare it would make my book keeping, not why my barista would want it over cash or credit card.
I reiterate - this is a massive experiment. It's rethinking the entire financial system to be rebuilt using open APIs and protocols. All sorts of weird stuff is happening on it, most of which will fail. Just like in the real financial system, which attracts lots of scammers who are constantly hounded and penalized by regulators, there are lots of scammers here. Even more so because they can't be arrested as easily (or ever). But it's open and anyone can use it, for better or worse.
So the question is not why you won't use it for bookkeeping, purchases, credit card rewards, etc. It's why is anyone using it at all? You know easily why you yourself won't use it. But Bitcoin is still worth $150 billion and Ethereum $20 billion - clearly a lot of people want it, and value it. It's a slow, difficult, complex, risky network. But people keep building on it, experimenting, improving. People find it useful for certain things. As long as those things stay useful, I believe it will at least maintain its value. But if people build more things, and find more utility, then it goes up in value.
Do I personally have all of my wealth and retirement tied up in this? No, absolutely not. Way too risky. But do I own some crypto, find utility in it, speculate, and experiment? Yes! The ecosystem is so vast I can't briefly explain all the use cases. There are many use cases, many reasons, many things people want and use crypto for, and more every year. This is a multi-generational experiment. It took hundreds of years for the modern financial system to come, and only a decade for this new one, so it needs more time.
For example, they are apperently invested in cryptokitties (the Dapper logo).
Do the authors address cryptocurrencies specifically?
I skimmed some reviews. I gleaned that this is a pro-austerity book, that the author's conclusions were largely debunked by independent analysis of their data.
Given this is true, does this book's treatment of cryptocurrency remain useful?
It's been 10 years of hype now where are those useful blockchain technologies, used by regular people, regular business, regular commerce, regular banks?
We can all see the 'theoretical potential' but I think what a16z needs to do now is start to understand and communicate 'why it's not working' and start talking about more material opportunities.
What an utterly disconnected-from-the-real-world approach to bringing literal VALUE in the world...
(speaking of current implementations of cryptocurrencies and their fan bases aka vested interests. Not directed at this article even remotely. I didn't even read the article. If you flag me for anything, flag me for this. TLDR; lol)
mises.org is a great place to begin to understand.
Bitcoin is bringing real value into the world by allowing people to save money for a rainy day without making risky investments, and without subjecting the wealth they've earned to the possibility of theft or seizure by the state or anyone else.
As for "crypto," the kind being mentioned in the article here, your guess is as good as mine. These are just scams intended to rake in money from naive investors and speculators, based upon a complete misunderstanding of why Bitcoin was designed the way it is.
As for folding RNA and other useful stuff - that's all nice, but somebody has to pay the costs. That somebody, hopefully, is paying it voluntarily. I might even be happy to volunteer some of my money to causes like that. The "steal hard earned money from people to pay for pet projects" ideology is a non-starter for me though.
> Bitcoin
> saving without making risky investments
> I’m sorry, what?
Glad you asked, you heard correctly, but I'm not sure you understand the nature of money.
Storing wealth with bitcoin is not really much different to storing wealth with dollars. In both cases, the future purchasing power of your wealth can change depending on the markets - it is in general, out of the control of any particular entities - but is in the control of every individual making transactions based on their own subjective value of the commodities they're exchanging (of which the money is one).
In the case of Bitcoin, the value of other commodities relative to bitcoin is subject only to these markets of individuals making those choices. There is nobody who can reduce or increase the value of a bitcoin arbitrarily. This means "saving in bitcoin" is betting that the market will be favourable to bitcoin in the long term such that you can maximize the return from the hard-earned wealth you laboured for.
In the case of dollars however, the dollar is still subject to the same market conditions as bitcoin - but it has an additional variable which can alter its value - the federal reserve, which can simply elect (by the non-elected) to devalue the dollar by arbitrarily increasing its supply. Since increasing the money supply has become the de facto behaviour of this entity, saving in dollars is an almost definite loss-making strategy. The money you obtained through hard labour will simply not be worth the work you performed when you come to spend it.
Any investment contains risk. Storing dollars in your bank account can be seen as "investing in the dollar." A very poor strategy if you ask me. Although you're pretty much guaranteed lose purchasing power on it, it is fairly low risk that you're going to lose a significant portion of it quickly, but the history of dozens of other currencies which have hyperinflated tells a story that this could change at a moment's notice.
An "investment in bitcoin" is an investment in a future of sound money, and not to be confused with "investing in the exchange rate of the dollar to bitcoin," which is a gamble and of course, high risk, if you have have a high time preference.
The future of sound money merely needs people who lower their time preference to believe that their wealth can be stored in the long term in bitcoin without being devalued, and the predetermined nature of bitcoin's disinflationary currency release can give them some confidence in that. Hyperinflation of bitcoin cannot occur, and since the supply will diminish, the value per bitcoin is likely to appreciate unless demand also diminishes at the same rate. However, since bitcoin targets self-interest, demand is likely to increase - as more people decide to store their wealth, the value per bitcoin increases, creating a feedback cycle which further incentivizes people to save in bitcoin. This cycle is self-perpetuating and will gradually swallow up larger and larger amounts of savings globally - and as it grows, the volatility of the exchange rate to dollars will likely decrease too, although there's the possibility that it could trigger further inflation of the dollar, which would see even more volatility, but would only serve to increase confidence in bitcoin as the fix for the problem of inflation.
At this point, I can't see how bitcoin could fail. The Federal Reserve has just committed to infinite devaluing of the dollar, and Bitcoin is about to enter its 3rd phase of "quantitative hardening." Will be fun to watch.
It happens that some people care about sound money enough that they need the security offered by this game theoretic model and they're willing to pay the electricity costs to get it, and your opinions on the matter mean nothing to them.
Although I'm not sure what non-bitcoiners mining "crypto" are wasting their money on, because they're not getting sound money, but useless fiat tokens.
Note that in English "5 years old" would become "0.5 decades", using the plural form as well.
Indeed, but decades (1983 or 1995-1998) older (except for the decentralization): https://en.wikipedia.org/w/index.php?title=Ecash&oldid=94837...
It's actually a good signal about the organization.
>It's actually a good signal about the organization.
> a16z drank their own coolaid in this instance.
The cognitive dissonance amongst some of you guys is so baffling to me; I get most of you you don't get/like Crytocurrency, and often cherry pick its most notable blunders to highlight why its 'failed or dead,' but just a few years back A16z/Horowtiz was seen as the Bastion if not the very Oracle of everything that was shaking up SV and by extension most of what you guys here thought needed to be disrupted.
Now because many of them have gotten involved into Cryptocurrencies, for various reasons I won't speculate about, now they're simply 'drinking Kool-aid.' As if a lot of their other ventures didn't require a massive distrust in a failed institution, look at their investments and judge for yourself what they're saying has failed and can be capitalized on if they're right (the ones that jump out are Healthcare and Education in the US in case you didn't notice) [1].
Hell, most people here don't realize that Coinbase, who I personally detest, is a YC backed venture and became an exchange/holder of nearly 5% of the entire supply of BTC in existence! By this rationale is YC a fad-chasing, Kool-aid drinking den for finance bros, too?
Again, I'm indifferent to your position on Crypto as a whole, but to go so far as to burn the people most involved in the very startup culture that breeds innovation and belittling them because you think you know better is so conflicting with what SV was supposed to be.
You've become like those people saying the Internet was a fad and will become irrelevant in a few years, only to see it be the very backbone of nearly every activity in daily Life and making most other technologies obsolete in the process.
What's even crazier is that some of you might have not even noticed that one of Bitcoin's most active Core Developers (now stepped down) is actually a regular poster here, so rather than go on some diatribe about the scams or dismiss what many of you don't really understand, you could have engaged him and asked all the technical questions and gotten a very through analysis of your criticisms with one of the guys that helped maintain and develop the project into what it has become.
You’ll find few greater proponents of cryptocurrencies and censorship resistant p2p networks than I.
Note well, however, that when I say “crypto”, I am either using it as the greek prefix “kryptos” (i.e. hidden or concealed), or to mean cryptography.
I’ve never once met someone technically competent in the space who says “crypto” or “cryptos” to refer to cryptocurrencies or altcoins.
YC also doesn’t do that.
a16z does.
It’s a signal about the organization.
I personally refer to its by its actual name as I don't like speaking in generalizations as each ecosystem is its own thing, as you are aware, and I instead will say: Bitcoin, Ether, Litecoin etc... but I would never assume someone is not competent because they used a term that has reached ubiquitous use to refer to the entirety of the Cryptocurrency Ecosystem.
Andersen Horowitz has been a proponent for Bitcoin since the days of Circle, right? I seem to remember his names being thrown around since back then.
I'm glad there are early adopters like yourself, predating me as I got in 2011, in the public discourse here but in light of all the disinformation around here do you really think hyper-focusing on semantics is the best way to try and clarify the Public's view on the subject?
Many people here, most with professional careers in tech and CS, don't even understand that Bitcoin solved the Byzantines General's problem in an elegant manner, one previously thought to be impossible. And often make specious reasoned arguments from that POV.
And I'm expected to take this argument of misused terms seriously?
Although this is the title of the article, it is misleading.
Really hits the crux of this futile effort. Trust cannot be formally defined. Trust is an ever-changing subjective belief done in an unknown world.
The stereotype of a libertarian crypto advocate who is really into bayesian inference is not a coincidence. They are micro-fascists: given time and information supposedly everyone would converge on the same indisputable truth (which I happen to currently hold) and act in the same optimal rational way.
The irony is that you don't even need to bring the human condition into the argument. The mathematics they so revere practically scream that there are fundamentally inherent limits. Solomonoff induction is incomputable. There is no free lunch. Why continue this march of madness?
> Trust cannot be formally defined. Trust is an ever-changing subjective belief done in an unknown world.
We know how to deal with trust for eons. They solve the wrong problem, if there is any.
Haven't heard much of anything tangible since they raised funding.
Unfortunately Ethereum is still the leading layer 0 product for a world super computer.