The technological case against Bitcoin and blockchain
lukeplant.me.uk
lukeplant.me.uk
Nothing is as explicitly wrong, it just misses the point. Author seems to love authority and defer to such.
Yeah, I don’t trust the State with my money. The author has failed to address the issues of:
* Wartime savings and safe transfer of funds (escape!!) * bank haircuts and bailouts * money printer goes brrr * state confiscation of bank funds by emergency order (Canada) * state confiscation of bank funds by economic failure (Cyprus haircut) * social credit systems linked to the monetary system (cbdc) * connectivity to the global banking system (Russia/china) * local failing fiat currencies in the world (lots of places, Lebanon and Turkey come to mind)
And each of those is a nuanced and deep discussion about the nature and philosophy of money.
Bitcoin is essentially a decentralised ledger for recording transactions. That those transactions have any meaning, financial or otherwise, is entirely and solely determined by those who use the ledger. Should those who use the ledger one day decide the numbers are in fact meaningless, then Bitcoin becomes worthless.
My guess is that over the next 10-20 years CBDC's will simply on-board the world to crypto while the demand for Bitcoin and other crypto-assets continue to slowly increase while the bulk of the population starts to become familiarized with the technology.
Imagine money that can be arbitrarily seized for any reason the government chooses, at any time, with no due process and no recourse. That is CBDCs.
CBDCs are like trading in USD cash in exchange for Airmiles or credit card points. More restricted, less useful, completely dependent on the goodwill of the state to work when you need them.
“I’m sorry citizen, you payment was declined because you hold unacceptable political views”
Times they are a changin
Ostrom’s Law: a resource arrangement that works in practice can work in theory.
The deeper I go into Bitcoin the more I understand the complications of usury.
I am by no means religious, but the more you look back the more you see the corruption of man throughout history. The switch from usury bad to usury good only took 800y.
>. Yeah yield is like a natural economic law, who are these ancients to claim it is a law against God?
Actally classical economics predicts that there is no such thing as capital gains, i.e. a perfect market drives economic profit and capital gains to zero.
Keynsian economics has the idea of liquidity preference. Once the interest rate falls below liquidity preference people will simply hold onto money at 0% because they woild rather have their money immediately available than invested or lent out over the long term. This means the interest rate gets stuck in a positive range and profits can never truly fall to 0%.
Keynes' idea was an attempt at reducing the real interest rate to 0% via constant inflation as he dismissed Silvio Gesell's proposal of directly adopting a negative interest rate on cash via his famous demurrage currency idea.
Liquidity preference is a general concept that applies to almost every asset. However, Henry George discovered that land is kept empty when its yield is below the liquidity preference of the owner. The owner would rather sit and wait until an opportunity presents himself even though the plot of land that he is keeping away is needed to satisfy a basic human need: shelter.
The amount of misinformation in this piece is frankly incredible. I have seen credible anti-Bitcoin content on HN in the past. This is not credible. It is barely coherent.
For example, check out the authors claims about decentralization, the ease of 51% attacks, and forks - then ask yourself why in 12 years no one has successfully attacked the network using one of these seemingly easy to execute exploits.
Bitcoin offers an almost $1 trillion USD bounty for anyone who successfully attacks it, open for any hacker with internet access. Can the author or the authorities he cites explain why the network remains I hacked?
We can do much better on HN.
No, it doesn’t. BTC would implode if it were successfully attacked. You can try to put on a massive short but you’re left with worse issues and capital utilization.
I would argue that they could extract many millions, possibly billions before the community caught on though.
Wouldn’t that be sufficient incentive to hack it? Why hasn’t anyone done it?
The beauty of the Bitcoin system is that any participant can easily and continuously audit the available supply of Bitcoin for the price of a Raspberry Pi and an SSD.
You can also accurately predict the inflation rate and supply for any point in time in the next hundred years.
Try doing the same with fiat, gold, stocks, or real estate. You will quickly discover it is much harder if not outright impossible.
There is such a thing as a security model that is too strong and can be weakened without practical consequences, and (strong) subjectivity is a good example of that.
Ethereum (referring here to the PoW chain, which isn't going anywhere anytime soon regardless of how the PoS transition goes) is getting dangerously close to this point. Syncing a full history archive node (which you will need if you want to have proper independence) from scratch took us close to half a year, with a recent high/mid-range 4c8t desktop CPU, 64GB RAM, ~500Mbps network, and NVMe SSD. Took us around 1-2 months on a dedicated Xeon server with striped Samsung enterprise NVMe drives in a colo with effort spent on tightening software, kernel, and filesystem parameters. IO and context switching seemed to be the bottlenecks. That was ~2 years ago. Storage requirements for this is now >4TB. This is still doable, but expensive.
Other chains, like BSC, are even worse than this which results in the de-facto centralisation that anti-big-blockers were so insistent about during the segwit saga. After the experiences above I have a little bit more sympathy for that stance.
Not any more. Ethereum (PoW) sync time and storage size have improved a lot since you measured them. (I've worked on algorithms to improve both these areas so I know them well.)
Since we're talking about scaling issues, rather than what's readily available in the well known implementations, I'll describe the best implementations that I know about.
Sync time: Syncing a full history archive node has been done in less than 1 day. It's reduced a lot from the multi-month syncs before, even though the chain is larger now. Syncing just the state for recent history is commonly done in under 6 hours. Both can be reduced further.
Storage size: The entire full history archive state fits in about 400 GiB. With all blocks but just recent history (i.e. a typical node) it's about 200 GiB, and when reduced to 1 year of blocks (EIP-4444) the total storage required for an Ethereum node fits into about 100 GiB.
Storage I/O: I don't have hard figures for this, but both the sync algorithms and storage compression techniques reduce IOPS load significantly.
Storage of full history in particular has been hugely improved over the 9-10 TiB required by Geth or OpenEthereum shown at https://etherscan.io/chartsync/chainarchive You can fit a full history archive node on a Raspberry Pi and small consumer SSD now if you want.
Great to hear about the substantial improvements! Some follow-up questions if you don't mind:
> the best implementations that I know about
Would that be Erigon (nee turbo-geth)? I think work was just going public on that around the time we were messing around with this and I haven't taken it for a spin yet.
> Syncing a full history archive node has been done in less than 1 day.
Am I right in assuming that this is some form of snapshot sync which doesn't include actual validation/verification of the blocks and integrity of the resulting state? Because otherwise that sounds (almost) impossibly short. If so, do you have any idea what one should expect to be able to achieve for that?
> The entire full history archive state fits in about 400 GiB.
Similar question here - if we disregard indexing (and I guess tracing?) etc which would have to be done separately, would the information contained therein be enough to derive past block states and events and, say, replicate a block explorer like etherscan?
Regardless, keep up the good work. Nimbus seems like a great eth2 client.
EDIT: Ooooh, I see now that I'm more out of the loop than I realized and Nimbus is also doing an eth1 implementation now - is that what you're referring to?
> Would that be Erigon (nee turbo-geth)?
No, but Erigon is very good. Erigon2 (the research branch), Besu (bonsai mode), Akula and Silkworm are other small-storage implementations.
>> Syncing a full history archive node has been done in less than 1 day.
> Am I right in assuming that this is some form of snapshot sync which doesn't include actual validation/verification of the blocks and integrity of the resulting state?
No. Geth snapshot sync takes 4-6 hours. The verification of all blocks from genesis is done by Akula in less than 1 day according to their own tests. (They evidently have a faster machine than I do, but extrapolating from other data I expect < 2 days on mine.)
> > The entire full history archive state fits in about 400 GiB.
> Similar question here - if we disregard indexing (and I guess tracing?) etc which would have to be done separately, would the information contained therein be enough to derive past block states and events and, say, replicate a block explorer like etherscan?
Yes, that 400 GiB is enough to provide fast lookup of any data point in the state history, sufficient for a block explorer like etherscan. A bit more space may be required for indexes such as lookup by transaction hash, as you say.
Technically just the blocks is enough to derive past states and replicate a block explorer :-) But I know what you mean.
> I see now that I'm more out of the loop than I realized and Nimbus is also doing an eth1 implementation now - is that what you're referring to?
No, because a Nimbus-eth1 node takes 24,000 GB and months to sync :-) Nimbus-eth1 has its good points but it's behind other implementations in performance at the moment. There have been some good performance proof of concept tests, but I don't work on Nimbus any more and can't comment on its future.
I have friends in different countries, it is far easier (and cheaper) to send AVAX than to deal with int'l fiat transfers. So add one more person with actual verified usecases.
Bitcoin is scarce, hard money that has a historical tendency to go up in value significantly over time.
Stablecoins have practical value as they hold their value over the short term while also having the Bitcoin-like ability to be transmitted across the world at 3am on a Sunday.
Just as you wouldn’t hold all your assets in a single equity, there is room in the world for both Bitcoinand stablecoins. I would argue they are actually complimentary. Does that make me a hypocrite?
I am very interested in UST on Terra, an algorithmic stablecoin whose value is controlled by an automated on-chain process of burning or minting a volatile pair asset called Luna.
Like Bitcoin it can be transmitted to anyone anywhere at any time. It is also a very fast blockchain where payments can be sent in a few seconds.
Like Bitcoin, UST is censorship-resistant, so useful for political activists in less free countries.
It also offers very compelling interest rates on savings that approach 20% APY as well as FDIC-like insurance options for ~2.5% that protect against unforseen failures of the USD peg or smart contract hacks.
The more I learn about UST the more I see it as a more attractive alternative to the USD for power-to-peer cash, payments or short-term savings. Just as I continue to see Bitcoin as a more attractive store of value today and potential global reserve currency in the future.
Terra UST stablecoins are a fantastic technology that solve important problems and they pair incredibly well with Bitcoin to form the base layer of a new monetary system designed to separate money from state.
Deflation, purchasing power increase, is good for savers. Those gorged on debt like to "fight deflation" because inflation makes their debts cheaper to pay. The "deflation is bad" cheering squad is talking their book of over-levered speculation.
After all, deflation makes a lot of people redundant since the wealthy don't want to share.
For example, Germany wants to produce every product on the planet and everyone to world in Germany. The idea of letting the Greek work in Greece is an abhorrent idea to most Germans.
Germans want to save as an end itself. They sell products and services to Greece without ever buying anything from Greece. This is bound to collapse at some point because the Greece debt that is fueling Germany's ecpnomy is unsustainable. Oh wait it did... and the same story is happening with italy, spain, protugal and even more african countries.
All those countries ought to not exist because Germany is running the show right? Who is Germany going tp sell its products once they are gone?
Oh right. Nobody. This very same relationship between countries also happens within countries. There are some individuals that are slightly more profitable to hire so they get the whole 40 work week even if they only want to work 25 hours for example. Those 15 hours cannot be worked by a poorer person that actually needs the money. You are now in a paradoxical situation where there is simultaneously too much money and yet not enough to employ everyone. It clearly is an allocative failure. But since the liquidationists see the failure in the existence of properly run businesses, not the fact that they hire and distribute the money to people that don't need it they will simply shut the entire business down.
After all, to get rid of the slightly more productive person that is earning more than he intends to spend, you first have to get rid of all the dozens of slightly less productive people first. During a depression, employers will fire those people whose supply and demand actually matches pretty well and ironically they tend to fire those whose supply exceeds their personal demands very late even though that is the origin of any depression. So the liquidationists end up with a very simple conclusion, shut down the business even though it is needed again in a few years, shut it down even though the cost of reopening exceeds the cost of keeping it open. Liquidationism has no proven track record, it has always ended in failure
That is an astounding stretch.
Kohl of Germany put Germans into euro scheme without a vote, because a vote on the centralized currency did not have support in Germany. Now the southern countries are trapped whereas before 2000 they had monetary sovereignty.
This is not deflation. Prices go up and down. That alone does not imply inflation/deflation.
> Deflation, purchasing power increase, is good for savers.
The best thing for savers is real returns. History has shown that periods of broad GDP growth with moderate inflation produce the greatest real returns.
My comment has nothing to do with me cheering on inflation. I am hearing a lot about Weimar inflation recently, and I’m not sure most people realize that was born from a horrendous deflationary period which resulted in two world wars (as another commenter rightly points out).
Investors want returns. In inflationary environments, savers are compelled to become speculators (or investors) to attempt to protect purchasing power.
GDP includes government spending, which has been increasing. How is broad growth in government spending good for savers?
I'm not talking about hyperinflation in USA, though it is convenient for your argument to use an extreme example of war reparations.
The scaling section links to a Frances Coppola blog from 2018 which sites the "lightning network not mathematically possible" blog post from 2017. Article does not mention progress made over the last 4 years in lightning, nor does it mention other scaling options such as federated chaumian e-cash systems.
I see the slow upgrades in bitcoin as a feature.
I see the energy problem as something that we need to solve with pollution legislation.
I skipped over the parts about NFTs and Ethereum, and only checked out the parts related to bitcoin.
The most Bitcoin network reorganizations seen by Blockchain.com in one day was 7:
Yes, the consequences are bad, but the risk is very low.
Though not negligible, when facing powerful enemies like ISPs or nation states, you need to be aware of it.
These satellites are also nonsense because they are just renting time on them to broadcast. If there is no actual internet connection, you can't make transactions in the first place.
Reason I ask is, I assume there will be some remnant leftover if/ when all the hype/ bubble aspects of the current iteration of all this cryptocurrency insanity implodes, that will actually become useful, but be so pragmatic and dull that laymen (such as myself) won't even realize I'm using the useful, stable, safe, secure, cheap, and practical tech that is appropriate to where it'll end up. I say this without any ground-level experience with the tech, with no skin in the game, and just based off of seeing how things tend to play out.
... Isn't git a Blockchain? I don't think git has failed.