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Comment by raganwald | Hacker News Reader

As the big banks in the USA have proven, government regulation is definitively not the answer to the question "How can you know whom to trust?”

A common sentiment: “Big Government doesn’t work.” No, it doesn’t work. But in many cases, it’s less broken then no government a/k/a The Free Market. I’m reminded of Winston Churchill’s quip: "It has been said that democracy is the worst form of government except all the others that have been tried.”

It could be that trusting democratic governments to manage a monetary system is fundamentally unsound. I’m listening: What alternative do you propose, and how is it going to scale beyond protecting the few wealthy info-elite that can protect themselves?

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>how is it going to scale beyond protecting the few wealthy info-elite that can protect themselves?

This is why I have trouble with Bit Coin. I actually like the idea of Bit Coin, a predictable monetary policy that has many of the advantages of a traditional inflationary economy, but without the ability of a political entity to make short term fixes that screw us over in the long term. But the problem is that we're transferring elite status to a different group of people. In the end, your ability to mine coins, process transactions, protect yourself and transact business using a non-trivial system is an advantage and screw everyone who doesn't get it. If you don't have advanced hardware and cheap electricity, you're disadvantaged. If you don't know how to use a mouse, you're disadvantaged.

I wish I was smart enough to come up with a better solution.

Without any rules, there is no such thing as personal property and therefore a free market cannot exist. You're describing anarchy, where people take what they want by force.

> You're describing anarchy, where people take what they want by force.

Like taxes taken by the government with the consent of the majority? Anarchy is solving for the general case.

You're free to move to someplace where they do not impose taxes, like Somalia.

Of course, you will have to vie with various competing warlords, all of whom will demand "protection money", but that's the price of freedom from taxation.

It's necessary to have a framework that makes taking the correct action more rewarding or less punitive than taking incorrect action.

We mostly rely on government to handle this. It's not perfect and it works in some folks' interests more than others, but I feel comfortable saying that it does increase the cost of most socially undesirable activities beyond their worth to most people most of the time.

Is it possible to come up with similar protection for Bitcoin without such an authority? I think you have to find a way to introduce risk for people handling Bitcoins they don't own, where they've got an amount of their own Bitcoins held as a security that could be forfeit if they fail to meet obligations.

But then, who holds the security? Who determines if it's forfeit? This doesn't have the feel to me of a situation that can be handled without human interaction, but I would definitely be intrigued if somebody figured it out.

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