Comment by gojomo | Hacker News Reader

Comment by gojomo | Hacker News Reader

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This analysis is true to a point, but overlooks that the 'decentralized cloud bank' innovation now allows a whole bunch of other technologies to be applied into an important economic domain without the old gatekeepers and limitations. Those other technologies are a bit more familiar to people:

• global always-on connectivity

• encryption constructs

• easy discovery/formation of communities-of-interest

• open source collaboration

• instant rich search and giant archives of past behavior

• delegation of policy to ever-improving software/automation

• cheap powerful handheld computer-phones

• ...etc

These may not seem to be similarly novel breakthroughs; we're getting used to them, over the last 5-20 years. But now they're being applied to a monetary domain, via Bitcoin (and other cryptocurrencies), where progress was formerly bottlenecked.

So while I'm wouldn't generally put a lot of weight on the cheap, shallow shot against Krugman – "he thought the net wouldn't have more impact than the fax machine" – there is a somewhat similar failing here. By looking at one aspect of Bitcoin in reductionist isolation, he (and his tech friend) are missing the combinatorial effect of all these new possibilities together.

Bitcoin to money is what app store is for mobile software, or the web is to newspapers etc. It's decentralization of power. There's no gatekeepers to prevent new innovative payment services. You need $100 to create a new payment service, not millions. You don't need to ask anyone permission to do what you want.

In practise, individuals will now have the power that only large corporations used to.

I'd disagree that Bitcoin is to money what the app store is for mobile software. If you are talking about the Apple App Store, they are the gatekeepers to what software you can load.

I agree that it's not a perfect analogy. App stores (I'm talking in general, not referring to Apple's store) are still centralized and act as gatekeepers, but the "gatekeeping level" is in another level to what it used to be. Before app stores it was practically impossible to for a lone developer to create an application and release it.

You do realize that software development existed before app stores, right? Lone developers created and released applications all the time. App stores are about convenience, and so they are not like your other examples, which are about decentralization. They just don't fit.

>Lone developers created and released applications all the time.

The context was applications for mobile phones.

every time i have read a statement like this in the past it has been followed at some point by a crushing, total and complete, reversal that shows that the exact opposite effect was produced from the anticipated outcome.

It's hard to recognize the importance of technological breakthroughs and impossible to predict the future. With Bitcoin the problem is doubly difficult because the technology is new but the economics may be old. Unlike, say, digital publishing that democratized a process that was once in the hands of gatekeepers because of high costs, crypto-currencies try to do away with gatekeepers that were put in place because decentralized currencies didn't work so well. This discussion bears resemblance to others about economic regulation, which, just like Bitcoin fans, ignore the fact that regulation was put in place, at least in America, to save Americans from the horrors of the Gilded Age.

Many of the problems with private/decentralized currencies in the past – problems that motivated the state monopoly and regulations – are no longer relevant, with modern technology. The global network, encryption, and transparent open-source governance render obsolete lots of the old concerns.

Also, while regulations and state monopolies always have an surface rationale based on solving actual problems, sometimes the real reason they're put in place, or maintained even as circumstances change, is because they benefit certain narrow entrenched interests.

We owe older regulatory arrangements some respect, for the effort that went into their initial crafting and their longevity across eras where (whatever other problems we have) we've survived and thrived beyond the past. (I agree with the "Chesterton's Fence" principle: don't take down a fence until you know why it was put up.)

But we shouldn't fear that old regulations and traditions are the only thing protecting us from 'horrors' of the past. The world has changed, some old risks are obsoleted by new levels of understanding and wealth, while all-new risks have arrived – including many created by the privileges and inflexibility of older 'solutions'.

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