The truth about the Bitcoin Foundation
bitcoinfoundation.org
bitcoinfoundation.org
It has economic assumptions baked into it (deflationary, fixed size of money pool, etc). These assumptions, like all economic assumptions built into a currency, will guide and govern people's behavior and use of it. That means that bitcoin is a human-invented system that, if it came into any widespread adoption, would play a role in suggesting or controlling people's behavior, just like any currency.
The difference is, the people whose behavior would be controlled have no say in changing those economic assumptions. The people who could potentially live in a bitcoin-infused world have no voice in how it operates. Bitcoin, in effect, takes a degree of agency from the people, and this is especially problematic if it became widespread enough that you'd be compelled to use it.
Why does that matter? Because people have a right to democratic institutions. People have a right to vote on or have a say in matters that govern their lives. Bitcoin, as it exists now, takes that away from people.
And, to bring up a couple of things people have said to be me here before, the fact that Bitcoin can be changed (i.e. by writing new code and persuading 100% of the community to adopt it) does not make it democratic. Setting the barrier to democratic participation at "learn to code, or pay someone to code, and then change everyone over all at once to your new software" means that that isn't really a democratic system at all.
And to bring up the point that currency shouldn't be democratically decided, well, no. People have a right to govern their affairs and live in a society responsive to their needs. Moving in the direction of taking some of that agency away is moving in the wrong direction.
I'm not opposed to digital currency in general, but I am opposed to one that operates in a way that I have no democratic recourse if I don't like how it runs.
Do we vote on central banking policies directly? No, of course not. Does that mean nothing ever changes? No, of course not.
I'm not sure who, if Mitt Romney had won, he'd have named as Fed chair, but I suspect it wouldn't have been Janet Yellen. (Just like, had McCain won in 2008, we sure wouldn't have anything like the Affordable Care Act--which, flawed as it is, is a big improvement over the old status quo.)
That's how democratic access to money policy works; we vote, power realigns in accordance with our votes, and a few years down the road, we do it again.
How is that better and more likely to happen than allowing 51% of the network to just adopt a new protocol and cut out all the middlepeople?
The reason Congress has not abolished the Fed is that most people think that the Fed is pretty good at what it is supposed to do.
The non-conspiracy fact is the Fed has stayed quiet during the past 7 years because it has done a remarkably good job compared to their conservative-to-the-point-of-incompetency European counterparts. Europeans are quite familiar with ECB policy, because it has handled the crisis so astoundingly badly.
On another note, we need a Godwin's law for "Conspiracy Theory". As soon as someone mentions the word, it's likely to set up a appeal to ridicule fallacy, such as used in the parent.
I'm also curious where in the county a loaf of bread is now $3-4, and I mean the cheap white/wheat bread that used to cost a buck and change (and still does here).
Housing, I know it's gone up a lot, but even so, 3x?
Can you provide any hard numbers on the 3x increase in gas, housing, and food?
The prices mentioned are exactly in-line with what I'm paying overall, though gas has gotten to around $3.10USD/Gal recently. Food prices are astronomical, and labor wages are flat/stagnating.
I guess if you want to compare the situation in the US in 2009 with the situation in Canada in 2015, then, ok, but it's hard to see what point you're actually trying to make then.
On a sidenote, why is economics so wrapped up in astrology?
And therein lies a problem. Under a system like this, policy is geared towards affecting the short term in order to affect the next election cycle and no heed is given to how things play out in the long run.
Maybe 4 years is too short a time to revisit the question. Maybe too long. I don't know if 4 years is the best length of time, but it doesn't make sense to make it too long a period of time; we've got to have a chance to change course every so often.
Bitcoin is controlled by the few barons who own most of the coins, and unlike central banks, those barons are entirely, rationally aligned with their own personal profit. Same with the overseas miners who invested in infrastructure. The federal reserve may be influenced by politics, but at least it is aligned with keeping the USD currency stable, and usable by citizens.
The personal interests of the bitcoin elite are why bitcoin suffers from tragedy of the commons. Bitcoin will never be anything but deflationary because the ones who control it (barons, miners) do not profit from change that is beneficial for bitcoin.
The federal government has some influence over the federal reserve, but it's advisory at best. Their deal is that fed allows the government to deficit spend as much as they want and in exchange the fed gets an cut of the interest on every dollar (which are federal reserve notes-- eg: debt.)
The federal reserve has not kept the USD stable, and is, in fact, financially incentivized to destroy the USD via inflation, and is busy doing so. They are obscuring this destruction by using the power to print dollars to buy treasuries at auction making it look like there is massive demand for such treasuries, keeping interest rates low. They keep interest rates low, which boosts government spending (Because its "cheap"-- at least in the short term) and this boosts fed income because they get the interest.
The bitcoin protocol was clearly made by someone who understood economics an didn't want to allow such a scam to be perpetrated on the public the way the fed has defrauded us of %99 of the value of the dollar over the past 100 years. (probably more like %99.9999 ... but I'm not sure how many 9s there are after the decimal.)
It's not a deflection to point to central banking-- central banking is the reason for bitcoin being the way it is.
If the Fed is currently busy destroying the USD via inflation, it's doing a pretty poor job of it has kept inflation under 2% for quite some time now.
You talk about the inflationary behavior causing the dollar to lose value over the last century, and that is absolutely intentional. A good currency is expected to experience a 1-3% annual inflation, in order to decentivize hoarding and remove barriers to cash flow.
Bitcoin is deflationary by design, and this is a key distinction to make. There is a definite future for an international cryptocurrency, but the implementation known as bitcoin is not it - exactly because of what you said, it is designed to be a store of value, not a currency. Many bitcoin evangelists will claim that theoretical soft forks can be made to solve this, by adding more supply and making bitcoin inflationary, but to do so requires 51% of miners to agree to it - which is irrational because it would devalue the miners' holdings and infrastructure.
Hence we're back at Bitcoin suffering from tragedy of the commons, which is by design as you point out.
And inflation is quite specifically the point, to encourage people to spend money (on buying stuff, on reinvestment, on whatever), instead of sitting on it.
When people sit on piles of money, it doesn't do anyone any good. It's not destroying the USD to keep that money moving around the economy, it's part of its basic deal.
Bitcoin was designed to be a cryptocurrency that stores value, and because it is deflationary, bitcoin makes a terrible currency. The bitcoin forking scheme to fix this is controlled by people who profit from bitcoin staying deflationary.
The economic majority controls Bitcoin, not the miners alone. Have you even heard about nodes?
What is the minimum number of people you think it would take to decide on a change to some rule of bitcoin and have enough combined power to force the change through?
Pools are in fact very democratic systems for this reason. Users can change pool at any moment's notice.
Miners still have to obey the rules of the Bitcoin nodes. If a miner tried to generate more coins, even if 100% of miners tried, it would fail as the several thousand active Bitcoin nodes would simply reject the blocks.
Softforks cannot add more coins into the network, they can, at most, restrict earlier valid transactions.
It's always been known that someone with over 51% of the power can rewrite the blockchain, but only within the rules of the Bitcoin nodes.
For example, a softfork could never spend coins from your wallet without your key, it could never make more coins or delete a users balance.
This is a good post on the difference: http://bitcoin.stackexchange.com/questions/30817/what-is-a-s...
51% certainly gives someone a lot of power, but it's power with limits, and the limits are the rules coded into every Bitcoin node.
Why should we expect that 99/100 people have anything insightful to say about currency? Even the person who is college-educated and took maybe 1 or 2 economics classes is way out of depth talking about it. There are maybe a "handful" of people who could give a meaningful evaluation of bitcoin or some alternative currency... similarly the requirement that someone be code-literate and have algorithmic "chops" to change bitcoin is good -- you don't want a person who doesn't even know what a distributed system is trying to make changes to something they don't understand because they read an article on huffington post about it and decided it was "problematic" because it didn't fall quite in line with something they believed rather strongly but without good reason to be true.
I'm not saying, "everything must be direct democracy."
I'm saying, "people have a right to access political power."
I've never been ok with "you're too stupid to know how this works, I'll take away your ability to decide," even though there are lots of things where I'd consider myself better-informed about stuff than the typical dumb idiot on the street.
(Yeah, even those typical dumb idiots, I want them to have a say in how society is structured too. That's how strongly I believe in democracy as a human right.)
Right now, bitcoin is totally a choice, and one very, very few people are making. If bitcoin ever spread beyond this very fringe state, to where people would be compelled to use it for whatever reason, that's where it's important that those people have a say in how it's designed and how it operates.
I am sympathetic to the idea of "let the people decide and let the best ones fall out of the mix," but the problem I see is:
Having multiple "competing" currencies defies the usefulness of currency at all. If, as a medium of exchange, I have to keep several around to do business with you (because you accept dogecoin, kanyecoin, and I'm carrying dogecoin and Frondocoin), then I don't think that's a very good situation.
And say Frondocoin wins out; for whatever reason, it takes over and 90% of people accept and carry some with them. Well, great, right? Except for the people who are growing up in the Frondocoin regime, whose economic lives are now dictated in some ways by the Frondocoin design goals.
Telling those people, "well, just start your own, and then persuade enough people in your local economy to start using it, and then maybe it'll grow enough to let you do interstate trade..." gets us right back to the start. Now people are once again stuck using a currency they didn't ask for and have no say in the operation of.
You might say "vote with your actions, your actions will help pick the winner."
I say, "vote with your vote, you have a right to periodically refresh your government by a well-defined, accessible process."
So, I guess I just still don't see how what you're proposing is either effective as currency or as democratic governance.
The idealism of common currencies emerged largely as the result of rapid globalization among hard currency regimes (case study: the eurozone). The obstacle of exchanging currencies in that context makes sense. I think this obstacle is / can be largely removed however in the context of digital currencies. I don't see the competing market of digital currencies as a king of the hill scenario seeking currency monopoly (as centralized national currencies current do), but rather as a continuous plurality more akin to one's stock portfolio. The key here is substitution of software processes for physical processes in transactions, and the inherit flexibility that such a transition results in. Now if you're thinking that trying to figure out how to manage a complex portfolio of competing currencies for every day financial transactions seems incredibly confusing, I'd agree with you! But simplifying that process is precisely the role that software enabled currencies can address.
In this respect, electing new currencies is analogous to electing new governments, consistent with a well-defined accessible process. The difference is that the election of (multiple) currency regimes is now decoupled from the election of representative intermediates. It's nice to think that our political institutions provide us democratic control over central banking, but who actually takes the nomination of the next Fed chairman into account when that consideration must share the collective attention span with so many other issues de jour?
We should minimize the amount of decisions people make about government. The best way to do this is to mostly do away with the federal government and maybe the state government, deferring as much as possible to small, local communities where it's possible for people to be reasonably informed.
It happens that the matter before us - the process by which state-sanctioned currency is created and distributed - is a wonderful example of the failure of voting to create policy which is in line with the civic polity of the voters in question.
Very, very few people believe that the current configuration of the federal reserve is just, yet over 40 million people voted for the current US President.
Thus, there is obviously a chasm between the beliefs of the voters and the outcome of their democratic exercise.
One of the most important (in fact to me, the most important) critiques made by the open source collaboration model is that, in some cases, a seemingly more chaotic system of decision-making can (but of course doesn't have to) result in a power dynamic more consistent with the underlying politics of the constituency.
Bitcoin, while obviously flawed in many ways, and blockchain technology generally, are formulations of this critique. They say, "here's a different imperfect way of making decisions about the operations of power structures."
In this way, it makes more sense to judge them on how they apply the desires of a constituency to the power structure, not merely the matter of whether or not they facilitate one particular mechanism for doing so (ie, voting).
By my assessment, Bitcoin is actually somewhat less horrible than USD when judged this way. Future cryptocurrencies may emerge which are not at all horrible.
(Critation needed). From my vantage point, very very few people - mostly cranks and charlatans - are against fractional reserve banking or the Federal reserve.
I agree that it isn't a popular viewpoint, and I don't think it is even feasible with fractional reserve banking as well as other nation state risks to a currency, like foreign manipulation, but I don't argue that it's all that crazy to call for the end of the Federal Reserve.
For those opposed to the general system of fractional reserve and central banking. I also said "mostly" because I do beleive there may be eventually a better system.
I think there's plenty of room to debate the policies and structure of the United States federal reserve.
Isn't it exactly the other way round?
For Bitcoin I can at least inspect and understand the economic assumptions, by looking at the source-code or having someone I trust explain it to me.
What are the economic assumptions for the USD? Who can I ask and how do I know they won't lie to me?
Also in terms of democratic recourse I find "learn to code or pay someone" a much lower barrier than "get rich enough to bribe influential politicians".
The US Dollar on the other hand is flexible to changing economic realities. The Mint can change the rate of production, and the Fed can change interest rates. We've seen this in the recent recession, where the Fed dramatically lowered interest rates in order to avoid a liquidity trap. There is the danger that the US Gov't might set the wrong monetary policy, either due to corruption or (more likely) incompetence. But to be worse than a fixed monetary policy, they essentially have to be choosing worse than random, which I doubt they'll do over the long run.
> What are the economic assumptions for the USD? Who can I ask and how do I know they won't lie to me?
The Fed can't really lie about the interest rate. I suppose the Mint could secretly hoard bills, but that would be a huge scandal and pretty quickly noticeable if they did it at a large enough scale to make a difference.
I would argue that we're all collectively part of this experiment right now. We can't tell which is worse because afaik there hasn't been a competing system with a more rigid policy to compare to yet.
The Fed can't really lie about the interest rate.
Well, policy is not so much about what someone has done but more about what they will do.
As for democratic resource, I don't see how there is any comparison possible between "learn (or pay someone) to code, and then persuade every money-holder to accept your code" and "receive your ballot in the mail, cast your vote for the politician whose money policy you like".
One looks like a frictionless spherical cow, the other looks like an imperfect but still workable democratic process.
That seems very optimistic to me.
The fiscal policy in Bitcoin boils down to a few small chunks of logic; block rewards, difficulty settings, transaction fees. Those are relatively easy to explain even to a non-techie.
And the resulting policy is definitive. It doesn't quietly change. All changes are broadcasted to everybody, and anyone who cares can stay up-to-date.
The US fiscal policy is not only infinitely more complex, it might also have quietly changed before you even finished explaining it to me...
"learn (or pay someone) to code, and then persuade every money-holder to accept your code" and "receive your ballot in the mail, cast your vote for the politician whose money policy you like".
To me the former is a pull-request on github, with open discussion and a realistic chance to get merged. The latter a symbolic gesture, hoping to bring someone in power who might perhaps hopefully one day implement a change that is at least similar to what I had in mind.
As opposed to paying for 8 years of law school and getting elected using the money of special interests? Setting the bar at knowledge freely available to anyone is about as good as you can do.
In practice, it only takes a handful of programmers to provide value for billions and stave off corruption. See: Linux
Where I live (Oregon, USA), they mail us ballots every year or two, and we vote on things. You don't need to own property or have a car, you still get to vote on stuff.
For example, last year we decided to legalize cannabis in our state. I'm quite sure the millions of people who voted for that didn't spend 8 years in law school.
There are plenty of political scientists who think that, as a mechanism for changing power structures, voting is ineffective and poorly conceived.
The same thing's going to happen in Oregon, when our legalization starts rolling along.
Watching an industry move from mostly-black-market (excepting the medical marijuana scene) to exploding with life and all on the level--as one example--it makes it tough for me to accept that voting does not substantially matter.
(The other example I bring up is the Affordable Care Act. I can now buy insurance out of pocket that caps my annual expenses at around $6000. Huge improvement over the old status quo for me and other independent professionals. I'm pretty sure that, had McCain won in 2008, that we wouldn't have anything like McCainCare. Another place where voting has lead to policy that has improved structures of power and trade.)
I get the point, but Linux's success isn't purely the result of a few programmers banging their fingers against a keyboard. There has been billions of dollars poured into its development over the years by corporate interests in the form of pure money and developers being paid to work on it.
Whereas in cryptoeconomy, once you decide you don't like the terms of this currency, you get a new currency made for free(call me if no programmer would give you 10 minutes of their time) and then you go on persuading people. You don't wait for any day and people vote on the spot whether they'd use it or not and then you don't even care if the elected govt does what it promised.
Pure democracy. Current America (and India where I live) is oligarchy with the power lying with the elite few.
To get really extreme I'd go suicide in front of the Indian parliament tonight if it simply bans people with criminal backgrounds to participate in elections. Guess what, many people have and nothing changed. You can hold my this comment as a written promise.
It's important to realize that bitcoin is two things:
- A decentralized payment network
- A store of value
Whether it has merit as a store of value has yet to be seen, but bitcoin has already proven itself as an innovative payment network. For this purpose I believe your argument is less important - the underlying invention of the blockchain can now be duplicated in other competing networks (altcoins, sidechains) if bitcoin itself does not prove satisfactory.
In future I believe bitcoin governance will look more similar to how the internet is governed today. For now, I think we have established that an unaccountable foundation is not the best structure.
1) the design of a currency might require paradoxical decisions - that is, popular choices for how they should work could lead to them being worse for people in the large
2) the democratic decision process might be satisfied by people choosing to adopt this currency or not
If the people chose to adopt a digital currency, that choice should be something that's also revisited periodically. Either directly (i.e. a citizens' initiative to change its inflationary/deflationary policy) or by way of our elected officials (i.e. "Vote for me, my stand on digital currency is X!"), it should be possible for the people to decide a new course of action every so often.
After a few years of living in a digital currency-enabled world, we'd have a sense of whether we wanted to keep the policy the same, change it, roll it back entirely, whatever. If it's something we could vote on, then great, democratic principles intact.
Bitcoin on the other hand has a set supply and supply schedule, making it deflationary and inadequate as a currency.
"The various currencies, which were all maintained on a stable basis in relation to gold and to one another, facilitated the easy flow of capital and of trade to an extent the full value of which we only realize now, when we are deprived of its advantages. Over this great area there was an almost absolute security of property and of person."
Keynes was one of the great advocates for dropping the gold standard, calling it a barbarous relic - as his biographer Skidelsky says, "useful as a constitutional monarch but disastrous as a despot".
The various central bankers clinging to gold - against all evidence - caused the great depression's deflationary spiral.
I really don't care - but the point still stands that Bitcoin is still almost a century behind other currencies because it is deflationary.
See, what Bitcoin really is about is moving money from the public to the private realm. In the same manner that nowadays you don't get to democratically vote the color of my living room's couch or what I'll have for supper tonight, tommorrow you won't either get to vote the monetary policy of the currency that I fancy using.
And that's perfectly fine because my choice won't "govern your life" as you put it. If for whatever reason you don't like Bitcoin you can stick to fiat money or use any other cryptocurrency with a different policy baked in. If I ever have to pay you money I'll just exchange some of my coins for yours at current market price (there'll be convenient services for that, rest assured), and you could do the same for me. Hakuna matata.
However:
Here in Colorado, we have legal(ish) marijuana. However, there is a federal law that says that banks can't deal with these businesses.
The result of this is lots of armed robbery. This doesn't seem very responsive to the needs of people in Colorado.
It would absolutely not "control" people's behavior. Control is a very charged term, that implies coercion. Unless there is coercion, there is absolutely no justification for banning Bitcoin so that people are only left with the "democratic" alternative you favor.
By all means, promote your democratic currency, but don't try to give it a competitive advantage by prohibiting people from using alternatives that don't meet your ideals.
> No, seriously, the decentralized nobody-needs-to-trust-anybody payments network was shut down by an IRC channel's consensus* for 8 hrs.*
It wasn't "shut down" in any sense of the word, the network kept working (in duplicate, no less). It was the decision of two pool owners with extraordinary hashrates to sacrifice their chain (which was actually the "correct" one as far as intentions go), rather than the core developers. Nobody has some magic key to shut down the network (though originally, Satoshi's alert key did enable a "safe mode", this is long gone)
> Bitcoin is not a protocol in any meaningful sense of word. It is a single C++ codebase that you have to be bug-for-bug compatible with.
That's the reality of distributed consensus. Matching it bug for bug is completely foolhardy (and many have failed at the task), you should be just linking in the consensus library which is currently being broken out of the bitcoin core source.
> Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances.
Except for the key one, that a LAMP setup running on a shared host isn't a distributed consensus. You could replace your car with a hamster wheel and it would still go round and round, but it's missing the core function of getting you to work.
> Bitcoin presently costs on the order of $6.5k per megabyte of data added to the block chain.
Which is why signatures are made with ECDSA, a very compact signature system compared with lamport or RSA. You don't want to be storing data in the block chain, and it's never been posited to be good for this (quite the opposite).
> Time between Bitcoin blocks is not guaranteed (follows a Poisson distribution). Sometimes all pending transactions just stop for a while
This isn't at all surprising, if they were regular then Bitcoin wouldn't be a functioning distributed consensus. You can get near instant, low trust "confirmations" by using a multisignature oracle which promises not to sign double spends. There's at least one company doing this at the moment, though it hasn't seen huge adoption.
https://bitcointalk.org/index.php?topic=152030.0
If you're a merchant: please stop processing transactions until the chains converge.
So there is room to argue about how patio11 phrased that, but it seems fair enough to say that advice from the insiders was to stop using it for a while (and given that the fork was resolved in keeping with the results of the discussion, I think it is fair to say that there really are insiders).
Saying not to use the network has pretty much all the same problems as making it unavailable (and the additional problem that it is confusing for the bad state to be available but not recommended for use).
For example, on the first point:
this is akin to saying the bit torrent foundation closed down bit torrent! waah!
it's impossible
once they released the reference implementation, it was out of their hands
this is the beauty of open sourced and decentralised technology, once it's out there it's difficult to control
the analogy would be Linus going batshit mad and deciding to include binary blob drivers provided by the NSA in the kernel mainline, fine - nobody will use it, business continues as usual using a fork before that and he becomes irrelevant
The incident begins at 22:11. If you don't trust my summary of it, and you consider yourself very, very well-briefed on what Bitcoin is doing under the hood and who the players are in the Bitcoin community, just read the next ~12 hours of logs. It's absolutely riveting.
My summary:
The Bitcoin protocol doesn't exist. The only protocol which matters is the actual behavior of the Bitcoin Core client -- the one originally coded by Satoshi, which forms a supermajority of the network. Bitcoin Core released version 0.8 on or about March 11, 2013. This differed from Bitcoin Core 0.7 in at least one respect, which was that 0.7 used Berkeley DB and 0.8 did not.
BDB has a configuration issue, specifying the maximum number of locks it can use at once. If you attempt to use more, it returns an error.
Here's one reason I say the Bitcoin Protocol doesn't exist: No sane person says "An important feature of the Bitcoin Protocol is that conforming clients MUST REJECT any Bitcoin transaction which would exhaust the default number of locks available to the Berkeley DB."
Someone submitted a Bitcoin transaction which did, in fact, exhaust the number of locks available to the Berkeley DB. It was conformant with all the rules that Bitcoiners believe transactions have to be conformant with except that bit about the lock limit in the Berkeley DB. This transaction was accepted by a miner running the 0.8 software.
Let's, for convenience, call the blockchain as it existed prior to that block being mined Blockchain B. The blockchain with that block in it is B'.
Bitcoin Core 0.7 rejected the authenticity of B'. Accordingly, when 0.8 nodes said "I have a new block to publish! It checks out and builds off of the-present-head-of-B'", 0.7 nodes said "I don't know what that nonsense you're spouting is, but it sure isn't Bitcoin." Bitcoin Core 0.7 nodes and miners continued talking amongst themselves and building B up.
Bitcoin Core 0.8 nodes accept the authenticity of B' and all blocks chained on top of it. If you presented them with a block chained off of the head of B, they would say "Oops, sorry, sucks to be you -- someone already has a longer chain. You've created a blockchain, but by the writ of Satoshi, we only do business with the longest compliant blockchain, which is B'."
This is called a network split. And it is, in laymen's terms, utterly cataclysmic.
Here's why: Suppose Mt. Gox runs on 0.7 and Coinbase runs on 0.8. I can create a transaction which spends some output(s) $COIN and have it accepted into a B' block. Perhaps that transaction deposits my $COIN into Coinbase. Since that transaction doesn't exist on B, I can then deposit the same $COIN into Mt. Gox. Both Mt. Gox and Coinbase believe themselves to be in possession of the same Bitcoin.
And both of them are right.
Which is why after that channel figures out what is happening that engineering gets real. After discussions between several core developers they ascertain that the Bitcoin mining cabal behind B' is small enough to get, well, both of them on Skype and convince them to throw away hours of history on B' (which is, again, built off the new-and-improved bug free version of Bitcoin) and instead start building off of B instead. Their history must die so that Bitcoin can live.
This plan is executed. It works.
Read the chat transcript if you don't understand this: Bitcoin was virtually unusable during the interim -- most of the merchants people cared about turned off transactions entirely because they were, sensibly, scared shitless. Several hours of transactional history got wiped out. One security researcher successfully executed a ~$10,000 double spend attack against a merchant -- he gave the money back afterwards.
Now, you tell me: how do you rate my credibility here versus your friend? My assessment of this event is "Bitcoin has an identifiable governance structure. You can fit them into an IRC channel +/- a few Skype sessions. They can independently decide to change the rules of the 'Bitcoin protocol' a) at will b) retroactively. I cannot reconcile this with claims that Bitcoin is 'does not require trust' or is 'decentralized.'"
Sigh. Your post was a great up until the very end.
Bitcoin developers can't push any rules on anybody. They haven't the power.
A majority of bitcoin hashpower can enforce a strictly stronger set of validation rules, as indeed happened here. Is it a problem that a very small number of individuals represent policy for >50% of the bitcoin hash rate? Yes. Is this intrinsic to the nature of bitcoin? No. And it's something that people are working to fix.
Can a majority of hashpower arbitrarily rewrite history? Yes, but only with a very real opportunity cost to themselves. And that is the rules of bitcoin since the beginning -- although in reality people would probably choose to reject a long reorg. Some level of human intervention is a good thing.
You really need to get up to speed with the event before commenting on it, there's a very good writeup in the form of BIP50.
https://github.com/bitcoin/bips/blob/master/bip-0050.mediawi...
The issue has nothing to do with a particular transaction or block, it was going to fail anyway and just happened to be triggered by a large block. The oversight meant that all 0.7 clients were inconsistent with one another depending on the history of the node and how long it had been operating.
> No sane person says "An important feature of the Bitcoin Protocol is that conforming clients MUST REJECT any Bitcoin transaction which would exhaust the default number of locks available to the Berkeley DB."
Nobody did say that, the failure was implicit not explicit.
> Several hours of transactional history got wiped out.
No it didn't, it was replaced with a slightly different history, or history remained the same, depending on which side and which client you happened to be running at the time.
This is precisely what he just said. A valid blockchain being replaced by fiat (heh) is certainly a destruction of transaction history, whether that happened to everyone using Bitcoin or just a subset of people using Bitcoin.
Aren't these floating variables, not booleans? "Level of decentralization" vs. "how much does it require trust". I would argue that the level of decentralization and trustlestness is better on bitcoin than fiat payment systems.
So what has happened subsequently ?
Was everybody encouraged now to upgrade to the 0.8 client across the board? Otherwise the same thing could occur again, deliberately or not, couldn't it?
Should it happen again you could fix it by either forcing everyone to quickly upgrade (and losing the transactions that occurred on the old main chain post-fork) or by doing what happened here (holding back or downgrading the upgraded clients until the old main chain was the longest chain again, and losing the transactions that had occurred on the new chain post-fork).
What will be even more interesting is what happens if we actually ever get multiple compatible implementations of Bitcoin. As patio11 hinted at, if those implementations are not all "bug for bug" compatible then type of thing could recur over and over again.
So we're left with the choice of remaining with a single reference implementation to reduce (but not eliminate) the risk of introducing partitions due to slight incompatibilities between Bitcoin clients, or to encourage multiple implementations of Bitcoin to reduce the dependency of an entire "decentralized" economy on a centralized reference code base.
Isn't everyone sufficiently aware by now that there have been bad bugs and fraud?
Wouldn't it be more interesting to discuss what needs to be improved?
Or is your point that distributed currency can not possibly work? (that would also be a more interesting debate)
There is no debate, distributed currency does work. I have been using it on and off for four years. Bitcoin works the same at 1 dollar as it does as 1000. Using the currency as a store of value, however, is another matter.
They could have just as well, seeing as they had the longer chain, decided to continue working on that chain, but they voluntarily decided otherwise. In the process, validating the inbuilt incentives of bitcoin.
The decision therefore wasn't "independent", but reached by consensus and further supported by everyone else. Had there been some disagreement, for example if what the devs were proposing was not seen by the two "powerful individuals" as being in their best interest, then matters could have developed far differently.
So, what exactly requires trust in all of this?
But can you imagine a possibility of building a system where the db that each person holds is not berkeley db or whatever but just plaintext and then writing your own functions to traverse the same.
I'll admit I do not understand the bitcoin core at all because I never invested time yet to read it. But I completely understand the blockchain algorithm and can write a cryptocurrency without even caring about what bitcoin did.
All I am asking you is do you believe that such a system can be built? Or do you believe that the current developers are intelligent enough that if they couldn't do it you can't do it either?
If you're basing your system on "oh we'll just make the software bug-free!", you have already lost.
So it is a Protocol but still really young and immature in some senses, but it doesn't mean anything else, it is evolving almost everyday.
https://blog.ethereum.org/2015/04/02/implementing-vitaliks-v...
Right, but in an attack scenario, Bitcoin can continue and survive without that governing structure. It can fall back entirely on its trustless protocol.
Your analysis does not appreciate the significance of this.
Insofar as this or future versions of Bitcoin might still have critical bugs that require social consensus to fix, then yes, Bitcoin is not guaranteed to be totally independent of the type of ad hoc centralized governing structure that emerges in IRC channels and Skype chats. But a bug is a failure of implementation, not the concept. Bitcoin, the concept, is sound, and is a major breakthrough that is not appreciated by OP's analysis.
Maybe a take away point from all this is that even if you are doing just a 20K transaction you should still wait 24+ hours to make sure a bug of this nature isn't occurring.
The network can enter a state where people that are familiar with it decide to tell people to not use it until it is fixed, and that did happen.
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No they were not null and void, there's no lasting records of what happened but they would have either existed on both chains (likely), or been returned to the memory pools of miners when they were reorganized out (likely). There was only one recorded instance of double spend during the event which was intentional, it and any descendant transactions would have been invalidated on the chain that did not win.
> Please explain why all of the above does not count as the network being "shut down" in any sense of the word.
Well "shut down" implies that nothing was operational, the network was perfectly functional it just happened to have fragmented due to an oversight in the way the underlying database in 0.7 was configured (you could non deterministically run out of locks, 0.8 didn't have the same failure but wasn't wide spread at the time). It might not have been safe to rely on untrusted transactions from outside sources during the event but anybody not doing this had zero risk whatsoever. The main losers in this event were the miners who threw away their block reward to speed up the resolution of the fork, which were re compensated at a later time anyway.
> and also that any transactions that you did on the v0.8 block might need to be re-broadcast?
The client handles this automatically.
>"..Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances."
The blockchain is a ledger fine. But mining & proof of-work are separate concepts from the ledger. Mining is not only digging gold for distribution but also checking that the money note you just received is 'not counterfeit' + 'unique'.
> "Bitcoin is not a protocol in any meaningful sense of word.."
Bitcoin isn't but blockchain is. It is an algorithm that enables value transfer over any medium of transmission. Similar to how morse code enabled data transfer where only signal was being transferred. Similarly, internet enabled information transfer where only data was being transferred. Blockchain is the 8th layer of the OSI model.
>"..Bitcoin's disaster recovery plan is a) get a cabal of people together in IRC, b) shut down the entire payment network, c) sort things."
Forget bitcoin. Its like looking at the internet and finding faults in hotmail as the first email service.
> "A good portion of geek enthusiasm for Bitcoins comes from the fact that it is programmable money. But: Money is also programmable money."
No. Forget money. Blockchain is the thing. Its like saying internet is all about email. Internet enables information transfer, now what is information-transfer in plain english? A letter. Hence messaging is the first natural application of internet. Blockchain enables value-transfer, what is that in plain english? Money.
Being able to check that a ledger is accurate is a feature. It can be captured by a PHP app which uses MySQL transactions. This is, in fact, the most popular way to ensure ledger integrity even in the Bitcoin community (on exchanges, where transactions happen "off chain" because Bitcoin is wholly unsuitable for processing the type of transaction that mosts interests the Bitcoin community).
The cost of verifying transactional integrity with MySQL transactions is, generally speaking, less than $900,000 per day, which is the present cost of verifying transactional integrity on the Bitcoin blockchain.
I will respectfully decline to respond to the rest of your comment as it includes no statements which can be true or untrue about Bitcoin as a technical artifact.
I'll try to explain. The banks have a ledger of all the notes in circulation maintaining a record of the number printed on the note. Now when I give you a note, and its fake, you can figure it out by checking the unique factors. But lets say that my 3D printer is advnced and printed it so accurate that it is same as a real dollar. Now the way to catch this note would be to check if the number on this note also exists on some other note. So basically proof-of-work is you checking for unique factors(not counterfeit) and then somehow check all the notes in the world that none of them have the same number(unique). Both of these are in addition to the use of mining as a way of distribution of wealth.
Could you just reply to why you don't consider the blockchain to be an algorithm?
Also, I mostly meant that you are paying too much attention to what the media is throwing at us, in the form of bitcoin and exchanges. As a thinker, forget bitcoin and its code and just think about blockchain. Saying that blockchain enables value transfer and must be considered as the 8th layer of OSI model is technical artifact.
I find this part of the conversation to be uninteresting, primarily because it attempts to make a distinction between "Bitcoin" and "the blockchain" (despite the fact that the Bitcoin consensus blockchain as annointed by the Bitcoin Core client at this moment in time is the only one of the infinite number of possible blockchains which is cared about) but can't make a distinction between "algorithm" and "protocol". This leaves me in a position where I say "Some people call IE6 a protocol. While one could rigorously examine the entire possible space of inputs and outputs associated with IE6 and attempt to describe some set-of-rules which would resemble a protocol, this is not what we mean when we say 'protocol' and it is, importantly, not the source of the benefits which IE6 fans say when they claim that IE6 is a protocol."
To which "Why don't you think IE6 is an algorithm?" is rather non-responsive. (IE6 is, vacuously, an algorithm. Whee.)
Saying that blockchain enables value transfer and must be considered as the 8th layer of OSI model is technical artifact.
I find it difficult to extract any signal about the reality which I live in from this statement. When I say "technical artifact" I usually want to imply something about the reality I live in. For example, calc.exe is a technical artifact: it actually exists, on yonder computer, and I can right now walk over to it and calculate 6+5 with a reasonable degree of confidence that this will enlighten me. I would also say the HTTP specs are a technical artifact: I, or anybody with modest technical capability, can read the specs, open up telnet, fire it at www.google.com on port 80, and then type in a predictable series of letters which results in search results presented in the middle of a lot of HTML.
I do not know of any comparable fashion in which "the blockchain" actually exists as distinct from "the data structure embedded in the much-more-complicated series of operations that is Bitcoin Core."
It feels as if your real problem is that I am not using technical jargons :)
I understand the meaning of 'protocol' vs 'algorithm' but this is a special case where the protocol is also the algorithm. Suppose you invented making tea and wrote down the recipe for doing so. This constitutes an algorithm for making tea for people who don't care how the ingredients came about, but this can also be called a protocol for making tea involving many algorithms like sugar-making etc.
If you'd say that tea making is strictly an algo and not a protocol then I'd simply agree with you to use that term and move on since whats happening here is more important to me than the technical jargons.
It is, instead, led and managed by an entity indistinguishable in form if not in intellect from every other governmental federal reserve.
This entity responds, 100% correctly for the health of the currency, by issuing fiat mandates, just like the US government did when, e.g., real-world counterfeiters came up with supernotes and began flooding the world with fake $20 bills, mandating a switch to new notes.
Although this behavior is correct, it does conclusively prove that the emperor has no clothes, and that bitcoin is a ponzi scheme run for the benefit of the early BTC holders.
That is not correct. Bitcoin is by far the largest, but people also have non-trivial amounts in various alt-coins: http://coinmarketcap.com/
In terms of your Browser-analogy: Next to IE6 (Bitcoin) we also have Safari (Ripple), Firefox (Litecoin) and whole range of smaller players.
They all speak dialects of the blockchain protocol.
An algorithm is not a protocol.
A protocol is something that two people can independently implement and expect to be interoperable. Morse code is a protocol (in addition to an algorithm): you can read the Wikipedia article on Morse code, I can go to the library and read a book on Morse code, and we can reliably communicate.
It is impossible to independently implement Bitcoin and reliably interoperate with the standard C++ implementation of Bitcoin at reliability levels sufficient for financial applications (as the 2013 BDB fork, between two versions of the standard C++ implementation, demonstrated).
It might be possible to define a blockchain-based protocol that does not have this fault, precisely because blockchain is not a protocol, but is (as you say) an algorithm. To my knowledge, nobody has done so, and Bitcoin has certainly not done so.
Why this is important is a different discussion. And yes, perhaps this will be fixed with the second generation of cryptocurrencies, past Bitcoin and its forks/variants, which you seem to favor doing to fix things. But I don't see why that makes patio11's claims wrong, since he was specifically addressing Bitcoin, not any blockchain-based system, or cryptocurrencies in general.
This is the real challenge to us crypto believers. Its hard but definitely not impossible(as demonstrated by the worth ofbitcoin today). Working on it.
Because that's the question you posed.
> "..Bitcoin's disaster recovery plan is a) get a cabal of people together in IRC, b) shut down the entire payment network, c) sort things."
So say somebody finds a bug in the implementation that lets you do bad things like transfer everyone's balance to an attacker's account...what's the back up plan? Is there an equivalent with US dollars where such a thing could happen that has a back up plan?
Putting myself in the shoes of Bitcoin's developers, I can't feel all but terrified that a simple buffer overflow or something similar could wipe out an entire currency. Or is there something I'm not understanding?
A digitally-signed email enables value-transfer too. Depending on your risk profile you could even go for an authenticated TLS connection that just does a RESTful style POST to enable value-transfer.
Value-transfer is not unique to a blockchain, or to Bitcoin's blockchain in particular, any more so than bubble sort is the only possible implementation of a sorting algorithm.
CS majors know to avoid bubble sort because it is so inefficient, yet many refuse to apply the same lesson to POW-based systems like Bitcoin.
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And the centralised system is happy printing money calling inflation a necessary evil. If you understand blockchain and the current financial system you will realize then inflation is necessary to facilitate loans so that the economy can grow, but that loans are not required at all. So if I can't take a loan how do I raise the capital for a business? The IPO model. And blockchain is the programmed IPO model.
There is a reason why people haven't figured out an algorithm to trustless-ly loan bitcoins. They never will.
My comment stated that there is no value for user in all the decentralized verification process and just storing transactions in a trusted central database is good enough for most of them.
Your response is more or less completely ignoring this and attacks the current financial system and what not, it does at no point explain why you can not centralize Bitcoin. What prevents doing the exact same thing as the Bitcoin network but with a central server for verification and storage instead of doing it in a distributed way?
Also you didn't address my point that rather quickly there would be people with no money. If you did subdivide the pennies I don't see how that's any different than printing more money. It's just what side of the decimal point you want to be on.
Subdividing pennies might be more dangerous actually because presumably you could only do it by a factor of 10. Would we say that on March 31st a dollar is worth 100 pennies but on April 1st its worth 150? Or would we just add another layer of 1000 micro pennies equal one penny? At least with current inflation they can introduce new dollars as they need so inflation is controllable. In your version its not controllable because its mandated by access to the currency itself.
this is a fact of human psychology that's a real barrier to your system, and unless it is addressed, bitcoin will continue to fail.
1. Resist complaining about downvotes. It makes boring reading (and hence gets downvoted). This is literally one of the guidelines.
2. If you find yourself saying "Downvoted because I <position in an argument>, really?", the answer is always, no, downvoted because you expressed <position in an argument> in a non-constructive manner that nobody wanted to read. If you had expressed <opposite position> in the same way, you'd have been downvoted too. This might be that you were overly aggressive, this might be that you were insufficiently clear in making your point, this might be because both <position> and <opposite position> are dead horses, etc.
But the answer is always no.
A lot of times if your tone is unintentionally off you'll get a few initial downvotes but other people will see your intentions and bring you up out of the grey, which is what happened here. You're continuing to get downvoted on other comments because they're contributing to a discussion nobody wants to see, the discussion about the discussion. It's best to just stick to the topic, and treat downvotes and the score in general as the ultimately meaningless internet points that they are. HN prizes the generally high signal-to-noise ratio of the comments.
Also Bitcoin is a political topic, one that will draw lots of people who will downvote you just because they don't agree with you.
There's some truly transformative tech at the core of Bitcoin, which is why it's been as successful as it has been (and will be) as a technology. On the other hand, there really is a contingent of supporters that primarily has a profit motive.
I've come to see it like politics. People pick a side and then become extreme about it, to no one's real benefit.
People are weird about money, in several directions at once. Bitcoin is money. Therefore people are weird about Bitcoin.
That's my theory, anyway.
Which the HN community helpfully confirms by downvoting your perfectly reasonable comment.
I think Bitcoin tickles a rather deep-rooted fear in many people.
Money is fundamental to everyone's existence and has always been exclusively issued and controlled by "the authority". Seeing a completely different system appear out of nowhere, and seeing it actually work (on a small scale), triggers a strong enough anxiety-reflex in enough people for every debate about Bitcoin to immediately derail into discussing BTC as if its definite purpose was to replace "real money", starting tomorrow, completely and entirely, and to devalue my pension fund in the process.
When enthusiastic bitcoin supporters parade around this kind of nonsense while simultaneously heaping on volumes of nebulous praise like "transformative", "revolutionary", "world-changing", likening bitcoin to the early internet, claiming it will stop wars, stop corruption, free the people and all the rest, it really puts up red flags for a lot of people.
Then how would you explain this irrational aggression in every Bitcoin thread?
As a case in point, why were you so eager to follow up with a strawman of your own:
heaping on volumes of nebulous praise like "transformative", "revolutionary", "world-changing", likening bitcoin to the early internet, claiming it will stop wars, stop corruption, free the people and all the rest
Neither waterlesscloud nor me wrote or implied anything like that.
Why do you attack something stupid that someone else once said about Bitcoin, rather than presenting an actual argument versus my "intellectually insulting" idea that Bitcoin might touch on some mammalian "fear of change", or against any of waterlesscloud's observations?
I don't consider downvotes aggression. I don't consider skepticism or even a general dislike of bitcoin to be aggression either. As far as the the discussion goes, bitcoin discourse is no more aggressive than any other technical topic on this forum.
> Neither waterlesscloud nor me wrote or implied anything like that.
A direct quote from waterlesscloud: >There's some truly transformative tech at the core of Bitcoin.
waterlesscloud is only one example: ctr+f "revolutionary" or "early internet" in this thread for others. It's not a strawman because I'm not making an argument, I'm giving you examples of enthusiast rhetoric that turns people off; it's not "something stupid that someone else once said", it's a category of condescending platitudes commonly laid out by bitcoin enthusiasts.
> presenting an actual argument versus my "intellectually insulting" idea that Bitcoin might touch on some mammalian "fear of change"
My point is that painting bitcoin skeptics as irrational people who can't help but lash out due to a subconscious fear of what bitcoin might mean for world economics is insulting and also subtly pushes the narrative that bitcoin is such a clearly amazing technology that it would be reasonable to ascribe fear of bitcoin's success as a motivator for negative reactions to bitcoin. It's absurd.
Calling the blockchain technology transformative doesn't put him in a bucket with people claiming "it will stop wars, stop corruption, free the people".
Even if you disagree with that assertion, his comment was about the discussion culture surrounding bitcoin and certainly didn't deserve any downvotes. (the irony of seeing this particular comment grayed out was what triggered mine after all...)
My point is that painting bitcoin skeptics as irrational people
What's with the generalizations?
I wrote "many people" and not "bitcoin skeptics".
I was referring to people who can't be bitcoin skeptics by the sheer virtue of not knowing enough about it to form a coherent argument against it. People who seem to never get tired of regurgitating the ever same tulip bulb and "criminals" trites at every opportunity. People who downvote completely innocent comments like the one from waterlesscloud and make any normal discussion about the subject needlessly hard.
Bitcoin skeptics are most welcome (I consider myself one), but you rarely see someone who actually knows a thing about Bitcoin (e.g. 0xFEED) bother posting in amidst the shitstorm anymore.
I don't quite get this one. How is money also programmable money? Does he mean USD, USD as claimed by paypal, USD as claimed by venmo?
One of the reasons I am excited about bitcoin is that for the first time there is decent infastructure for machine to machine payments that can withstand any one buisness failing.
Yes to all of those. Computers have been absolutely intertwined with finance and money for decades, so much so that it's become almost invisible to people. But just because it's so invisible you don't notice it doesn't mean that major economies haven't already been using "programmable money".
> machine to machine payments that can withstand any one buisness failing.
Business fail all the time, including business involved in payment processing with existing national currencies. That hasn't stopped machine-to-machine payments.
On the other hand Bitcoin has suffered payment stops in its history, which Patrick mentions in the linked tweetstorm.
> If you don't believe me or don't get it, I don't have time to try to convince you, sorry. - Satoshi Nakamoto
Either way, this post is about the Bitcoin foundation, not whether bitcoin itself has merit. I feel that this discussion has turned more into a technical tit for tat of bitcoin.
Afterwards, the democrats and republicans changed the debate rules to ensure they wouldn't be hit like that again, so they sure took it seriously.
Perhaps he meant to say Nader?
That's not a significant number. 19% might seem like a lot, but he didn't pick up a single state. If he had, then he might have been a serious contender. A serious contender is someone who "has a serious chance of winning". Ross Perot never had a chance of winning, and thus, was never a serious contender. He got closer than most to being a serious contender, but still didn't cross that line. He was projected to lose by double digits by literally every pollster and odds maker.
https://twitter.com/patio11/status/583696870704152576 1/I follow Bitcoin like some people follow Nascar crashes. Some quick thoughts in tweetstorm format:
https://twitter.com/patio11/status/583697092306014208 2/ It is an open secret in the Bitcoin community that merchants who adopt it see virtually no meaningful transaction volume.
https://twitter.com/patio11/status/583697371378257920 3/ Western Union spends roughly 1/2 of revenue on local offices by both ends of the transactions. Bitcoin remittances don't solve this.
https://twitter.com/patio11/status/583697585719746560 4/ Bitcoin presently costs on the order of $6.5k per megabyte of data added to the block chain.
https://twitter.com/patio11/status/583697812438691841 5/ The entire market cap of Bitcoin as of 4/1/2015 is a fee paid to someone for work already done between 2009 and 4/1/2015.
https://twitter.com/patio11/status/583698553614143488 6/ Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances.
https://twitter.com/patio11/status/583699554563784704 7/ Bitcoin's Internet cheering squad is a spontaneously organized boiler room. This is Bitcoin's #1 engineering and marketing achievement.
https://twitter.com/patio11/status/583699782624911361 8/ The cheering squad improves upon techniques used to make Ross Perot and Rand Paul seem like serious contenders for the US presidency.
https://twitter.com/patio11/status/583700634764910592 9/ Bitcoin is not a protocol in any meaningful sense of word. It is a single C++ codebase that you have to be bug-for-bug compatible with.
https://twitter.com/patio11/status/583701008754147329 10/ Bitcoin's disaster recovery plan is a) get a cabal of people together in IRC, b) shut down the entire payment network, c) sort things.
https://twitter.com/patio11/status/583701441866371073 11/ No, seriously, the decentralized nobody-needs-to-trust-anybody payments network was shut down by an IRC channel's consensus for 8 hrs.
https://twitter.com/patio11/status/583702513469104128 12/ Time between Bitcoin blocks is not guaranteed (follows a Poisson distribution). Sometimes all pending transactions just stop for a while
https://twitter.com/patio11/status/583702865098604544 13/ The media following Bitcoin, both enthusiast press and tech rags, are so incompetent at their jobs that it beggars belief.
https://twitter.com/patio11/status/583703396231716864 14/ One example of many: a single phone call or letter in Japanese would have sufficed to verify that Mt. Gox was insolvent in summer 2013.
https://twitter.com/patio11/status/583706966553276417 15/ A good portion of geek enthusiasm for Bitcoins comes from the fact that it is programmable money. But: Money is also programmable money.
https://twitter.com/patio11/status/583707625210060800 16/ This concludes my mini-rant on Bitcoin. I have a longer, more technical rant but will do it some other time.
It would have been good to put a disclaimer in there that the rant applies only to the currency aspect of Bitcoin, and not the Bitcoin Protocol.
>> Bitcoin is not a protocol in any meaningful sense of word. It is a single C++ codebase that you have to be bug-for-bug compatible with.
I don't want to discuss what a protocol is and if Bitcoin is a real protocol or not. But it's important to notice that it's more sensible to bugs/unspecified/unexpected results than normal software.
If Chrome is not bug-compatible with IE6, you can complain, mark one of them as unsupported, make two versions of your page, peek the common denominator, ...
The same happens with MicrosoftWord and OpenOficeWrite, the different implementations of LaTeX, email support of Unicode characters, C/C++ compilers, Python/PyPy/IronPython/Jython, ...
With Bitcoin, each bug difference is a hard fork waiting to happen.
There will be those who want an easy ride. They'll wait until the problems are solved and the infrastructure is in place. But for me, the exciting time is now, because the future is still being written.
Let those who want to mock the efforts of others do so. The rest of us can roll up our sleeves and be builders of this new economy for the people.
What about remittances that cost already poor people enormous amounts of money?
What about the more core issue of being in charge of your own money? People in Venezuela, Argentina, Russia, China and Cyprus might have something to say for being able to choose what money they use.
What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself? It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
Fraud happens with Bitcoin too. If anything the Bitcoin economy suffers more from it, the only difference is that chargebacks are not as easily possible with Bitcoin.
Moreover removing chargebacks shifts the burden of fraud from businesses to consumers, who are even less equipped to handle the requirements of detecting fradulent transactions and preventing misuse of their Bitcoin wallets.
How many 47-step "Simple guides to using Bitcoin safely" guides are there on /r/bitcoin now? When Bitcoin experts have to non-ironically suggest sealing off network ports with epoxy to safely use the "Currency of the Internet" that should cause alarms to sound for everyone.
Far from being pro-consumer, Bitcoin is practically the logical conclusion of 'caveat emptor', trying to take Internet-based businesses back to the days before Upton Sinclar's "The Jungle" was published.
Luckily for us, the 2.5-or so transaction per second limit seems to guarantee we won't have to worry about any significant shift to Bitcoin even if people wanted to pay $10/tx fees...
I'll give you a guide: download a wallet, choose a password, backup your wallet file. Then don't epoxy any ethernet ports since that is ridiculous.
And work on transaction scaling is far ahead of its need as the current block size is not a hindrance at the current transaction rate, although maybe you actually know that already.
Note that this isn't a guide on how to use Bitcoin securely. The guide itself admits right up-front that this is the "20% effort for 80% security" guide, or in other words they have to leave some more advanced stuff out that is still required for security, even if it doesn't represent a large amount of marginal risk.
(P.S. epoxying your ports was mentioned, un-ironically, in an upvoted post in that same thread).
Among the things that a mere mortal has to contend with to use Bitcoin securely (assuming they get the other 20% of what they need to know elsewhere, of course):
* "Unplugging their Internet" to generate a safe wallet password.
* Ensuring their computer is completely secure as well (as pointed out in the section on choosing a software wallet, "They are among the best place to store your money safely (provided your computer is secure as well)").
* Deterministic wallets and other wallets.
* The need to take extra steps to backup wallets if using BitcoinQT
* How to spend money if you're not actually keeping your computer seat warm with mobile/online wallets, with the caveat that you can't actually store any more money in such wallets than "you're prepared to lose".
-- They also point out blockchain.info here for use as online wallets, even though blockchain.info is notoriously insecure compared to other alternatives.
* "Don’t use your online wallets from unsafe computers", which is practically as useless as advice goes as saying "Always carefully read and understand all prompts that a webpage or software program displays before clicking on any buttons, even if closing the prompt is required to proceed to your actual task".
* Advice for cold storage: 'set one up easily by buying an old laptop, reformatting it, installing Linux and a Bitcoin client'. Anyone else remember that time you couldn't safely save USD without buying an old laptop and installing an OS for experts?
> And work on transaction scaling is far ahead of its need as the current block size is not a hindrance at the current transaction rate, although maybe you actually know that already.
Indeed, Bitcoin is in no danger of approaching its practical transaction limits anytime soon given current Bitcoin use growth....
Not for me as a consumer. If I lose my card I'm covered if someone steals my details and makes a charge I'm covered. As a consumer I don't care about the business. As a business I can price in fraud easily.
>What about remittances that cost already poor people enormous amounts of money?
The expensive part of remittances isn't moving money between countries and that is the only part that bitcoin makes cheaper. The expensive part is 1) Complying with regulations(ignoring this is how most bitcoin remittance services are currently so cheap) and 2) Having people everywhere that the receiver can go and get local currency from(Bitcoin companies are currently using 3rd party services to avoid paying for this but those services aren't going to fund them forever). The other side to 2 is people saying that they can use things like local bitcoins. The issue there is with success becomes an oversupply locally of people looking to sell their bitcoins which leads to a reduced price for it which adds cost to the sender to get the receiver the same amount.
>What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
This is general a pain in the ass which is why companies like Bitpay and Coinbase are so popular with almost every merchant using one or the other.
>But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself? It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
Based on the fact that it hasn't been secret now for years, has been easy for people in a few countries to buy for years and the public is still very meh about it if not aggressively opposed to it. I've used bitcoin myself quite a bit. It is easy to use to make a payment but I wouldn't say my credit cards are any more difficult. However it isn't easy in general. I have to first figure out how to securely store it, then I have to worry about having it stolen since I am at a complete loss if that happens, and I have to find a way to buy it which for me not being American is still a pretty huge pain in the ass. Once that's done and I'm made my purchase I now need to hope that the company doesn't make a mistake and lose my order or screw up in processing since I have no way easy way to make them resolve a problem.
It's unlikely that the real cost of other methods will ever be 0 (cash incurs lots of risk management, bitcoin too, other systems involve fees, etc.).
Still not sure how Bitcoin even remotely solves this. If someone steals my wallet and racks up a bill on my credit card there are legal recourses and ways to get my money back. If someone compromises my bitcoin wallet and empties it there is _absolutely no recourse_. Saying I should have protected it better is no better than saying I shouldn't have been mugged and had my wallet taken. In one case I have a chance at recovering funds, in the other I don't.
> What about remittances that cost already poor people enormous amounts of money?
I'm not sure a highly volatile currency that currently requires an expert knowledge of the internet and computing and is only a valid form of payment in a handful of incredibly affluent tech focussed markets solves this in any way.
> What about the more core issue of being in charge of your own money? People in Venezuela, Argentina, Russia, China and Cyprus might have something to say for being able to choose what money they use.
This has been discussed in what's currently the top comment, but Bitcoin is notably less democratic than a large number of government backed currencies. I can vote for a president who will put people in charge of the Fed who share my economic interests, and I think there's reason to trust that process more than an anonymous group of developers and middlemen who are attempting to make the entire process less painful.
> What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
Excluding investing huge capital in hiring a group of developers (whom you are relying on) to develop a solution for you, you're trading that for relying on less proven companies like coinbase, bitpay, coin, etc. Philosophically it may be superior, but I'd trust my money more with Visa than any of the fraudulent bitcoin startups that have disappeared with millions in funds.
> But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself?
I have used it, and it's pretty awful. I've tried explaining it to non-technical friends and family and they see no value proposition over traditional payments.
> It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
When my options to get my paycheck to bitcoin are a) wait a week for a website I'm forced to trust to process my money or b) meet a guy in a coffee shop with a large amount of cash on me and have him transfer the bitcoin to me. I'd hardly call that a "simple" nor "easy" process, especially when the merchant then has to go through an equally difficult process to get the funds in a usable currency for things like taxes and payroll.
Bitcoin may be an interesting development in digital currency and blockchain is undoubtably a promising technology, but claiming that for most users bitcoin is more reliable, safe, and easier than traditional payments is, to be frank, laughable.
The community seems content to talk about how long email or the internet took to become common while at the same time ignoring the fact that the internet has vastly decreased the amount of time it takes for new technologies and ideas to spread.
At what point going forward of no growth would you admit it has peaked?
Sentiments like this are akin to people looking at the internet in the days of prodigy and saying 'I can send a letter and get sports scores from the newspaper, the internet is overhyped'
20 years later it is still a transformative force in people's lives that continues to change and evolve.
Fast enough to show progress.
>It was only in the last year that there were even multiple viable places to buy btc in the US.
Coinbase has been around since 2012, and now we've had a few choices even beyond them for over a year and they still haven't made a difference. Don't you ever wonder why Coinbase and Bitpay are so adamant about not releasing real figures for anything? Coinbase releases number of wallets which is a worthless vanity metric since you can have multiple wallets and it tells us nothing of use. Bitpay released tons of details on last Bitcoin Black Friday and this year their only statement was that its not all about the numbers. More recently they've cancelled their sponsorship of the Bitcoin Bowl early.
You're replying to a comment where I point out the problem with comparing bitcoin to the early internet by comparing it to the early internet. The difference between then and now is the level of improvement and the inability for the existing system to match the improvements of the new one. The internet is a huge improvement over sending a letter and getting sports scores. Massive, unquestionable. Bitcoin isn't a huge improvement over the traditional banking system(even for the unbanked).
I don't think you're going to get such an admission from the average, invested, Bitcoin enthusiast any time soon.
You're entirely correct in your post here. 2014 was meant to be "the" year for Bitcoin and it was an absolute flop. Nothing came from it.
There seems to be this overall naive belief of "if you build it, they will come" while "it" has no clear value to anyone beyond those who want to carry out illegal transactions.
The "why" "they" will come to it seems to be ever expanding as enthusiasts grasp in hope that someday the currency they're using as an investment instrument will see wider adoption and make them money for their patience and continued public praise of it.
Bitcoin seems to have become a matter of faith more than anything else. If you truly believe you'll go to Bitcoin heaven. Ignore those who question it as they hath no clue.
There is a reason IBM, UBS, etc are building blockchain research centres and not just throwing their weight behind bitcoin itself.
Let the organization go bankrupt and create a new one.
The scam actually ended in December 2013, when the original scammers unloaded hundreds of millions of dollars worth of their worthless hyped hashes for $1100 each. Everything has been gravy since then - they made over $100 million in the last year as well. The bitcoin is worth under $260, and headed to zero.
Warren Buffett and Charlie Munger have been around long enough to know a fraud when they see one, and Munger correctly termed Bitcoins "rat poison". It's not a digital currency - it's a Ponzi scheme that will kill any chance of an actual digital currency from being developed in the subsequent years after its inevitable demise. I was saying so here when it was worth over $460. If the bagholders had listened instead of downvoted, they would have saved a lot of money. You still have time to get out before it plunges to zero. The idea these worthless hashes can retain a $3 billion market cap is risible.
I know why a commodity like gold has value, or why oil has value. Gold has been used as a currency, or to back currencies for thousands of years. Gold backed the US dollar until 1971. In fact, the 10,000 tons of gold the US still holds in Fort Knox and elsewhere still backs the dollar, albeit indirectly (for what other reason are they paying the expenses to store it?)
Why does Bitcoin have value? It doesn't, nor did Pets.com, subprime real estate, Dutch tulip bulbs, or other bubbles supported by hype.
HN has new rules against gratuituous negativity. I warned some people here from this scam over a year ago when it was over $460 (now <$260). I don't know if people can be warned off hype here in the future, but if so, you can always listen to old hands who have seen it all before like Munger and Buffett, who see this "rat poison" for what it is - valueless hashes, destined to be priced at their true worth - $0. Of course, as Keynes said, markets can remain irrational longer than I can remain solvent.
I understand this seems to be a minority opinion on hacker news. I know I don't have the exact parameters of the scam. But insisting on such degenerates into some weird imitation of constructivist logic that seems to claim: if you can't point out exactly when you are going to be ripped off then you can't prove you are going to be ripped off, and therefore you don't know you are being ripped off.
Or: no, I don't know how to make money shorting Bitcoin. But I also don't know how to make money shorting 419 scams. That doesn't mean these things have positive value. Assuming information always has tradable value (i.e. you can go long or go short) is attempting to apply an idea that may or may not be true for investments to a completely different category (scams).
What I think confuses people is we are in the time interval where Bitcoin is a successful scam. So it superficially appears different than any past failed scam you compare it to. But Bitcoin is almost entirely about paying earlier investors purely with proceeds from later investors. A lot of abstract markets and currencies do appear to be similar to this, but tend to have other mitigating features that I just don't see in Bitcoin. (The mitigating factor for traditional currencies is the large state institutions that would lose reputation in a hyperinflation scenario, hasn't always stopped hyperinflation- but it is at least a weak counter-force; for stocks it is the fiction of company control/ownership/dividends/voting-rights; gold the liquidity of the resale market and demand for jewelry; I am not saying these are good institutions, just that you certainly don't want to be even worse.)
I would say to the pro-Bitcoin crowd: if you don't think Bitcoin is a scam, is there any description of a system that you would consider a scam (with our without the Bitcoin name attached)? I say this in seriousness as I really suspect there is some sort of "by definition informed investors can't be scammed, they can only make good or bad investments" element to some of the debates.
Old money now has to buy it at new rates or ignore it. Some old money decided to buy early and now have considerable impact on its future so thats something. Everyone in between is trying to figure out how having "Disney dollars" helps them. See https://www.youtube.com/watch?v=8Jp22_M8wNQ&spfreload=10
Bitcoin is open source, and what we say it is is exactly what it is, and anyone (or any programmer, but hey, this is HN) can check it, so there is no scam.
By your logic then gold and every other investment is also a scam, because you are "giving money to earlier investors".
Of course prices can swing in the shorter term. Silver was worth $10 an ounce in 1979 and $10 an ounce in 1981, but for a few days in 1980 it went over $40 for various reasons.
The price of gold and silver shot up after the 2008 sub-prime crisis, but have come down from their highs. There are still some economic fears, like with the EU, with Greece and Spain, so the prices are still somewhat high.
The reason gold's price doesn't outstrip its value over the long term is because it is just a commodity, despite being durable as you say (and divisible, and uniform, and portable). If its price outstripped its value for too long, people would move to better priced commodities like the other precious metals, or oil, or other commodities.
basically every centralised entity arising from bitcoin/the blockchain has crapped out/been a waste of money. pointless altcoins, asic mining cos, bitcoin stocks, all the rest.
core, real, bitcoin itself remains a fantastic investment with massive upside, and will continue to be an incredibly useful in particular areas (darknet drugs etc)
All the corruption on the peripheries is expected and irrelevant. long live bitcoin.
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Where is Apple Pay's blockchain? ;-)
Seriously, Apple created a payment service that is backed by traditional technology (credit cards).
> and the hundreds of altcoins on the market only validates Bitcoin
This rather shows that greed works: There are lots of people who would love to become rich by being early-time users of some altcoin.
There are attempts to form rival groups like alliances etc but people know better. However, the media doesn't and thus to a neutral it might seem that these orgs hold a lot of importance in the community.
Ironically, the bitcoin ecosystem always seems to have problems with centralized points of failure.
I sincerely hope that film writers have paid attention the past year, from MyWallet and onwards. It's all golden, beyond-belief territory with colourful characters involved.
I first got interested in 2012 buying a pile at 3-4$ per bitcoin to play around and satisfy my inner nerd. Then I forgot about it for a year or 2, it has been a wild ride since...
I don't think you can make a revolution work by handing it over to sociopaths and then wondering where all your value went.
You probably need something more subtle.
Still - BTC is interesting because altcurrency is the future, and mainstream banking is going down within 20-30 years.
But it's going to be something more reliable than BTC that kills it. BTC is a premonition, not the real deal.
The community at large doesn't seem to care much.
Most people only really entertained the idea of the foundation as it was paying Gavin and another core developer a salary for their work, which is the only upside.
It would be interesting to have sight of the Foundation's accounts, to see what they have been spending the money on.
I doubt that much, if any, money passed through the UK limited company. Hence its company accounts are unlikely to be informative.
I know #3 is somewhat ironic, but given the unwieldy nature of the blockchain (especially when you scale it out to global use) I don't see a long-term sustainable future. With a blockchain comes 3rd party bitcoin "banks" which IMO is just the same financial structure as we have now, just different people running it.
Side chains will be interesting, as the specification of Bitcoin becomes fixed and never changing, new additions could be added onto Bitcoin outside of the core specification via these side chains.
Will this work? Who knows.
Point (2), Bitcoin hasn't really had to rely on the foundation except for the salaries of two core developers. As I understand it most of the Bitcoin core development team are not supported by the foundation.
(3) Instead of no blockchain, I wonder if there is a way to make a more distributed blockchain? Imagine that a single copy of the blockchain could exist on perhaps 1000 nodes instead of just 1?
Just a thought? I think the essence of the blockchain, this immortal database that proves the integrity of each Bitcoin, I really think we need to keep this in some way.
With that said I'm still not 100% convinced a distributed blockchain is essential to have legitimate cryptocurrency. I know the problem has been worked on for a long time by a lot of really smart people, and this really is the best implementation to date.
I guess for me the path is clear. Whoever comes up with the simplest, least-technical implementation will win the race for adoption. No matter what though, I'm confident cryptocurrency is the future of currency.
What's interesting about bitcoin is its blockchain algorithm, nothing else.
Satoshi was simply a single point of failure, some obvious element of the system that could be attacked, especially knowing how many Bitcoin this person amassed.
When Satoshi left, Bitcoin became that little bit more decentralised, as others had to take on the lead development role and the community had to allow others to take the lead.
All the decisions about Bitcoin's future with regard to technical issues is now heavily debated, if Satoshi were still here there might not be a debate, just a decision.
Most of us in the community agree that Satoshi's departure was for the good of Bitcoin.
> the lead
The lead of what ? He's certainly the most knowledgeable person about bitcoin. Anybody could invent another virtual currency algorithm now.
> Most of us in the community agree that Satoshi's departure was for the good of Bitcoin.
A majority can still be wrong though.
That's false. There are several persons who are way more knowledgeable than him now (assuming he hasn't been following the developments since he disappeared).
You know exactly WHO you are blaming, and that it was a WHO question to ask, not a WHAT. To be crystal clear, you are stating the 'creator' of Bitcoin is 'hiding' and that, because of the fact he is 'hiding', he doesn't advocate it. Frankly, that's saying a lot (i.e. a blaming statement) about somebody you don't (and can't) know. It's also technically an ad hominem argument, which is a trust hacking mechanism.
Which you know already. <--- That's a blaming statement, BTW.
> What matters?
Not asking leading questions, for one thing.