[lern_too_spel]

There is no such thing as an extreme discount for Bitcoin. I have yet to see anybody try to do a proper valuation for a Bitcoin to set a price target. If there were, institutional investors would buy in and its price in USD would stabilize nearly instantly.

No Bitcoin pumpers can give a proper value analysis because its actual value is something approaching 0. It has no use for which it is better than alternatives, even among cryptocurrencies. It is a classic bubble where people buy assuming that a greater fool will come along and buy at a higher price.

[Frogolocalypse]

I get it. You don't understand the application of decentralization and consensus in bitcoin, and how its application separates it from all other alts. Bitcoin is the only real crypto-currency, because it is the only one to have achieved actual decentralization, and therefore is a working implementation of the previously thought unsolvable solution to the Byzantine Generals Problem.

Doesn't mean other people don't understand this though, and that number increases every day.

[cookiecaper]

> Bitcoin is the only real crypto-currency, because it is the only one to have achieved actual decentralization

This is ridiculous because Bitcoin is arguably much more vulnerable to centralized manipulation than fiat money. You only need to compromise 2-3 of the major mining pools and suddenly a 51% attack isn't so unfathomable, and that's just one potential attack vector. The pools obscure the real source of the mining power -- wouldn't it be funny if it was a nation-state who had a backdoor, or even one who was just interested in promoting bitcoin because it makes it so much easier for them to track their citizen's activities and exchanges? What happens if a bitcoin core dev gets compromised? What about MtGox^WCoinbase? What if you wanted to destroy bitcoin, and blew up a hotel where the central bankers^W^Wmajor pool operators were all meeting at the same time, as they've been known to do? etc. Could go on for a long time.

If I wanted to disrupt the Federal Reserve the same way, where do I start? Can I get the interest rate changed by phishing Janet Yellin's Gmail password?

Bitcoin as an experiment in a democratized, decentralized mechanism of exchange that normal people could use as an alternative to conventional payment methods has completely failed. This is, in large part, due to the short-sighted design of the difficulty mechanism, which makes it impossible to mine on commodity hardware. As soon as someone releases affordable hardware that is useful for mining, it defeats itself on the next difficulty bump.

Bitcoin is something weird right now, but it's assuredly not what it was meant to be, because a central cartel of power brokers have it wrapped around their finger and the average citizen can't do anything about it, exactly the circumstance that most early adopters were hoping bitcoin could help solve.

[runeks]

> You only need to compromise 2-3 of the major mining pools and suddenly a 51% attack isn't so unfathomable, and that's just one potential attack vector.

If an attacker manages to gain control of 51% of the processing power, he can either a) choose to earn ~$350,000 per hour playing by the rules (mining to his own address) or b) perform a double spend attack on someone (in which case he needs to own over ~$350,000 and find someone willing to pay him in cash before either the mining pool or the network discovers the attack). Which will he realistically choose? The settlement time for USD is in the order of days. Will he risk a USD transfer being aborted before he can get his money, or play it safe and generate 12.5 bitcoins (~$100,000) within 20 minutes to his own address?

Also, exchanges and nodes can easily see that a fork is ongoing, with just barely half the hashing power on the honest chain. Chances are exchanges would shut down, clients would warn of a 51% attack, and the attacker would be left with the only option of mining honestly on the longest chain to his own address, thus taking money from poorly secured mining pools, but not affecting the stability of Bitcoin.

> What happens if a bitcoin core dev gets compromised?

I don’t know. What do you suggest would be the consequences of a single Bitcoin Core dev getting comprised? I highly doubt any code of his would even be merged into master, much less make it into a release.

[Frogolocalypse]

> You only need to compromise 2-3 of the major mining pools and suddenly a 51% attack isn't so unfathomable,

Nodes control consensus in bitcoin, not miners. If miners ever 51% attack, the nodes simply change the pow algorithm. Miners get crushed. That's why they don't dare.

You should probably learn how bitcoin works. It's great.

[heptathorp]

1. How does the entire network just agree to switch to a new algorithm? How do they decide what the new algorithm is?

2. When everybody forks off of the compromised chain, haven't we effectively created an altcoin? What is the value of this nascent altcoin?

3. I'm thinking the value can't be very much, otherwise it would be way out of proportion to the difficulty considering there are not yet any ASICs for the new algorithm. Wouldn't it then be very much worth it for someone to attack it again using, say, a botnet?

[Frogolocalypse]

I don't think you're actually interested in the answers. Any pow change would simply be a hard fork with no or opt-in replay protection. I say none, because there's no need to provide protection to the compromised chain. The patch will have already been developed. The core developers will already have vetted many pow algorithms, and a decision would be made at the time.

It's actually not very complex.

[lern_too_spel]

You don't get it. I understand how consensus works in Bitcoin. I argue that it doesn't provide any advantage over other systems in anything and has overwhelming downsides in all of its current applications. Notably, you have failed to mention any counterexample.

Also, the Byzantine Generals Problem was solved multiple times in the paper that introduced it.

You were somebody's greater fool. You believe that there will be more greater fools to come. Eventually, you will run out of fools.

[Frogolocalypse]

> You don't get it.

No you don't, which is why you're still talking about it the way you are.

> you have failed to mention any counterexample.

What we have now. Inflation debasing your money.

This is actually a game theory problem. There are three groups in bitcoin. The users, the holders, and the miners. To understand the way that relationship works, you have to understand what keeps everyone separated and honest. That requires an understanding of the incentives of bitcoin, and that requires understanding what proof-of-work (https://en.wikipedia.org/wiki/Proof-of-work_system) is.

Proof-of-work aligns consensus with the users, because it is the users that are paying the miners through transaction fees. Even holders require users, and more importantly, node owners. Therefore, it is users that are incentivizing the miners. Proof-of-stake (https://en.wikipedia.org/wiki/Proof-of-stake) aligns consensus with the holders, who are paying the miners. That is an incentive structure that reflects our current financial system. But bitcoin changes this through incentive structures and cryptography. In bitcoin, it is the incentive of the payers, not the paid, that imo is the wild invention of satoshi, and enacted through cryptography.

PoS fails because there is only one outcome given that incentive structure. Holders being miners, and then controlling the users. PoW overcomes this because the outcome is the constant tension between all three.

At the heart of the solution is what was previously thought to be the unsolvable byzantine generals problem. (https://en.wikipedia.org/wiki/Byzantine_fault_tolerance) It is a variation on the two generals problem. The problem is "if you are a number of generals surrounding a castle, how do you coordinate an attack date and ensure that the message to attack is correctly received, when you know that the message may be altered along the way?". There's game theory around what is possible, but that's the gist of it. In the problem, a bad actor can game the system so that everyone loses. I have reduced it to three. Given you know one is a traitor, how do you deliver the message to attack?

The way that this is managed is that miners order the transactions, and race to hash them to an algorithm (the work in proof-of-work), which is in bitcoin, SHA-256, until they get an answer that will be accepted by the nodes (proof). They are incentivized to become more and more efficient, and spend more resources as the price increases. The nodes provide the proof in proof-of-work. They say "this block is valid", and all nodes that follow consensus will come to the same agreement. For that work, the nodes award miners bitcoin. The nodes can prove which miner spent more work, but it sometimes takes a few blocks to get it right, which is why you have to wait for a few confirmations.

The only real thing that miners can threaten to do is stop users (the people paying them) from receiving blocks. Users and holders, after all, control their own cryptographic proofs to the tokens. But the current miners are only miners of SHA-256 pow algorithm blocks. In an adversarial condition, the miners will have just stopped coming to the party, so the users say 'fuck this' and change the pow. They get a new set of miners, mining a new algorithm, and the holders go 'holy shit, do I wanna spend my cash with a bunch of numpties that couldn't behave themselves?'. And they start spending their cash on the chain that the users say is the real one, and everyone just goes about their business again. Old miners get crushed. New miners think happy days. If the nodes change their software, that's the end of the story. Because the nodes define the consensus, they can. The remaining node owners get to decide whether they want to be owned by the miners, or whether they actually want to still remain users. The holders decide whether they are more likely to be able to realize their money with the miners that now control a drastically centralized subset of nodes, or to continue on in the system that led to them being holders in the first place.

Users can't attack the system, because then they would become holders, and users would no longer trust them for the reasons already stated, and they don't hold the cryptographic proofs of the holders. If the holders do that, they lose all of their users, so the only thing they game-theory-wise would do, would be to instate a pow. Why would anyone prefer a system in which the people with the money have all of the power? Otherwise known as the world financial system.

Whoever attacks loses, and there's no real way to cheat the system. That's the brilliant solution to the byzantine generals problem. It is a self-sustaining financial system that rewards everyone for participating in it, where incentives are perfectly aligned for its longevity, with an ever reducing supply of tokens that are effectively infinitely divisible, increasing their value per-capita. And no, there isn't any other system in the world that shares these properties. Without these properties, the byzantine generals problem can't be solved, and decentralization can't be achieved. It is a fiendishly clever system, akin to an anti-body to debt-fueled inflation.

Like I said, SN was/is/will be a genius.

> Eventually, you will run out of fools.

That is what is happening to the fixed-asset debt bubble. Bitcoin is its reckoning.

[superbrama]

What you’ve done here is offer a detailed technical explanation and then thrown in something about deflating a debt bubble, without actually connecting them.

I’m all for the technology, but the technology itself doesn’t solve any systemic financial issues, not directly. It’s the adoption itself, and how it may be used for legit commerce, say 5-10 years down the road, that would potentially do so. And this would be facilitated by technology evolution from now until then. Bitcoin may be at the center of that evolution, but it’s not assured just yet.

People are buying or holding on speculation for various reasons but most with a common speculation: They believe that the price will continue to rise relative to their cost basis. That’s it. Some of these folks have a fundamental belief about bitcoin’s future as a currency, but that future isn’t enabled directly by the technical details that you’ve offered. Most newcomers don’t care about the revolution, they’re just trying to hop aboard a rocket ship.

You have a solid understanding of bitcoin’s technical details. Just pointing out that such details don’t directly solve any economic / debt related issues, for many reasons. One of its key limitations is that the technology of bitcoin cannot facilitate commerce at scale, not currently.

Price of bitcoin will go up or down directly as a result of decisions of buyers and sellers, nothing less or more. Greater fools applies to bitcoin just the same as other open markets.

Fixed assets, goods and services, etc., are stable relative to fiat, at least USD. So bitcon isn’t deflating any bubbles.

[Frogolocalypse]

I'm pretty sure we're discussing something new now, and that's cool.

> Fixed assets, goods and services, etc., are stable relative to fiat, at least USD.

Not house prices. As bitcoin gets larger and larger, you will see those prices stabilize and start to fall. What i think will happen, is that when the people who own all of those empty houses around the world that are used as a capital appreciation asset, start finding that that capital appreciation isn't increasing anymore, they will either sell them or rent them out. Feds ain't gonna take that lying down of course. They can't afford to, as the gfc proved. I expect an acceleration of qe.

Let's be clear, it is the price of these houses vs bitcoin that matters. If your capital appreciation of bitcoin is greater than housing, you will choose the one that has the best return. Bitcoin compared to the fixed asset market right now is a fraction of a fraction. But that is changing and it is changing fast. When bitcoin is 100 times the asset value of today, that metric becomes apparent.

And frankly it doesn't matter what people think. That's the beauty of the bitcoin design. It works because it doesn't rely upon questioning peoples motives, it relies on just working. And it is working. Oh is it working.

[superbrama]

You believe housing will fall in fiat? So a $1MM home will be $900k, etc? What’s btc have to do with this? Why would housing go down in fiat if bitcoin is going up in fiat?

Is anyone pricing housing indexes in bitcoin? You could maybe come up with one yourself.

[lern_too_spel]

Bitcoin, like gold, does not stop inflation. Once again, what is a problem that Bitcoin solves that isn't solved better by another system?

See the original paper on The Byzantine Generals Problem by Lamport et al, where the authors present multiple solutions. Many more solutions have been successfully used in production. People who need to solve that problem do not need to hold any Bitcoin, so the Byzantine Generals Problem does not put any floor on the value of Bitcoin.

[jcoffland]

What is the problem that email solves that regular mail does not already solve? The answer to that is also the answer to your question about Bitcoin.

[lern_too_spel]

Email sends messages faster and more cheaply than regular mail. Bitcoin sends money slower and more expensively than existing payment systems.

[Frogolocalypse]

> does not stop inflation

Not interested in arguing with strawmen. I've been clear enough.

[lern_too_spel]

Straight from the frog's mouth: "Inflation debasing your money."

This was your sole example of a problem that Bitcoin solves better than any other. If you now disavow that example, do you concede that Bitcoin solves no useful problem better than other systems?