[bittcto]

This is a very common rehash of the "blockchain not bitcoin" perspective, and this indicates a lack of understanding of the purpose of bitcoin. Bitcoin/satoshi aren't being coy, though. The Genesis block contains the headline "Chancellor on the brink of second bailout for banks." Bitcoin was created as a democratized money that is outside of central control.

The author thinks that centralized control is not a problem because "there is no lack of trusted enough intermediaries in the financial/accounting sector".

This is something that bitcoiners strongly disagree with, with almost daily news of financial censorship going on, and irresponsible financial institutions continuing to be funded by quantitative easing[1] to engage in carry trade and other gambling (which is somehow considered less risky than a revolutionary new form of hard digital money).

The thing that I think a lot of people miss is that bitcoin is not a technology, it is a combination of technological innovations with economic innovations.

Its the incentives in bitcoin that are critical to the system... this is why "private blockchains" are silly. You might as well use Oracle with version tracking on changes.

Public blockchains, namely bitcoin, have the potential of being genuinely trustworthy in themselves, not based on hoping you don't have counterparty risk.

In 2009, it was the counterpary risks that really amplified the disaster-- all of those CDOs were written assuming there was no possibility of default.

The rest of the financial sector operates at the risk of financial censorship, but financial censorship is not unusual-- everything from banning people from doing business with each other to the elimination of ownership rights for corporate bonds in the GM case. It's not that uncommon.

With bitcoin there is no possibility of default, and very high resistance to financial censorship.

[1] Not to mention that arbitrary issuance of currency basically removes individuals ability to trust that currency in the first place.

[organsnyder]

> With bitcoin there is no possibility of default, and very high resistance to financial censorship.

I'll concede your second point (due to the decentralization of Bitcoin), but I'm having a hard time accepting "no possibility of default".

What does "default" mean, when applied to a currency? In the 2008 crisis, it was institutions that were in default (or in danger of defaulting); the currency itself was just fine. Over-leveraging could be done with any commodity—it's not limited to traditional fiat currencies.

Your argument seems to hinge on an assumption that centralized banking is mainly made up of bad actors, while decentralized banking is made up of virtuous ones. I don't see why this would be the case. I prefer to assume that everyone is a bad actor (must be my Calvinist upbringing), so we should design systems with this in mind. Government-sanctioned currencies give us the ability—in theory—to have accountability through the political process; certainly, it's not perfect (see USA, 2018), but at least there is the potential to incorporate checks and balances.

[dnautics]

> With bitcoin there is no possibility of default

Nobody is stopping you from writing an off-chain loan that defaults, by trampolining back to meatspace trust models for the debt obligation. Sure the effects are likely to be much more contained, but to say there is no possibility of default is not accurate.

[jayd16]

Agreed. Its a ludicrous claim. Bitcoin manages ownership of coin, not debt. There's absolutely nothing about bitcoin that stops over exposure. Even if you have the coin reserves, there's nothing showing other loans you've taken so even if the coin is in your wallet, that doesn't prove no one else has a claim to that coin.

[bittcto]

I love that you called a claim I didn't make ludicrous. I thin that strawman is murdered.

[andrewla]

> In 2009, it was the counterparty risks that really amplified the disaster-- all of those CDOs were written assuming there was no possibility of default ... With bitcoin there is no possibility of default, and very high resistance to financial censorship.

I don't really see how this statement can be justified; I can borrow or have contractual obligations denominated in Bitcoin that I fail to deliver, and you are free to value the contract pre-default at its market value and even take loans against it, amplifying the ripple effects of a default.

In my opinion, the real crisis in 2009 was not the failure of the banks and the financial system; the real crisis was the bailouts -- funneling huge amounts of money created just for that purpose to the very institutions that had proven their inability to manage that money.

My hope for Bitcoin is that it makes such a bailout untenable because it would require real money be spent, or unlimited credit be created, which would expose even large central banks to the problems of sovereign default.

[boreas]

Bitcoin has very few of the properties that one would consider desirable for a currency.

1) Transaction costs. Don't want to beat this horse to death. Some other cryptos improve on this.

2) It's inherently deflationary. Deflation is bad. This ties into another strange thing, which is that the boosters of every coin think they are supporting the long-term adoption of the technology by "HODL"ing but that is the opposite of what people would do with a real currency. I haven't seen a crypto that isn't deflationary.

3) The bitcoin protocol decentralizes some things but centralizes along other dimensions. For mature cryptos its very tough to get the entire community to agree to a hard fork, which means that mundane fraud can't be effectively unwound, like banks could probably do with fiat transactions. I have the most trouble articulating this.

[bittcto]

"Bitcoin has very few of the properties that one would consider desirable for a currency."

The desirable properties of currency are: - difficult to counterfeit - fungibility - robustness from degradation (eg: salt works except if you get it wet) - consistent store of value - Easily transportable.

Bitcoin has all of the above, and has better qualities in each regard than both gold and the US dollar.

As for your complaints: 1. Transaction fees are not a problem. You can move a million dollars for $0.20. You can move 1 penny for a millionth of a penny with bitcoin. The "transaction fees" FUD is just a campaign combined with a spam attack and that spam attack has been defeated. Further it becomes irrelevant with lightning.

2. Bitcoin is literally inflationary. It won't stop inflating until 2140. You think its "deflationary" because its price keeps going up, but that's simply a consequence of the technology adoption lifecycle.

The idea that deflation is bad is absurd. Monetary inflation is a form of taxation, or more precisely counterfeiting. It is literally theft. The reason old people have trouble getting by is that the government has stolen their lifetime of savings via inflation. The idea that government propaganda has convinced people that this is somehow good is really quite disgusting.

3) There is no reason to hard fork bitcoin. The only ones that have happened were early days and an accidental one (which nobody noticed because everyone upgraded.) You don't need to hard fork bitcoin.

Unwinding "mundane fraud" is not a feature of gold or the US Dollar so the idea that this is a requirement of a currency is absurd.

Also, you were complaining that it is centralized, but your evidence is that it's so decentralized that you can't reverse transactions?! You said you were having trouble articulating it, so maybe you switched points in the middle.

Anyway, censorship resistance is a good thing-- any method that lets you "unwind mundane fraud" would let a government censor who has what bitcoin.

[andrewla]

> It's inherently deflationary

I hear this argument a lot from skeptics, and even from some supporters (though the supporters often contest the "Deflation is bad" follow-up).

I think anyone who says "it's inherently deflationary" should translate that to the phrase "it will always go up in value", which is another way of saying the exact same thing.

Even as a Bitcoin supporter, I find the notion that "it will always go up in value" to be a pretty dubious claim to make, much less a more convoluted argument (that admittedly you did not make) that it cannot be successful (i.e. cannot continue to maintain value) because it is deflationary (i.e. must always increase in value), as those two things are saying the opposite thing.

Practically speaking, in the Keynsian view, any examination of the deflationary/inflationary aspect of Bitcoin has to be tied to the fact that there will be way more "Bitcoin" in circulation than Bitcoin on the blockchain, because of the multiplier effects of banking and credit markets (neither of which exist in any interesting way at the moment, but despite what some of the more fervent supporters believe, there's no reason that fractional reserve banking cannot be denominated in Bitcoin). So trying to make an argument about inflation based on M0 is a bit meaningless -- the state of the credit market is way more important than the supply of specie.

[dcuthbertson]

> Bitcoin was created as a democratized money that is outside of central control.

I'm just beginning to learn about blockchains and bitcoins. At the moment, I don't see how bitcoin is democratic. Having read "Miners Aren't Your Friends" [1], I don't see how it's possible to trust a system where "... each miner controls the blocks they generate, they can also exercise control over the state changes in that block," that is, miners can manipulate the order of transactions in a contract. At the very least they can cause extra transaction fees to be charged.

[1] https://blog.keep.network/miners-arent-your-friends-cde9b6e0...

[Obi_Juan_Kenobi]

I strongly urge you to read Vitalik Buterin; he's written a great deal on many core subjects in crypto and is a far better writer and analyst than most.

Bitcoin exists and is successful precisely because miners control authorship of the public ledger. The entire point of proof-of-work is to ensure this. The essential observation, and really the key invention of Bitcoin, is that you ensure that no single party can control authorship to the blockchain unless they control a majority of the mining power, which is very expensive. Furthermore, control of authorship is directly correlated to investment in the network; capital investment in mining equipment, continued investment in electricity for hashing, and value extracted from that in the form of the cryptocurrency itself. In other words, those who are most able to attack the network also have the most to lose by doing so. This is the foundation upon which Bitcoin is built.

Ethereum is a different story because of smart contracts and the potential move to proof-of-stake (Casper). But these arguments don't apply to Bitcoin. There are also people involved in Bitcoin that have political/development disagreements with miners, and thus seek to advocate that 'users' can/do control the network. I recommend a critical reading of both 'sides' and to reach your own conclusions.

[k__]

"Bitcoin was created as a democratized money that is outside of central control"

That sounds nice in theory, but how could it be true?

If you have more/better hardware you get more votes, which equals -> more money more votes.

[andrewla]

Still, "more money more votes" is different from "centralized". No matter how many USD I have, I cannot make direct changes to Federal Reserve policy.