Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :)
> Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :)
I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if there are actually men behind the curtain manipulating it's value to screw everyone over in order to benefit themselves.
> magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer
That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state. The US dollar is the world reserve currency because the United States is the best in the world at deploying destructive power, and the British and French currency before that when they were at the height of their power.
It's a neutral currency that every nation state on the planet can be ok with, because the system is completely agnostic to who the participants are. The only thing it requires is that you have hash power and internet connectivity. Nation states will have proportional power in the system based on their respective abilities to deploy energy and compute power to the security of the network.
> The only thing it requires is that you have hash power and internet connectivity.
Your argument is a bit naive and this sentence I quoted is the one that shows the reason. Proof of Work is a energy intensive activity, not to mention the specialized tech it requires.
Access to energy today is more than ever a sign of the power (including military power) of a nation, so much that energy itself could be regarded as the ultimate currency [1]. Who has more energy is richer. In short that is because nations with abundance of energy enable all sort of activities. In nations in which energy is scarce, opportunities are constrained by the cost of energy.
Because energy in the world is still a relatively scarce resource, powerful nations control natural resources needed to produce energy in any way they can. The obvious example is oil, but also land itself can be seen as a means to produce energy: think of the space needed for solar.
So in the end when talking about Bitcoin we are back at square one. Even if it was the only currency of the world, it would still be controlled by those with more power.
In short: Bitcoin is governed by spending energy and CPU -> ability to produce energy and CPU -> control over means of production of energy and CPU -> international strength ensuring control over natural resources and IP.
> Even if it was the only currency of the world, it would still be controlled by those with more power.
You don't have to be a miner to use Bitcoin and miners don't control Bitcoin. Miners can't force a protocol change, no matter how much hash power they have.
Bitcoin is not governed by spending energy and CPU. In fact all miners on earth could disappear except a guy with a Pentium IV on his basement doing all the BTC mining on the world, and it would still work. The difficulty of the hashing would adjust so that it would be possible for his weak slow guesses to send a block every 10 min.
> What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state.
You say this as if it was a good thing. But is it? Look at it from the other direction: it's a tremendous optimization. Imagine a world of Bitcoin, where someone comes and proposes: "Look, we can all keep spending almost all of the world's energy production on scaling basic trade, or... we can just agree that I'll beat up anyone not playing ball, and we can put all that energy to productive use - like farming, medicine, construction, entertainment, science". Does it sound like a bad deal now?
Also, the only reason there isn't much threats of violence[0] associated with Bitcoin yet is because cryptocurrencies are tiny. Barely anyone in the real economy cares about crypto[1]. If, by some scary miracle of a trickster god, the economy starts caring for real, cryptocurrencies will get quickly integrated into the mainstream by regulatory means - and regulations are backed by proof of violence. And almost everyone will want that, too, because people will be tired of getting robbed or cheated out of their money. You can't correct an act of violence without another act of violence[2].
(It's not even that hard to rein in Bitcoin. All it would take is for the US govt to announce which chain is considered legitimate by them for the purpose of paying taxes, and that the rest is considered counterfeit money.)
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[0] - Criminal activity notwithstanding.
[1] - No, noises made by large banks about running their own blockchains isn't caring - it's just exploring new potential areas of growth and profit.
[2] - At least if we generalize "violence" enough, to encompass credible threats of violence. If me stealing your money at gunpoint is an act of violence, then so is the court ordering me to give it back under threat of forcing me into prison.
> What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state.
I completely agree that the US govt and all super powers before it have made many mistakes, and shed much blood.
But the world isn't a utopian bubble free of conflict. The US military doesn't bestow value to the dollar because it goes around nuking every country in sight...it bestows value because it this huge potential of force keeps more peace than we would otherwise have. It's the same rationale for why a 51% attack on bitcoin is so unlikely: those with the ability to attack, also have the most to lose. Mutually assured destruction was not a new concept that started and ended with the cold war. It's fundamentally game theoretic and is why cooperative strategies are so powerful.
If you take into consideration all of the atrocities of the past 50 years, even the truly horrific scars on the US military industrial complex, this has been the most peaceful and prosperous period in all of humanity by a large margin. Could it be better? Of course, and we should strive for that.
But the same underlying reasons that the dollar is considered safe are the same forces that allow bitcoin to be successful. The fact that the world has come together and cooperated on a massive information sharing network called the internet is an example of something that, ignoring the tech advancements, would have been unfathomable mere centuries ago.
> Orrrrr.... because its value is backed by the world's largest economy?
There's also the fact that oil is quoted in US dollars, and about 65 countries, about a third of all the countries in the world, peg their currency to the US dollar[1].
As a former trader, this claim cracks me up. It makes the times I quoted crude contracts in euros and loonies and yen seem so subversive…
The truth is, until recently, dollars were easy to transfer. The Fed started moving money electronically in 1915; by 1918, a national wire system was established [1]. Between the USSR and U.S., only one embraced free movement of capital. As a result, when Lufthansa bought Airbus jets, they settled in dollars, and trades quoted in pounds would be settled in New York in dollars. That has since changed; so has how oil is traded.
The last time the petrodollar hypothesis was remotely true was in the early 1980s.
Sure but why do you think that is. What currency oil is quoted in has more to do with foreign policy than economics. Regardless of what reasons the US may have had to invade Iraq in 2001, Saddam Hussein was literally on record in 2000 for planning to switch away from quoting Iraqi oil in US dollars to the Euro[0].
There was a ton of talk about the 2001 invasions being about the US oil reserves for itself but that's based on a very simplistic understanding of US foreign policy. The US didn't annex the oil fields, it disrupted the national oil company's monopoly to allow privatization of the market and invite international (especially US and US-friendly) investors. It was really more of a hostile takeover backed by the world's largest military.
Again, I'm not claiming that this was the sole reason behind the invasion or the primary motivator, but the US has a history of privatizing nationalized industries of countries it successfully invades, overthrows or interferes in the elections of.
Hah, its all protected by the proof of violence state. When someone is physically trying to take your assets, your going to convert that currency as fast as possible into physical force or protection.
The problem is a deep misunderstanding of currency. The structure of currency is a tool humans use to exert and identify power within groups. The idea that a decentralized currency will change human nature or goals to control miss the forrest for the trees.
We are animals the violence, control and waning and waxing dominance is the only predictable outcome.
That's a darker picture than what actually it is. Violence is mostly driven by lack of resources. When humans can co-operate for better outcomes, they usually do (or at least the successful societies).
> The problem is a deep misunderstanding of currency. The structure of currency is a tool humans use to exert and identify power within groups. The idea that a decentralized currency will change human nature or goals to control miss the forrest for the trees.
I agree with this. Most people see currency as money or wealth when, in reality, it's a representation of the structure of the system. That's why some countries are experiencing high inflation: It's not the printing of money but rather a symptom of deep internal problems within their economy. See Argentina for example.
Sure, we arent always violent, but there always be people wanting what others have and imbalance otherwise there would be no relative value established.
Great example. I dont think its a bug that crypto is almost fully adopted by people who come from means. People are living in very different systems even in the US currently
The Dollar isn't money, it doesn't function as such. It can't store value very well. Its a federal instrument, and its value is adjusted by the Federal Reserve, which pretty much everyone agrees is incredibly fraudulent.
What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state.
I really like the idea of trying to build at least some part of society on top of mathematics instead of the laws of physics, but I am not really convinced that cryptocurrencies are an example or that this is even possible. The entire Bitcoin system is still made up of humans and hardware, there are still a lot of ways in which the laws of physics could overrule mathematics. Being distributed admittedly makes this harder but I think it is far from to point of being really effective.
Except crypto isn't currency, it's an artificial resource with no inherent usefulness beyond exchange.
States won't give up their currencies because that would put all of them in the position of, say, Liberia, rather than the position of the US, EU or China who can literally print money to pay.
And even if all state currencies vanished over night, this would change nothing for individuals because the vast majority of wealth is claimed by a minority of individuals and the only thing guaranteeing their claim is the exact monopoly of violence of the state that also backs its currency.
You don't have a private yacht because the state guarantees the value of your money with violence against foreign nation state actors. You have a private yacht because the state will ruthlessly punish anyone other than itself trying to take it away from you.
The state may be holding a gun to your head to be able to take away what's yours at any time, but it also holds a gun to everyone else's head to prevent them from taking it first. This is why the extremely rich spend so much time, money and energy influencing politics. Not because they want to dismantle the state, but because they want to keep it from using the gun against them while still keeping it pointed at everyone else.
Without a state threatening violence to protect your claims on "private property" you'd literally have to raise your own private army to defend it. This is why leftists call anarcho-capitalism "feudalism with extra steps".
It's interesting that you didn't correct me on Liberia, which actually merely had its currency pegged to the US dollar temporarily. I must have mixed up Liberia with another country.
El Salvador is a fun case because they didn't exactly switch to the US dollar because their economy was doing so great but because it was either that or massively devaluing their already dodgy currency because they are a very small country and their economy heavily relies on international trade.
They introduced Bitcoin as "legal tender" on top of the US dollar against the will of the majority of their citizens but the law was part of a program to lure in foreign investments. This too followed earlier economic problems, so it's more of a cashgrab than a genuine interest in crypto currencies.
El Salvador replaced its currency with the US dollar. It did not replace its currency with Bitcoin. It also didn't replace the US dollar with Bitcoin, it just added it as a form of legal tender. It also suffered almost immediate consequences when the price of Bitcoin crashed and they had to dump additional money into it to compensate for this.
It's too early to say but at the moment this doesn't sound like a wise political move for El Salvador rather than a risky publicity stunt for the president.
I pay for my VPS, VPN, and Netflix subscriptions with BTC. I bought my camera, and various other gadgets with BTC at BicCamera in Japan. I sold my VR kit for BTC. I save and spend my RAI anywhere that accepts Visa with an Eidoo debit card.
Bitcoin uses a lot of energy. Power is (arguably, and not always)[0] gained or exercised through violence, if not of the state then of the large entities that generate that power, be it coal, natural gas, hydro or even solar.
Bitcoin has no currency. I can't pay taxes with it, I can't buy groceries with it. It's an asset at best. A wallet has a claim on a number stored in distributed database. No more no less.
> That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state.
No, not really. At all. You're trying to make it sound like everyone is just an anarchist activist trying to fight the power, when in reality it's just people scrambling to make a quick buck.
Let's be real and put it in perspective: do you feel that people such as the Winklevoss twins give a damn about theoretical concepts such as "proof of violence by the state"?
> Motivation of participants is irrelevant. Bitcoin is working because its participants are greedy and behave as such.
The key problem you're trying to glance over is the fact that not all participants have the same degree of influence or control.
A greedy participant who is in a position to manipulate the market to fit his goals is in an entirely different position than a greedy participant who is completely powerless and vulnerable to this manipulation.
Is it ok if someone participating in a Ponzi scheme is fleeced just because you accuse him of being greedy?
> Is it ok if someone participating in a Ponzi scheme is fleeced just because you accuse him of being greedy?
I know this is counter-intuitive, but yes. Yes, they think that.
They think that human nature is to be greedy and screw other people over to your own advantage. This is what they mean that capitalism is natural because it builds on human nature. Nevermind that for most of history human societies have been built on gift economies or that humans always cooperate in times of extreme crisis unless there are external influences explicitly preventing it.
Social interactions are transactional to them and if you luck out by participating in a Ponzi scheme early that's good and righteous but if you lose by coming in late and being fleeced, it's your own fault. Luck justifies the spoils of success.
It isn't working though. It isn't practically useful for anything. They only people getting value out of bitcoin are doing so by converting it back to fiat. You can't buy virtually anything with Bitcoin.
If Bitcoin was meant to be a pyramid scheme where you get rich by convincing others to prop it up long enough for you to cash out, it is working. As a currency, its a total failure.
This is a false statement, communities have found value in Bitcoin. El Salvador being the go-to example but we're also seeing adoption in other places, exemplified by the acceptance of Bitcoin at the Venezuelan airport. In addition to that we're seeing companies dedicated to the ad-hoc conversion of crypto to local currencies using specialized debit/credit card. This will effectively help facilitate the move to the ubiquitous spending of crypto.
> They of course do give a damn about theoretical concepts such as "The Great Monetary Inflation"
It seems you tried to shift the subject mid-discussion and thus move the goalpost. The point being discussed was "proof of violence by the state", but somehow you've tried to change subject mid-discussion to inflation and how they argue that going long in BTC is a profitable investment.
In fact, the Winklevoss Capital article you quoted even praise the US dollar as "a reliable store of value" and even go as far as praising the Federal Reserve and it's "comparatively good management".
This doesn't sound like "fight the power" to me. In fact, it just reads as a marketing brochure selling an investment.
> the Winklevoss Capital article you quoted even praise the US dollar as "a reliable store of value"
Haha, you must be blind. Nowhere in the article did they say that. I quote: "we believe there are fundamental problems with gold, oil, and the U.S. dollar as stores of value going forward". Then they go on to explain how the dollar is mismanaged.
I have this problem with crypto in general on here where I can’t trust anyone with pushing arguments centered around pathos or ethos because I can never know if they’re just trying to gin up support for crypto in general so that theirs isn’t the final level of the Ponzi scheme.
To everyone I’ve misjudged who genuinely enjoys the theory being crypto: I’m sorry.
If you think the article provides evidence for any of what you are saying, you should read it again. Do you really believe the 1000 top holders of Bitcoin that control together about 15% of the supply somehow conspired together to manipulate the price?
Yes, there is a lot of small scale shenanigans with crypto currencies, but Bitcoin has become very hard to manipulate due to the sheer size of the market.
I really believe that. Remember that the size of the housing market didn't protect it from manipulation in the early 2000s - having a huge pile of independent market participants doesn't mean they can't all be tricked into trading at the same inflated prices.
> Do you really believe (...) conspired together to manipulate the price?
> Yes, there is a lot of small scale shenanigans with crypto currencies, but (...).
There are no buts. Either the market is manipulated, or it isn't. You already acknowledged it is manipulated, but somehow the degree of difficulty to pull it off is of any relevance? Why do you feel this matters?
Bitcoin was created in no small part to address this problem. The fact that it's not addressing it is a legitimate criticism of the coin.
"Our brand new environmentally-inefficient, difficult-to-regulate, needlessly-complicated, easy-to-surveil currency also falls prey to the same financial consolidation outcomes of every other traditional currency" is not really the strong defense of Bitcoin that people seem to think it is. And "Bitcoin isn't established by state violence" doesn't work when states/corporations control most of the supply and have outsized control over the protocol. This kind of consolidation undermines Bitcoin's value as an experimental/democratic currency.
From the article:
> These observations led the NBER to conclude that despite the attention Bitcoin has received over the past few years, the ecosystem is still dominated by a concentration of key players, making the ecosystem susceptible to systemic risk like a 51 percent attack, where a group of miners could take control of the majority of the network.
If someone is legitimately, honestly trying to pitch Bitcoin as a democratizing currency, then seeing outcomes like this should be worrying to them. The regular dismissal that traditional currencies have the same problems makes it hard to take Bitcoin proponents seriously when they talk about societal benefits that the coin purportedly provides.
There's a disconnect here between the theory that Bitcoin allows equal participation by anyone in the network, and the reality that even the resources required to start participating in the network can be tightly regulated and are often controlled and manipulated through centralized state/corporate apparatus. And hand-wavy dismissals of that problem don't do the currency any favors. Why adopt a new currency that still has multiple downsides, if the upsides are constantly being waved away as unimportant by even the currency's own proponents?
No, this problem goes way beyond wealth concentration. The centralization of mining activities is extremely dangerous. The whole point of bitcoin is to be decentralized so that outside influences are minimized or eliminated. There is absolutely no point to this coin if it's centralized. All the energy spent mining it is being wasted on a useless coin that serves no purpose and whose only valuable quality is its brand.
The capped supply and heavy bias of coin emission toward initial years create a strong incentive for hoarding and pure speculative use.
I would expect much wealth concentration if the emission had been purely linear with a fixed block reward, taking MUCH longer to get down to a small yearly supply inflation (100 years to get to 1%). Such a SLOW emission would focus on the use as a currency rather than "store of value".
It likely would have made Bitcoin's environmental impact much smaller as well, without speculators pushing up the price.
But that wouldn't exist in isolation. A less inflationary cryptocurrency would be more desiderable to traders, miners would flee too and the system wouldn't be secure against attacks.
You would end up with the same situation as now, just with some name swapped.
I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if there are actually men behind the curtain manipulating it's value to screw everyone over in order to benefit themselves.