[horsawlarway]

Sure, but value without an enforcement mechanism is not very useful.

People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).

So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.

Then you run off with my initial 50%.

Now what?

----

Every solution I've seen is riddled with pitfalls and gotchas

- Use escrow? Wait - now we're just trusting a central authority again.

- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.

- Sue over the theft? Now the central authority is just the government again, and we're back at square one!

You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.

[throwaway21332]

You're conflating two issues with each other. One is having a decentralized currency with a fixed monetary policy. Another issue is the counterparty risk.

Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.

Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.

[horsawlarway]

See, I think you're disconnecting two issues which are inherently related.

Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.

If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?

[throwaway21332]

The reason I am disconnecting those issues is that Bitcoin was never designed to solve the type of fraud you're talking about. There is no proposed mechanism to solve it, because it's outside of it's scope.

It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.

Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.

[horsawlarway]

But now we're back to a spot where bitcoin doesn't work as a fungible good without an appeal to an outside authority of some sort. Whether that's escrow/insurance/legal contract/etc.

We started with:

"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."

Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.

So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)

Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.

Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).

[throwaway21332]

The ledger gives you a guarantee that only you can spend the BTC that you have access to. Nobody can "freeze" your UTXO or forbid you from accepting transactions.

Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.

The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.

This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D

[horsawlarway]

> The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.

But this is true of all assets!

Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.

And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.

The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.

Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.

Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!

[8note]

> seizing your savings

If I'm understanding this thread, you're saying that bit coin is simultaneously designed to allow for this kind of seizure and not.

Swap the mtGox hacker with the government.

It's useful keeping the two problems connected though, since both are features of competing payment methods

[BTCOG]

Not sure why you're being downvoted for providing a good answer here. When you use Bitcoin, or cash it is solely your responsibility to protect that counterparty risk via your own means. Without a contract and receipt, the same would happen to your cash if you walked into a business and the owner decided to keep a small sum of your money with no record of transaction. If you gave a shop owner or autobody mechanic $50-500 cash with no receipt he could very easily just keep your cash. You have no recourse. Call the police? Doesn't matter in real life because you have no receipt or contract. It's your word against his. Since I see that you've just replied and still want "recourse" if someone steals your money I'll just clearly spell that out for you. You cause the level of recourse of your stolen money that you require. Whether via violence or a counter-theft and damage to the thief equaling what was stolen from you. It's left up to you with Bitcoin. If you can't stand the heat, get out of the kitchen. We don't want government intervention.

[horsawlarway]

Except you just wrote a long comment telling me that I should be using government intervention if I want to actually trade bitcoins for goods or services.

You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).