[bredren]

Rob from Gliph here. Gliph is a Bitcoin company from Boost VC Class 2. Tim Draper led our angel round (with Pantera) and is a mentor to Gliph.

Tim has been excited about Bitcoin and its potential for some time. Well in advance of other VCs, Tim was talking about its potential, particularly with regard to "competitive governance."

Have a look at this youtube video from his presentation at Stanford in February of last year: https://www.youtube.com/watch?v=oZ0mrD0EnI0#t=28m05s

He starts describing solutions for competitive governance around 28:05. At 29:10 he brings up Bitcoin. I believe this was the first time he spoke about Bitcoin publicly but may be wrong. He states in the video:

"[bitcoin is] the most valuable currency now on the planet because it is under no one's control. It is out of people's control. It is no longer regulated by any government. They can't print Bitcoin."

Bitcoin was worth about $24.50 when he said that.

[roymurdock]

The developers and miners are, in effect, the government of bitcoin. The developers act like the federal reserve, in that they can change the code to raise the max amount of bitcoin, increase the mining difficulty, etc. just as the Federal reserve would conduct open market operations or set interest rates to target inflation. So it's completely wrong to say that Bitcoin is "under no one's control". [0]

The key difference is that a majority of the miners have to accept the developer's changes and run the new client. The average US citizen cannot refuse interest rate hikes. So it's a transfer of power away from the few and corrupt (Fed + banks) to the few who are limited in their ability to be corrupt (developers + mining pools).

If the developers implement a terrible policy, the miners will refuse to update their clients to avoid devaluing the currency they are working hard to generate. So the power distribution and incentive structure are different. Whether thats a good or bad thing remains to be seen.

[0] http://www.weis2013.econinfosec.org/papers/KrollDaveyFeltenW...

[dragonwriter]

I think a problem in your analysis is that the miners are the equivalent of the Fed, not the developers. The developers are technical experts on whom the miners rely for tools, but are not the equivalent of the substantive decision makers.

But the bigger problem, whether you view miners or miners+developers as parallel to the Fed, is that you've failed present any argument or evidence supporting your key point, to wit, that the "few" who form the "government of bitcoin" (by your description) are somehow inherently "limited in their ability to be corrupt".

[roymurdock]

The Fed makes the rules. The banks/people perform the actions under those rules that create economic activity in the US.

The Developers make the rules. The miners perform the actions under those rules that create economic activity in the Bitcoin markets.

Say the Fed is corrupt/stupid and enacts a bad policy. The banks/people have no choice but to accept the decision of the Fed. Theoretically you could emigrate, but that is neither desirable nor feasible for the majority of the population.

Say the developers are corrupt/stupid and decide to raise the Bitcoin cap to 30 billion and lower the difficulty, effectively hyperinflating the currency. The mining community has the choice to either a) not accept the changes to the client or b) to vote with their digital feet by moving to another cryptocurrency. They are more likely to choose a) assuming they've been mining for a while/have a reserve of Bitcoin.

The key is that the miners "rely [on the developers] for tools" as you put it. The tools = the client = the rules of the game. So the developers make the rules and the miners decide whether or not to play by them.

[LeoPanthera]

They can change the code, but they can't force anyone to adopt the new version. Ultimately, it's the majority of the people running full nodes in the network who are in control, and if they reject a change made by the developers and refuse to upgrade, or even go with a fork, then that's where bitcoin goes.