Why Bitcoin has to succeed(incoherency.co.uk)
incoherency.co.uk
Why Bitcoin has to succeed
http://incoherency.co.uk/blog/stories/bitcoin-must-succeed.html
12 comments
To extent that there are a few minimal laws protecting individual investors in the U.S., they exist because scam artists try to steal everyone's money.
That rule - which you or someone else has ranted about before - vastly increases the returns for individuals. Yes, they get pushed to big companies and "safer" investments. But they also get scammed less often. Overall it's a big win for individuals.
Consumer protections: a force for enormous good in the world.
That rule - which you or someone else has ranted about before - vastly increases the returns for individuals. Yes, they get pushed to big companies and "safer" investments. But they also get scammed less often. Overall it's a big win for individuals.
Consumer protections: a force for enormous good in the world.
>vastly increases the returns for individuals. Yes, they get pushed to big companies and "safer" investments. But they also get scammed less often. Overall it's a big win for individuals.
Returns are a function of efficiency. By excluding 99% of the economy from direct access to capital markets, enormous friction is created, and investors are forced to pay far more economic rent to big companies. Both of these have undoubtedly resulted in investors enjoying lower returns.
Scams are indeed a problem, but the solution to scams is to deter them, by punishing those found guilty of carrying them out.
What society shouldn't do is make it illegal to engage in some class of mutually voluntary economic interactions without approval from a third party, in the name of preempting scams, and keeping people safe from their own mistakes.
Such laws violate some basic principles of liberal democracy and create economic inefficiencies, and unfortunately, they have become steadily more common over the last 100 years.
Trying to make massively complex industries like finance, healthcare and food processing safe, through a set of bureaucratic rules, is a case of trying to centrally plan the economy using cookie cutter solutions that cannot possibly account for all possible configurations. It will necessarily stifle innovation and create opportunities for rent-seeking, like in the creation of the $6 million barrier to direct access to the public capital markets that are IPO restrictions, that enrich large financial intermediaries.
If these proscriptive laws were repealed tomorrow, there would definitely be an uptick in scams. But the market is an evolutionary institution that has the right incentives and feedback loops to evolve toward better configurations that avoid inefficiencies like fraud.
And we have evidence for this in the cryptocurrency world, where reputation and consumer knowledge rapidly transformed the industry to make it harder for scammers.
For about three years there were rampant hacks of major Bitcoin exchanges, and fraud where people lost thousands of bitcoin to web wallets that gained their confidence and then pulled exit scams.
Eventually bitcoin users wised up, and the industry responded by producing high quality services. In the exchange market, this meant credible exchanges with reputable parties backing them, and that used security best practices, became available, and became the first choice of users, while in wallets, both bitcoin users and bitcoin information portals became more discriminating in the wallets they put their confidence in, and became much more cautious about web wallets that acted as custodians for customer funds.
Returns are a function of efficiency. By excluding 99% of the economy from direct access to capital markets, enormous friction is created, and investors are forced to pay far more economic rent to big companies. Both of these have undoubtedly resulted in investors enjoying lower returns.
Scams are indeed a problem, but the solution to scams is to deter them, by punishing those found guilty of carrying them out.
What society shouldn't do is make it illegal to engage in some class of mutually voluntary economic interactions without approval from a third party, in the name of preempting scams, and keeping people safe from their own mistakes.
Such laws violate some basic principles of liberal democracy and create economic inefficiencies, and unfortunately, they have become steadily more common over the last 100 years.
Trying to make massively complex industries like finance, healthcare and food processing safe, through a set of bureaucratic rules, is a case of trying to centrally plan the economy using cookie cutter solutions that cannot possibly account for all possible configurations. It will necessarily stifle innovation and create opportunities for rent-seeking, like in the creation of the $6 million barrier to direct access to the public capital markets that are IPO restrictions, that enrich large financial intermediaries.
If these proscriptive laws were repealed tomorrow, there would definitely be an uptick in scams. But the market is an evolutionary institution that has the right incentives and feedback loops to evolve toward better configurations that avoid inefficiencies like fraud.
And we have evidence for this in the cryptocurrency world, where reputation and consumer knowledge rapidly transformed the industry to make it harder for scammers.
For about three years there were rampant hacks of major Bitcoin exchanges, and fraud where people lost thousands of bitcoin to web wallets that gained their confidence and then pulled exit scams.
Eventually bitcoin users wised up, and the industry responded by producing high quality services. In the exchange market, this meant credible exchanges with reputable parties backing them, and that used security best practices, became available, and became the first choice of users, while in wallets, both bitcoin users and bitcoin information portals became more discriminating in the wallets they put their confidence in, and became much more cautious about web wallets that acted as custodians for customer funds.
You absolutely nailed that argument. If someone reads it and is not convinced, they're not thinking straight.
Cryptocurrencies are a symptom of people's intense distrust of governments and the corporations which lobby them. People are voting with their money. It's not the most efficient solution, but it's a desperately needed one.
Cryptocurrencies are a symptom of people's intense distrust of governments and the corporations which lobby them. People are voting with their money. It's not the most efficient solution, but it's a desperately needed one.
Feedback like this is much appreciated. The logic I'm presenting seems compelling to me, but I can only be confident of that when I get outside confirmation.
And I agree: if traditional financial businesses and activities, that rely on trusted intermediaries, weren't so heavily restricted by governments, significantly fewer people would need to pay the high decentralization premium and use cryptocurrency.
And I agree: if traditional financial businesses and activities, that rely on trusted intermediaries, weren't so heavily restricted by governments, significantly fewer people would need to pay the high decentralization premium and use cryptocurrency.
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The law is better on average for all people because a lot of people invest impulsively and get scammed, but worse for a minority of informed investors who if they bet right could get large returns.
Maybe it doesnt harm people in all senses, but it seems like unnecessary babysitting at the least.
Maybe it doesnt harm people in all senses, but it seems like unnecessary babysitting at the least.
i think you're confusing "maximizing return for current incumbents" with a more generic "harming people"
i admit its confusing
i admit its confusing
I don't see where he confuses those two things.
So let's put our weight behind an incredibly wasteful platform that eats up ungodly amounts of electricity for very little gain?
Not sure where your logic is coming from.
Mining bitcoin is a free market in its purest form.
This comes with a side of geopolitical challenges sure, but that's not an issue the technology itself is responsible for solving.
This comes with a side of geopolitical challenges sure, but that's not an issue the technology itself is responsible for solving.
What about Etherium, Golem, and other attempts to turn the mining phase into useful computing power?
Other examples are the laws around investing. In some countries like the US, you are not allowed to invest your own money in a startup unless you are an accredited investor... To become an accredited investor, you basically have to be rich; there is an income and assets test and you have to meet the minimum requirements. It's basically a scheme to make sure that only the rich get richer by making sure that the most promising investments stay out of reach of regular people... Regular people are forced to invest in low risk, low-return stocks and bonds - Thus keeping them where they are financially. The government is actively funnelling all the investment capital from regular people into mega-corporations which keep them enslaved.
The US government claims that it is to protect people from losing their money on risky deals... But if that were really the case, surely you'd think that the government would also be kind enough to ban gambling! Surely that's riskier.