Unforeseen Consequences and that 1929 vibe(antipope.org)
antipope.org
Unforeseen Consequences and that 1929 vibe
http://www.antipope.org/charlie/blog-static/2017/11/unforseen-consequences-and-tha.html
121 comments
I also don’t understand Stross’ blanket characterization of bitcoin as only being useful to libertatians. I would think the citizens of a proper socialist government would also want to use money that can’t be devalued. It would make very clear what is being spent by the government versus national bank systems which can achieve things by just devaluing currency.
Exactly, its' hugely popular in Venezuela and Zimbabwe and other places where government messes with peoples' money.
But then, remember, Charles thinks that pepe is a nazi symbol! He's not exactly among the rational.
But then, remember, Charles thinks that pepe is a nazi symbol! He's not exactly among the rational.
>will be driven by mining fees. Or maybe it won't
errm.
>The easiest way of rent-seeking for billionaire monopolists would be to buy Bitcoin and just wait and reap the rents.
Pretty much all of them realize that the speculative bubble is built on nothing.
errm.
>The easiest way of rent-seeking for billionaire monopolists would be to buy Bitcoin and just wait and reap the rents.
Pretty much all of them realize that the speculative bubble is built on nothing.
> errm.
Please elaborate your objection? I'm happy to reiterate that it's clear that we can't predict the future, but that it's intellectually dishonest to suggest that we don't have plans when in fact we do. (It's fine to criticize the plans, but that's not what Charlie did.)
> Pretty much all of them realize that the speculative bubble is built on nothing.
That's no reason not to profit from it while it lasts, if you're a rent-seeking billionaire who can afford to lose their investment. It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
Please elaborate your objection? I'm happy to reiterate that it's clear that we can't predict the future, but that it's intellectually dishonest to suggest that we don't have plans when in fact we do. (It's fine to criticize the plans, but that's not what Charlie did.)
> Pretty much all of them realize that the speculative bubble is built on nothing.
That's no reason not to profit from it while it lasts, if you're a rent-seeking billionaire who can afford to lose their investment. It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
>Please elaborate your objection?
I was just noting that you didn't seem to have an especially clearer picture than Charlie did, while claiming he was wrong to say the future was unclear.
>It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
You don't seem to understand what rent-seeking is. Rent-seeking is when you seek out particular privileges that enable you to gain an advantage. A "sure thing" if you will. By controlling asymmetric information, the levers of government, cornering the market, or controlling exclusive rights over naturally scarce opportunities.
They are greedy, but not stupid. A greedy person may play slot machines, but would not be intelligently directing their avarice. This is ultimately what you are suggesting they do.
I was just noting that you didn't seem to have an especially clearer picture than Charlie did, while claiming he was wrong to say the future was unclear.
>It's strange to suggest that greedy rent-seekers would not be greedy in this one specific instance.
You don't seem to understand what rent-seeking is. Rent-seeking is when you seek out particular privileges that enable you to gain an advantage. A "sure thing" if you will. By controlling asymmetric information, the levers of government, cornering the market, or controlling exclusive rights over naturally scarce opportunities.
They are greedy, but not stupid. A greedy person may play slot machines, but would not be intelligently directing their avarice. This is ultimately what you are suggesting they do.
> I was just noting that you didn't seem to have an especially clearer picture than Charlie did
I'm not sure what to tell you if you don't see a difference between "there are clear plans for the future, but of course plans are no guarantee for what will happen in the year 2100" (my point) and "there is no plan for the future, nobody has any idea how to incentivize mining, what a bunch of idiots" (Charlie's statement). In fact, the plans do not only exist as plans. They are implemented in software that is deployed on a huge network of machines.
I'm not sure what to tell you if you don't see a difference between "there are clear plans for the future, but of course plans are no guarantee for what will happen in the year 2100" (my point) and "there is no plan for the future, nobody has any idea how to incentivize mining, what a bunch of idiots" (Charlie's statement). In fact, the plans do not only exist as plans. They are implemented in software that is deployed on a huge network of machines.
He lost me with the overuse of word "neo-Nazi" and taking simple hoops from libertarian to neo-Nazi using one persons/trolls comment.
Either put a cogent article without innuendo to make a point or nothing.
To quote a wise man, "this is not an argument, its a slur".
Either put a cogent article without innuendo to make a point or nothing.
To quote a wise man, "this is not an argument, its a slur".
The unchecked greed of libertarian ideology is potentially as destructive as fascism, luckily libertarian ideas will never be politically palatable.
> potentially as destructive as fascism
This is meaningless; you can substitute any other ideology you dislike (socialism, conservatism, anarchism, liberalism, whatever) and it makes just as much sense.
This is meaningless; you can substitute any other ideology you dislike (socialism, conservatism, anarchism, liberalism, whatever) and it makes just as much sense.
Except it isn't meaningless, libertarianism is morally and ethically bankrupt, not to mention wildly impractical. Most of these other ideologies account for collective effort for the greater good and a social safety net, which are two of the hundreds of things that current governments have that libertarians would like to dismantle.
Libertarianism (at least, to me) is about not stopping people from doing something that isn't harming others.
There's nothing at all morally or ethically bankrupt about it. If anything, libertarianism holds higher moral and ethical ground than any other ideology.
There's nothing at all morally or ethically bankrupt about it. If anything, libertarianism holds higher moral and ethical ground than any other ideology.
Hahaha that argument hinges on not harming others. Rent seeking and hoarding demonstrably harm others. Are we pretending those aren't pillars of capitalism?
Yes, those aren't pillars of capitalism.
Capitalism is about voluntary transactions that are mutually-beneficial.
Capitalism is about voluntary transactions that are mutually-beneficial.
If you believe that you're going to be sad when you learn about how the financial industry and housing markets work.
Sure but capitalism isn't libertarianism. Libertarians tend to hate rent seeking and hording if you spent any time learning about them you would know those are two issues they take very seriously.
Fascinating (no sarcasm). Through what mechanism do libertarians propose to prevent these behaviors?
Usually by lowering the barrier of entry due to regulatory restrictions that back 90% of rent seeking.
How do they support the rationale that rent-seeking is enabled by "regulatory restrictions" and not the near-impossibility of competing with a pile of capital several orders of magnitude larger than yours?
How do you square 'impossibility of competing' with rent-seeking? Rent seeking is when one obtains economic gain without creating wealth; if big capital is outcompeting you, aren't they providing more value than you for less?
Examples of rent seeking that come to my mind are things like obligatory licenses (license owners can charge higher prices because possible competitors are shut out of the market); excessive zoning (property owners extract value because no new property construction is allowed); subsidised production.
What's an example of rent-seeking caused by someone having a pile of capital much bigger than small companies, that does not happen through lobbying for regulation?
Examples of rent seeking that come to my mind are things like obligatory licenses (license owners can charge higher prices because possible competitors are shut out of the market); excessive zoning (property owners extract value because no new property construction is allowed); subsidised production.
What's an example of rent-seeking caused by someone having a pile of capital much bigger than small companies, that does not happen through lobbying for regulation?
Would you like to review the pharmaceutical industry or any of the several instances Microsoft has been hit with anti-trust lawsuits? Or review what's happened to the retail sector in the wake of Walmart and Amazon rising to primacy? Two of those cases involve no special regulation guarding the parent companies. The other is an entire industry only barely held in check by what regulation already exists. Oh yeah, I almost forgot about Food Lion. They have a multi-decade track record of opening new stores in areas served by smaller chains, operating at a loss until the competition is driven out of business, then dialing their prices up.
The problem is nearly all actions we take affect other people. Placing profit and property rights above human considerations is morally and ethically bankrupt.
Also, what actions are you prohibited from taking now that you could do under a libertarian system?
Also, what actions are you prohibited from taking now that you could do under a libertarian system?
Paying a friend to perform unlicensed dentistry on me.
Driving a car on the public highway without insurance.
Buying some marijuana to smoke in the privacy of my own home.
Buying scrap metal from a stranger without taking down his ID.
It's mainly (but not exclusively) things that are correlated with wrongdoing, but don't actually harm anyone in and of themselves.
I'm all for punishing people who are doing harm (e.g. in the above cases: pretending to be a competent dentist when you're not, or running into someone's car and not paying them for the damage, or robbing some shops to pay for your marijuana, or stealing copper to sell for scrap), but I don't like punishing innocent people who are doing no harm, merely because they're trying to do something that is also done as a byproduct of harm.
Driving a car on the public highway without insurance.
Buying some marijuana to smoke in the privacy of my own home.
Buying scrap metal from a stranger without taking down his ID.
It's mainly (but not exclusively) things that are correlated with wrongdoing, but don't actually harm anyone in and of themselves.
I'm all for punishing people who are doing harm (e.g. in the above cases: pretending to be a competent dentist when you're not, or running into someone's car and not paying them for the damage, or robbing some shops to pay for your marijuana, or stealing copper to sell for scrap), but I don't like punishing innocent people who are doing no harm, merely because they're trying to do something that is also done as a byproduct of harm.
There are laws against all of these things but people do them anyways. The majority of people purchasing drugs on the black market are never caught. I'm sure your buddy could pull a tooth for you if you are both smart enough not to tell anyone. You can buy scrap metal in private transactions for cash without ID.
Driving on the public highway with no insurance and no way to financially settle any potential accident is not an innocent person doing no harm. They're externalizing their responsibility onto whoever they collide with.
I know this is an ideological discussion and not a practical one, but my response to that is a lot of laws are in place because the harm the bad actors do when there are no consequences outweighs the potential benefit gained from a lack of regulation.
Driving on the public highway with no insurance and no way to financially settle any potential accident is not an innocent person doing no harm. They're externalizing their responsibility onto whoever they collide with.
I know this is an ideological discussion and not a practical one, but my response to that is a lot of laws are in place because the harm the bad actors do when there are no consequences outweighs the potential benefit gained from a lack of regulation.
Braiding hair without a license.
You confuse anarchocapitalism with libertarianism.
Something like 90% of libertarians I speak with are in favour of social safety nets (guaranteed basic income comes up a lot) and progressive taxation.
Everyone believes in collective effort for the greater good. People just disagree about the best way to achieve this collective effort.
Something like 90% of libertarians I speak with are in favour of social safety nets (guaranteed basic income comes up a lot) and progressive taxation.
Everyone believes in collective effort for the greater good. People just disagree about the best way to achieve this collective effort.
Fair enough, modern libertarian ideas about social safety nets may be more progressive than I realized. I'm surprised a Guaranteed Basic Income is advocated for by libertarians, but it's an idea I would like to see tested, I think it would cut down on a lot of the anger and other negative emotions associated with poverty that tend to keep people impoverished.
On the second point, that's true. The same or similar outcomes can be achieved with different policies/incentives.
On the second point, that's true. The same or similar outcomes can be achieved with different policies/incentives.
How can an ideology based around property rights be greedy? Is it greedy to keep what is yours?
The world is a club run for the benefit of its members, not a contract enslaving all future generations. Therefore property rights must be balanced against other considerations. The definition of greed is to want to keep what is yours in the face of its inutility to yourself and its absolute necessity to someone else.
Libertarianism advocates for the privatization of EVERYTHING and the destruction of the social safety net. Have fun enforcing your property rights when the guy with more capital can drain you dry in the private court system. Most people who advocate libertarian ideas would be a serf/slave in a real libertarian paradise. I would also be a serf/slave, I have no illusions about that.
>
Libertarianism advocates for the privatization of EVERYTHING and the destruction of the social safety net.
The privatization of everything including the social safety net.
> Have fun enforcing your property rights when the guy with more capital can drain you dry in the private court system
Users of the current court systems are having "fun" too, you know. What's the benchmark here?
The privatization of everything including the social safety net.
> Have fun enforcing your property rights when the guy with more capital can drain you dry in the private court system
Users of the current court systems are having "fun" too, you know. What's the benchmark here?
My point is that wealth stratification under a libertarian system would rapidly approach the 1% owning 90+% instead of the 40% they now hold.
Robber Barons, Gilded Age. <--- Read about this era before advocating for libertarian ideas
It's hard to have discussions about the present if you don't understand the past.
Robber Barons, Gilded Age. <--- Read about this era before advocating for libertarian ideas
It's hard to have discussions about the present if you don't understand the past.
> Robber Barons, Gilded Age. <--- Read about this era before advocating for libertarian ideas
The most rapid increase in prosperity in the history of mankind, where millions of people were lifted out of abject poverty. Currently repeating in other countries that embrace free-market capitalism. What's your point?
The most rapid increase in prosperity in the history of mankind, where millions of people were lifted out of abject poverty. Currently repeating in other countries that embrace free-market capitalism. What's your point?
Class/wealth stratification is bad for everyone. The poor suffer, and if things get bad enough, emperors and their families are gunned down, [1] and the rich are beheaded. [2] Nobody wins. Striving towards a saner wage/wealth gap will have more benefits for society than hyperbolic wealth stratification.
[1] https://en.wikipedia.org/wiki/Execution_of_the_Romanov_famil...
[2] https://en.wikipedia.org/wiki/Reign_of_Terror
[1] https://en.wikipedia.org/wiki/Execution_of_the_Romanov_famil...
[2] https://en.wikipedia.org/wiki/Reign_of_Terror
You're making good arguments against communism.
It's more fair to say he's making good arguments against wealth distribution so bad for the majority that they're willing to kill their masters to have a chance at improving things.
If the rich were interested in self-preservation they'd treat wealth inequality as an existential issue.
If the rich were interested in self-preservation they'd treat wealth inequality as an existential issue.
The French Revolution predates communism.
The highest class differences ever in America, save the present day. What's your point?
Privatization of the social safety net? You over there pretending market forces exist that reward resolving starvation, poverty, homelessness, or any of the other myriad social problems caused by class warfare?
Market forces are the only way to reduce starvation and homelessness.
I think pretty much every charity would like a word with you.
As a counter-argument I would like to refer you to every 3rd world country on the planet, systemic (and growing) poverty in the first world, worldwide homelessness, and the handful of oligarchs who's net worth would pay to resolve these issues several times over if their assets were seized and redistributed. What is it you were saying market forces do again?
[deleted]
We can't talk about what's "ours" without talking about how it became "ours" in the first place. Keeping land that your ancestors "claimed" back when the world was much less populated, most likely driving other people off by force to do so, is indeed greedy.
...the king said, just before the blade fell.
Absolutely not, however it is greedy to take what isn't. (ie Irak, Syria et al ...)
We're getting off-topic, but can you name a libertarian that is pro-war? Most are vocally anti-war.
Ron Paul advocated that we pull out of every foreign military installation we have and look inward. This action would cause such a huge vacuum of power that WW III is a foregone conclusion in that scenario.
The lesson here? Libertarians have good ideas about: The war on drugs,
The lesson here? Libertarians have good ideas about: The war on drugs,
Yet he received more money from active duty military than all other candidates combined.
Add this to your list: blowback.
Add this to your list: blowback.
Your opinion is just that your opinion. Everyone has one. As for Bitcoin and other cryptocurrencies - they are physical fact. When ideas and physical reality collide - ideas get smashed.
I'm commenting because I can't downvote.
I don't want to downvote because I dislike what it says. I want to downvote because its poorly researched and full of hyperbole.
I don't want to downvote because I dislike what it says. I want to downvote because its poorly researched and full of hyperbole.
But expand on your argument too. I think some of what he says is correct. Not as anti-bitcoin as him but I do think it is due for a crash.
Sure, bitcoin is going to become more or less worthless in the not too distant future. But this article is just bad on so many levels.
Is it? While you can easily eye-roll the nazi stuff out of the conversation there are several assertions embedded in the essay that are going to require more than a handwave to dismiss effectively.
The Nazi connection is interesting and there do seem to be echoes of that moment in the past in our current situation.
I'm anti-BTC. The energy consumption is increasing on a linear curve at best. And we're at a point in our history where we need to reduce our atmospheric carbon drastically... BTC is only increasing it based on the speculation of a very small portion of Earth's population and provides little value to us in any meaningful way.
Also I'm not a free-market libertarian so there's that.
I'm anti-BTC. The energy consumption is increasing on a linear curve at best. And we're at a point in our history where we need to reduce our atmospheric carbon drastically... BTC is only increasing it based on the speculation of a very small portion of Earth's population and provides little value to us in any meaningful way.
Also I'm not a free-market libertarian so there's that.
Good god! I'm sick of bitcoin, too, but this guy is way off his rocker. Maybe while your opponents are taking "red" pills you could take a few chill pills.
> At that point, the incentive for mining [...] will disappear
The intention is that by that point, the transaction fees alone will be sufficiently high to incentivise mining.
The intention is that by that point, the transaction fees alone will be sufficiently high to incentivise mining.
So here is the problem.
The security of a Proof-of-Work network is proportional to the amount of work you put into it. You can call the work electricity or computation, but ultimately the work is money. And the money spent securing Bitcoin will be basically the mining rewards. Right now, at $10,000 / BTC, that's about $6.5 B / year (10k$ / BTC * 12.5 BTC / block * 144 blocks / day * 365 days / year).
If you want to maintain the current level of security on the Bitcoin blockchain, you need to continue to pump $6.5B / year into mining rewards. You could spend less, but then you get less security. Right now BTC is pumping that money in through inflation and investment in the currency through exchanges. If you wanted to put that money in through transaction fees, then you need to have $6.5B worth of transaction fees per year.
That is a lot.
VISA has a yearly revenue of $13B, and a lot of that is interest charges and bullshit fees, not transaction costs. Mastercard and Paypal have yearly revenues of $10B.
It's still not impossible. If Bitcoin processes a similar number of transactions to one of the major credit card companies at a similar fee level, that would probably work out. It would need to process significantly more transactions to make a lower fee work, and if it can't match the transaction volume, it needs a significantly higher fee.
If the fees are insufficient, the size and security of the Bitcoin network will fall to match. How much security are you comfortable with? $1B / year? $100M / year? $1M / year?
The security of a Proof-of-Work network is proportional to the amount of work you put into it. You can call the work electricity or computation, but ultimately the work is money. And the money spent securing Bitcoin will be basically the mining rewards. Right now, at $10,000 / BTC, that's about $6.5 B / year (10k$ / BTC * 12.5 BTC / block * 144 blocks / day * 365 days / year).
If you want to maintain the current level of security on the Bitcoin blockchain, you need to continue to pump $6.5B / year into mining rewards. You could spend less, but then you get less security. Right now BTC is pumping that money in through inflation and investment in the currency through exchanges. If you wanted to put that money in through transaction fees, then you need to have $6.5B worth of transaction fees per year.
That is a lot.
VISA has a yearly revenue of $13B, and a lot of that is interest charges and bullshit fees, not transaction costs. Mastercard and Paypal have yearly revenues of $10B.
It's still not impossible. If Bitcoin processes a similar number of transactions to one of the major credit card companies at a similar fee level, that would probably work out. It would need to process significantly more transactions to make a lower fee work, and if it can't match the transaction volume, it needs a significantly higher fee.
If the fees are insufficient, the size and security of the Bitcoin network will fall to match. How much security are you comfortable with? $1B / year? $100M / year? $1M / year?
Actually transaction fees already pay a significant part of the mining reward. And with the development of 2nd-layer technology like Lightning Network, fees for on-chain bitcoin transactions can go very high indeed without significant adverse effects on bitcoin users.
Transaction fees are currently 11% of the mining reward, which isn't nothing. If the non-transaction mining reward went away tomorrow, you'd expect the mining power to decrease 10-fold, and the work securing the Bitcoin network to be about $700M / year.
By itself, I'd say $1B / year might be enough security. Any malicious nation-state wanting to attack the network through mining power would need to spend on the order of a billion dollars, which is a lot even for a large government. On the other hand, if you did have a sharp discontinuity, and not a gradual turn-down in spare capacity over many years as the mining reward gradually decreases, you would have a unique opportunity for attackers: a huge amount of mining equipment would likely be dumped on the market at once, and an attacker might be able to build up their own capacity quickly and cheaply.
The Lightning Network helps with scaling the number of transactions, but it doesn't change the need for an adequate amount of work to be done to secure the core network; you still need to spend a large number of dollars (or Bitcoins, if you prefer) each year mining, so that attackers cannot afford to attack the network through that venue. The Lightning Network gives you a larger tax base for this security tax to be levied on, but it doesn't change the fact that when you ask the question "How much money should we spend mining Bitcoin?" the only secure answer is "As much as we possibly can.".
By itself, I'd say $1B / year might be enough security. Any malicious nation-state wanting to attack the network through mining power would need to spend on the order of a billion dollars, which is a lot even for a large government. On the other hand, if you did have a sharp discontinuity, and not a gradual turn-down in spare capacity over many years as the mining reward gradually decreases, you would have a unique opportunity for attackers: a huge amount of mining equipment would likely be dumped on the market at once, and an attacker might be able to build up their own capacity quickly and cheaply.
The Lightning Network helps with scaling the number of transactions, but it doesn't change the need for an adequate amount of work to be done to secure the core network; you still need to spend a large number of dollars (or Bitcoins, if you prefer) each year mining, so that attackers cannot afford to attack the network through that venue. The Lightning Network gives you a larger tax base for this security tax to be levied on, but it doesn't change the fact that when you ask the question "How much money should we spend mining Bitcoin?" the only secure answer is "As much as we possibly can.".
100% agreed.
And if they aren't the miners will just fork Bitcoin to a version without the coin limit. The real question is what future do the miner's choose? I see three options:
1) The new Bitcoin supply is tightly managed and the miners maintain the current deflationary pressure, ensuring a continued rise in Bitcoin's value.
2) The new Bitcoin is tightly managed, but with the aim of some modest amount of inflation akin to what most central banks aim for. In this model, transaction fees dominate mining profits since Bitcoin's value will stabilize or drop.
3) The new Bitcoin goes into hyper-inflation Weimar Republic-style, eventually becoming worthless.
I think it will be number 3. There is too much money to be made by attempting to time the inflationary spiral, and miners essentially acting as Bitcoin's central bank are in a perfect place to take advantage of it.
1) The new Bitcoin supply is tightly managed and the miners maintain the current deflationary pressure, ensuring a continued rise in Bitcoin's value.
2) The new Bitcoin is tightly managed, but with the aim of some modest amount of inflation akin to what most central banks aim for. In this model, transaction fees dominate mining profits since Bitcoin's value will stabilize or drop.
3) The new Bitcoin goes into hyper-inflation Weimar Republic-style, eventually becoming worthless.
I think it will be number 3. There is too much money to be made by attempting to time the inflationary spiral, and miners essentially acting as Bitcoin's central bank are in a perfect place to take advantage of it.
Miners can't unilaterally fork Bitcoin without consensus in the community. They tried this already this year with Segwit2x.
Unless a critical mass of actual users want the fork, it will never succeed, because the fork will not have enough value to be worth mining.
Unless a critical mass of actual users want the fork, it will never succeed, because the fork will not have enough value to be worth mining.
The high transaction fees will also becoming a limiting factor in BTC growth... it is already a problem for it being a useful cryptocurrency
The protocol can also be changed to Proof of Stake (PoS).
I don't think any serious bitcoin developer considers that a reasonable option. Most very strongly believe that PoS is fundamentally less secure.
Uh Vitalik of ethereum released his white paper on Casper PoS protocol and publicly announced his intentions to switch. What makes you think "No" developer believes it's viable?
No bitcoin (presumably bitcoin-core) developer thinks it's viable.
his intentions were there from the beginning, results not so much
also I've never seem a response to this paper here from the Eth crew https://download.wpsoftware.net/bitcoin/pos.pdf
also I've never seem a response to this paper here from the Eth crew https://download.wpsoftware.net/bitcoin/pos.pdf
Why not eliminate global consensus altogether:
https://intercoin.org/technology.pdf
https://intercoin.org/technology.pdf
If you tweeted, in English, "ban imports from Japan" you'd get a swarm of frog/kek avatars among all the anime girls. Does that mean that Japan is a Nazi-aligned country?
Japan is largely ethnonationalist, a strong believer in traditional gender roles, has a culture that individuals should be subservient to the system, has close ties between corporations and government, is highly environmentalist, has a powerful police with few checks on them... while I'd reserve the term "Nazi" for those actually engaging in genocide, it's pretty fascist. There's a reason those people see themselves as aligned with Japan.
Environmentalism is fascist now?
The bitcoin mining industry will end once the electricity (and hardware) becomes more expensive than the value of mined bitcoins - it stops being economically feasible. If we're already breaking .1% of the world's energy consumption, then we're probably pretty close.
Bitcoins will continue to be valuable, short of some security flaw wrecking them, simply because of scarcity and functionality. But if they can't be used for a majority of (legal) financial transactions, the value will be limited. And as long as the exchange rates are highly unstable and exchanges are unreliable/untrustworthy, mainstream banking won't touch it with a ten foot pole. They don't want the risk.
Bitcoins will continue to be valuable, short of some security flaw wrecking them, simply because of scarcity and functionality. But if they can't be used for a majority of (legal) financial transactions, the value will be limited. And as long as the exchange rates are highly unstable and exchanges are unreliable/untrustworthy, mainstream banking won't touch it with a ten foot pole. They don't want the risk.
>
The bitcoin mining industry will end once the electricity (and hardware) becomes more expensive than the value of mined bitcoins
You do not understand mining difficulty adjustment
You do not understand mining difficulty adjustment
Apparently not. Care to enlighten me? Because seriously, .1% of global electricity consumption, if that number is accurate, is expensive. Are we going to go up from there, or down, and how does it relate to a long-term stable bitcoin exchange rate, relative to mainstream reserve currencies?
If we're in a speculative bubble (we are), it justifies the mining. But bitcoin will never, ever be a viable global currency if it's deflating 500% a year, like it is right now. Mainstream reserve currencies are designed and carefully regulated to inflate at 1-4% or so, slowly losing value - inflation encourages investment, because sitting on cash hurts. What could someone invest their bitcoins in that could justify giving up the possibility of a 500% annual return just for the techno-equivalent of stuffing them in a mattress?
Bitcoin mining, apparently.
See where I'm going with this? Investing outrageous sums in bitcoin mining makes sense when it's a massive deflationary bubble. It makes almost no sense at all when it's slowly inflating like a grownup currency does.
If we're in a speculative bubble (we are), it justifies the mining. But bitcoin will never, ever be a viable global currency if it's deflating 500% a year, like it is right now. Mainstream reserve currencies are designed and carefully regulated to inflate at 1-4% or so, slowly losing value - inflation encourages investment, because sitting on cash hurts. What could someone invest their bitcoins in that could justify giving up the possibility of a 500% annual return just for the techno-equivalent of stuffing them in a mattress?
Bitcoin mining, apparently.
See where I'm going with this? Investing outrageous sums in bitcoin mining makes sense when it's a massive deflationary bubble. It makes almost no sense at all when it's slowly inflating like a grownup currency does.
> Apparently not. Care to enlighten me? Because seriously, .1% of global electricity consumption, if that number is accurate, is expensive. Are we going to go up from there, or down, and how does it relate to a long-term stable bitcoin exchange rate, relative to mainstream reserve currencies?
The electricity cost of mining bitcoin is directly related to the transaction fees, once all bitcoins are mined. This is because if mining is very profitable (transaction fees >> electricity cost), more people are incentivised to mine, thus raising the hash rate and difficulty, thus making mining more expensive. If mining is very unprofitable (transaction fees << electricity cost), people turn off their machines, hashpower and electricity cost drop, and mining becomes easier.
Thus if successful BTC has ~300k on-chain transactions a day, transaction pays average $1 in transaction fees, you expect ~$300k of electricity to be used a day.
--
No one expects BTC to keep deflating 500% once it reaches saturation. Currently all of BTC value is speculative - based on the 0.1% change it'll become successful and be worth $MOON, against the 99.9% change it'll fail and be worth 0.
In the end-game scenario where it's an established global exchange network, with all the coins available already mined, it's only as deflationary as other currencies are inflationary.
The 'inflation causes investment' theory only applies to investment that has expected return of 1-2%; given that the stock market return is estimated at ~7%, and yet people still hold cash, it seems hard to believe that inflation has significant impact on investment.
The electricity cost of mining bitcoin is directly related to the transaction fees, once all bitcoins are mined. This is because if mining is very profitable (transaction fees >> electricity cost), more people are incentivised to mine, thus raising the hash rate and difficulty, thus making mining more expensive. If mining is very unprofitable (transaction fees << electricity cost), people turn off their machines, hashpower and electricity cost drop, and mining becomes easier.
Thus if successful BTC has ~300k on-chain transactions a day, transaction pays average $1 in transaction fees, you expect ~$300k of electricity to be used a day.
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No one expects BTC to keep deflating 500% once it reaches saturation. Currently all of BTC value is speculative - based on the 0.1% change it'll become successful and be worth $MOON, against the 99.9% change it'll fail and be worth 0.
In the end-game scenario where it's an established global exchange network, with all the coins available already mined, it's only as deflationary as other currencies are inflationary.
The 'inflation causes investment' theory only applies to investment that has expected return of 1-2%; given that the stock market return is estimated at ~7%, and yet people still hold cash, it seems hard to believe that inflation has significant impact on investment.
Holding cash is part of the risk/return/liquidity triangle. All investment functions against this triangle - cash is extremely low risk, and maximally liquid, at the cost of a slight negative return. (Contrast this to, say, angel investment, which has near-maximum potential returns, but very high risk and near-zero liquidity.)
And contrast the low risk / high liquidity / near zero return behavior of cash with bitcoin. With bitcoin, you have very high risk (speculative bubble) / limited liquidity (can't be used for most transactions, must exchange) / absurdly high returns. It is in no way like cash. It's pure speculation.
A medium of exchange needs to behave like cash. It needs to be highly stable and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to replace cash (and cash-equivalents like credit cards), it's doing an absolutely shitty job of it, and will continue to do so until the price stabilizes.
As for inflation's impact on investment... read the WSJ or Forbes regularly for what the mainstream financial industry thinks about that. They're absolutely inflation-phobic. I'm old enough to remember late-1970s stagflation, which made basic investments like real estate totally absurd and nearly wrecked the economy. No one wants to go back to that. But if there's one thing worse than high inflation, it's deflation - when cash actually increases in value. It radically disincentivizes investment, when you can just stuff cash in a mattress and make a real return doing so. Why take a risk if you can make money without it?
And contrast the low risk / high liquidity / near zero return behavior of cash with bitcoin. With bitcoin, you have very high risk (speculative bubble) / limited liquidity (can't be used for most transactions, must exchange) / absurdly high returns. It is in no way like cash. It's pure speculation.
A medium of exchange needs to behave like cash. It needs to be highly stable and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to replace cash (and cash-equivalents like credit cards), it's doing an absolutely shitty job of it, and will continue to do so until the price stabilizes.
As for inflation's impact on investment... read the WSJ or Forbes regularly for what the mainstream financial industry thinks about that. They're absolutely inflation-phobic. I'm old enough to remember late-1970s stagflation, which made basic investments like real estate totally absurd and nearly wrecked the economy. No one wants to go back to that. But if there's one thing worse than high inflation, it's deflation - when cash actually increases in value. It radically disincentivizes investment, when you can just stuff cash in a mattress and make a real return doing so. Why take a risk if you can make money without it?
There’s not a currency out there that costs .12% of co2 to print. Pretty sure the former currency backers (gold, silver) don’t either. That factor alone is reason enough to not use it.
You must also consider the cost of storing, moving and exchanging, and guaranteeing the currency. Printing on its own is useless.
How many mainframes keep track of money at banks? How much paper is used for ledgers? What % of internet traffic is about moving money? How many vans of cash move through cities to fill ATMs?
How many mainframes keep track of money at banks? How much paper is used for ledgers? What % of internet traffic is about moving money? How many vans of cash move through cities to fill ATMs?
Some years ago, I worked at the Federal Reserve, on a system that moved $100B (billion!) a DAY, on a pretty reasonable server farm. Yes, there's a fair bit of energy committed to the existing financial system, but it's moving far, far more actual value with many orders of magnitude more actual exchanges than bitcoin is going.
The Federal Reserve is doing something completely different than Bitcoin is doing.
Yeah. It's providing a useful, widely accepted, and stable currency.
But I'm addressing the argument that the energy consumption for bitcoin mining and the energy consumption of the mainstream financial system is directly comparable (they're not).
But I'm addressing the argument that the energy consumption for bitcoin mining and the energy consumption of the mainstream financial system is directly comparable (they're not).
If mining becomes unprofitable, miners will stop mining and the total network hashrate will go down. The protocol will adjust by making mining easier, until it balances out at one block being mined every 10 min.
In a competitive market we should expect that mining costs (energy consumption) would converge to the mining reward, which is currently at 12.5 bitcoin per block. (I don't know how competitive mining really is at this moment though)
Of course, it is important to remember that if the mining difficulty becomes too low it gets cheaper to launch a 51% attack on the network.
In a competitive market we should expect that mining costs (energy consumption) would converge to the mining reward, which is currently at 12.5 bitcoin per block. (I don't know how competitive mining really is at this moment though)
Of course, it is important to remember that if the mining difficulty becomes too low it gets cheaper to launch a 51% attack on the network.
That's a tragedy of the commons problem. No one is incentivized to mine less. The price then sets itself against the cost of hardware arms racing and electricity.
If Bitcoin becomes too expensive to mine, the difficulty adjusts downward until it becomes cheap enough again. https://en.bitcoin.it/wiki/Difficulty
You are correct that people have a higher incentive to obtain Bitcoin than to spend it. It doesn't follow that there is no incentive to obtain it.
You are correct that people have a higher incentive to obtain Bitcoin than to spend it. It doesn't follow that there is no incentive to obtain it.
Two comments on two follow-on questions about BTC.
1. 'bitcoin delivering' and bitcoin value crashing are orthogonal concepts. Store of value and hoard-speculative aspects of bitcoin are probably the worst parts of bitcoin.
2. Non regulated cryptocurrencies are not exactly anti-oligarchs. Absence of regulation would set them free to prey the weak. Goldman Sachs and all of the finance innovators who participate in disaster capitalism would love cryptocurrensies if they take off.
1. 'bitcoin delivering' and bitcoin value crashing are orthogonal concepts. Store of value and hoard-speculative aspects of bitcoin are probably the worst parts of bitcoin.
2. Non regulated cryptocurrencies are not exactly anti-oligarchs. Absence of regulation would set them free to prey the weak. Goldman Sachs and all of the finance innovators who participate in disaster capitalism would love cryptocurrensies if they take off.
I also feel that there will come a day of reckoning between the US and other world governments and Bitcoin, will governments really tolerate an alternative to their currency?
> Bitcoin isn't just popular among libertarians, it's popular among folks with green frog/Kek user icons and anti-semitic views. ("Are you a Jew?" asked one egg.)
You have got to be kidding me. After druglord/pedo/(eco-)terrorist money, now it's the Nazi currency.
Is there a Bitcoin smear left that we haven't used yet?
Edit: Somebody also alert Olaoluwa Osuntokun to what he's getting involved in. He promptly should go back to `foo/bar` instead of `kek/kek`.
You have got to be kidding me. After druglord/pedo/(eco-)terrorist money, now it's the Nazi currency.
Is there a Bitcoin smear left that we haven't used yet?
Edit: Somebody also alert Olaoluwa Osuntokun to what he's getting involved in. He promptly should go back to `foo/bar` instead of `kek/kek`.
The evidence for BTC being primarily driven money laundering is pretty overwhelming. Look into the correlation between BTC price and tethers if you don't believe me; and just go look at what a tether does and tell me that's not just a chaotic-good version of money laundering.
Also makes sense it would draw interest from anti-government types. I do happen to agree with the two points the author makes at the end of the article: either Bitcoin succeeds and gets invaded by corporate money / power or it fails and something takes its place, but there are going to be a lot of tears either way and people are going to blame the politicians because that's what they do.
Also makes sense it would draw interest from anti-government types. I do happen to agree with the two points the author makes at the end of the article: either Bitcoin succeeds and gets invaded by corporate money / power or it fails and something takes its place, but there are going to be a lot of tears either way and people are going to blame the politicians because that's what they do.
What evidence exactly? This is money laundering:
In 2010 Wachovia Bank – now part of Wells Fargo – settled an action brought against it under US bank secrecy act to have laundered $378 billion of Mexican drug money and made a profit of $12.3 billion from it. It paid $160 million in fines and settlement costs.
In 2012 HSBC was fined and settled for having laundered $7 billion of drug money between 2007 and 2008 and $19.4 billion of Iran related funds.
In 2017 Deutsche Bank paid $630 million in fines and settlement for having laundered $10 billion of Russian assets. Explain to me how can launder that kind of money using BTC?
In 2012 HSBC was fined and settled for having laundered $7 billion of drug money between 2007 and 2008 and $19.4 billion of Iran related funds.
In 2017 Deutsche Bank paid $630 million in fines and settlement for having laundered $10 billion of Russian assets. Explain to me how can launder that kind of money using BTC?
Just because it's a smear doesn't mean it isn't true.
His argument boils down to "someone on the internet asked me if I'm a Jew, therefore... I'm right!"
But we don't even have to follow him on his "BTC-->another Holocaust!!1!" route to see he's nuts.
That's because "don't use BTC because it's less efficient than VISA" is already nuts. BTC and VISA aren't performing equivalent functions, so he's comparing apples to oranges. For those who prefer decentralization, the only relevant comparison is between systems that deliver decentralization.
But we don't even have to follow him on his "BTC-->another Holocaust!!1!" route to see he's nuts.
That's because "don't use BTC because it's less efficient than VISA" is already nuts. BTC and VISA aren't performing equivalent functions, so he's comparing apples to oranges. For those who prefer decentralization, the only relevant comparison is between systems that deliver decentralization.
I wouldn't say it means he's nuts. Even if you ditch the right-wing politics commentary, there's a problem with decentralized currency - it's directly in opposition to the interests of governments. Which makes it questionable whether it will ever succeed. That's not nuts.
That said, as I've pointed out elsewhere, bitcoin does not currently behave even remotely like a useful medium of exchange. The price needs to be be rock-solid stable, the way the dollar or the euro or the yen is stable, and it needs to be extremely liquid, usable for most transactions. When bitcoins are generating 500% annual returns relative to stable currencies simply by existing, spending them is actually irrational (although unloading and getting out while the getting is good might not be). Until it's stable, forget government interference... the banking system won't accept bitcoin.
That said, as I've pointed out elsewhere, bitcoin does not currently behave even remotely like a useful medium of exchange. The price needs to be be rock-solid stable, the way the dollar or the euro or the yen is stable, and it needs to be extremely liquid, usable for most transactions. When bitcoins are generating 500% annual returns relative to stable currencies simply by existing, spending them is actually irrational (although unloading and getting out while the getting is good might not be). Until it's stable, forget government interference... the banking system won't accept bitcoin.
> spending them is actually irrational (although unloading and getting out while the getting is good might not be).
Can you expand on this thought? What is the difference between "spending" bitcoin and selling it?
Can you expand on this thought? What is the difference between "spending" bitcoin and selling it?
You "sell" bitcoin for currency. You "spend" cash (or bitcoin) for goods and services.
I wrote that comment while munching on a bagel and a diet coke, for which I paid $5.26. The transaction took only a few seconds. I can do that partly because I know the five bucks I spend today would still be worth about five bucks six months from now, would still buy me a bagel and a diet coke. I spent five bucks. I did not "sell" five bucks. That's not how a medium of exchange works.
If I reasonably suspected that the five bucks I'm spending on the bagel would be worth ten bucks in a few months, I'd be very hesitant to spend it.
On the way home from the bagel shop, I gave another five bucks to a homeless woman. Could I have even done that with bitcoin?
I wrote that comment while munching on a bagel and a diet coke, for which I paid $5.26. The transaction took only a few seconds. I can do that partly because I know the five bucks I spend today would still be worth about five bucks six months from now, would still buy me a bagel and a diet coke. I spent five bucks. I did not "sell" five bucks. That's not how a medium of exchange works.
If I reasonably suspected that the five bucks I'm spending on the bagel would be worth ten bucks in a few months, I'd be very hesitant to spend it.
On the way home from the bagel shop, I gave another five bucks to a homeless woman. Could I have even done that with bitcoin?
It doesn't matter how much your money will be worth in 6 months' time if you need to eat. If it's the only money you have, you must spend it, or go hungry. It's the same reason people buy computers even though computers get cheaper over time. If you need a computer now, it's no good waiting, even if you know you'll get more for your money later.
And in fact it is much easier to send bitcoin to a homeless person than it is to send them a bank transfer, as it is extremely difficult for a person without an address to even get a bank account.
And in fact it is much easier to send bitcoin to a homeless person than it is to send them a bank transfer, as it is extremely difficult for a person without an address to even get a bank account.
Not as easy as handing them a $5 bill.
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It's a useless ad hominem.
Don't forget ransomware! That's won over a lot of new Bitcoin fans, right?
It's quite fascinating to observe disruption and fear in society at the age of the internet. It most have felt the same for all the technologies the bitcoin haters use everyday ( phones, cars, electricity, internet ... )
Whether you agree with their content or not, it's a losing proposition to fight a war against memes.
>>The longer BTC persists, the worse the eventual blowout—and the more angry people there are going to be. Angry people who are currently being recruited and radicalized by neo-Nazis.
How does anyone reach adulthood and clutch this kind of fear of Internet assholes? Embarrassing.
How does anyone reach adulthood and clutch this kind of fear of Internet assholes? Embarrassing.
Nazis! Anti-war nazis who would follow Milton Friedman and Thomas Sowell off the bridge, into the lake, and to the ends of the earth...
Why the hell did this even make it to the front page???
Why the hell did this even make it to the front page???
> What I wasn't expecting was the alt-right/neo-Nazi connection. Bitcoin isn't just popular among libertarians, it's popular among folks with green frog/Kek user icons and anti-semitic views. ("Are you a Jew?" asked one egg.)
Garbage blogpost.
I dislike the bitcoin and cryptocurrency industry & communities in general, but this is just ridiculous.
Garbage blogpost.
I dislike the bitcoin and cryptocurrency industry & communities in general, but this is just ridiculous.
Dystopic fiction where everybody is dead. YA cherish triangle described completely in the subjunctive. No characters, despite the fact that there unquestionably could have been.
This BTC indictment I found elsewhere. I'm not the author, but it spoke to me.
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Two friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:
Hey Satosh... I have a genius idea Yeah, what is it? You know that app you coded...the one that churns out the useless SHA algorithms? Yeah? LOL...lets sell them as digital currencies! Dude...you are fucking wasted, here, have another bong No, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals! Dude... you are insane! What kind of moron would buy something like that? Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW? They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughter They are still laughing today. The rest is history
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Two friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:
Hey Satosh... I have a genius idea Yeah, what is it? You know that app you coded...the one that churns out the useless SHA algorithms? Yeah? LOL...lets sell them as digital currencies! Dude...you are fucking wasted, here, have another bong No, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals! Dude... you are insane! What kind of moron would buy something like that? Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW? They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughter They are still laughing today. The rest is history
The first sentence of "Accelerando" is transcendentally beautiful, something to be quoted for generations to come.
The rest of the first chapter is pretty interesting. The domme/sub relationship thing is well written although the sex act depicted sounds implausible. The second chapter also has an interesting scene where Macx is rescued by Anette with the recording earrings. Not long after we have a rant by an Italian politician that already showcases most of the Strossian School of economics. Then the book gets muddled but that's arguably part of the concept.
Basically people keep listening to Stross for this sublime sentence: "Manfred is on the run, making strangers rich."
The rest of the first chapter is pretty interesting. The domme/sub relationship thing is well written although the sex act depicted sounds implausible. The second chapter also has an interesting scene where Macx is rescued by Anette with the recording earrings. Not long after we have a rant by an Italian politician that already showcases most of the Strossian School of economics. Then the book gets muddled but that's arguably part of the concept.
Basically people keep listening to Stross for this sublime sentence: "Manfred is on the run, making strangers rich."
> we're going to run out of new BTC to mine sooner or later
as it's not a question of "sooner or later", the supply schedule is fixed and well-known. But even more:
> At that point, the incentive for mining (a process essential for reconciling the public ledgers) will disappear and the currency will ... will what?
... will be driven by mining fees. Or maybe it won't, which is also a reasonable guess. But suggesting that we have no idea and no plan is disingenious.
Also:
> if, as I think, BTC doesn't deliver, then the bubble will eventually burst.
It's not necessarily an all-or-nothing thing. Is 10'000 USD overvalued? Maybe, but that wouldn't mean that the actual value is 0 USD, only that it's somewhere between 0 and 10'000.
And:
> A working distributed cryptocurrency model is inimical to the interests of billionaire monopolists who want to get rich by imposing rent-seeking practices [...followed by regulatory phantasies]
I also think this argument is mistaken. The easiest way of rent-seeking for billionaire monopolists would be to buy Bitcoin and just wait and reap the rents.