Blockchain Is Not Decentralised(leventov.medium.com)
leventov.medium.com
Blockchain Is Not Decentralised
https://leventov.medium.com/blockchain-is-not-decentralised-e098ce4f2a45
110 comments
Even if miners and devs do try to screw people over, it's always possible to fork from a certain blockheight.
> it's always possible to fork from a certain blockheight
So looking back at the 2016 hard fork of Ethereum after the DAO thing[0], is it a feature that "the community"[1] can choose to hard fork to revert transactions that are "bad"[2], or is it a bug?
[0] https://blog.ethereum.org/2016/07/20/hard-fork-completed/ [1] I'm not sure who defines this [2] I'm also not sure who defines this
So looking back at the 2016 hard fork of Ethereum after the DAO thing[0], is it a feature that "the community"[1] can choose to hard fork to revert transactions that are "bad"[2], or is it a bug?
[0] https://blog.ethereum.org/2016/07/20/hard-fork-completed/ [1] I'm not sure who defines this [2] I'm also not sure who defines this
Yep. This is why you don't keep your coins on an exchange. If there's another fork like BCH or ETC you might be screwed.
And given the large number of ASICs involved, large updates[0] of BTC "software" would require a hardware refresh, increasing adoption hesitancy.
[0] Where large is defined as something the ASIC designer did not predict needed to be a flexible part of the system.
[0] Where large is defined as something the ASIC designer did not predict needed to be a flexible part of the system.
Basically no protocol changes, especially the ones people are worried about, require ASIC changes.
If you imagined a world where a small cabal of power bankers could control monetary policy, why is it hard to imagine a small cabal of powerful bitcoin miners could do the same?
The tech encourages large miners in terms of hardware and infrastructure investment. There's a race to the bottom for compute and power consumption that small miners can't really compete with. In this way the system could conceivably move towards that small powerful group.
The tech encourages large miners in terms of hardware and infrastructure investment. There's a race to the bottom for compute and power consumption that small miners can't really compete with. In this way the system could conceivably move towards that small powerful group.
because bitcoin miners can't dictate monetary policy (they can only dictate transaction ordering/inclusion), but governments can do both.
They influence Bitcoin development (SegWit is a good example), so they dictate the Bitcoin version of policy.
It's other way around. Majority of miners were against SegWit and blocked its activation for over a year. Community then decided to collectively upgrade their nodes to accept only certain transactions. It is called User Activated Soft Fork (#UASF)
The miners had to make a decision. Mine coins that rest of the world dont want, or activate segwit.
How can they not dictate monetary policy? They could conceivably cause inflation by increasing mining rewards or perhaps deflation through coin destruction.
Miners don't decide what software other people run, that's why. If a miner tries to mint themselves more Bitcoin than they are due, then their block will be rejected by the network.
The scenario in question is when a small group has control of the network through consolidated hash power.
That's irrelevant when nobody recognizes your coins. https://en.bitcoin.it/wiki/Economic_majority
> Miners don't decide what software other people run
That would require changes to the codebase which most nodes probably wouldn't support. Which would be creating their own fork.
You can't just "increase mining rewards" as a miner.
You can't just "increase mining rewards" as a miner.
The difference is the bankers have authority and compliance by way of force. That is, government controls currency, you pay your taxes in dollars, you trade your oil in dollars, etc., or else.
Crypto groups do not have this authority, and cannot impose their will beyond what the masses will accept. They compete with forks and alternative products. Some chains don't even use mining, some use alternate algorithms where SHA-256 ASICs have no advantage. If powerful groups try to force unpopular change, they'll just split the chain and more or less divide the value proportionally to the user-base that they can convince to join them.
We saw this with Bitcoin Cash, Ethereum Classic, etc. So if the Bitcoin network does something I don't like, I have the option of leaving and supporting one of the potential forks I do like. Force cannot be imposed, and products must compete. This is one of the advantages of open source, decentralized software design.
Crypto groups do not have this authority, and cannot impose their will beyond what the masses will accept. They compete with forks and alternative products. Some chains don't even use mining, some use alternate algorithms where SHA-256 ASICs have no advantage. If powerful groups try to force unpopular change, they'll just split the chain and more or less divide the value proportionally to the user-base that they can convince to join them.
We saw this with Bitcoin Cash, Ethereum Classic, etc. So if the Bitcoin network does something I don't like, I have the option of leaving and supporting one of the potential forks I do like. Force cannot be imposed, and products must compete. This is one of the advantages of open source, decentralized software design.
Is splitting a real solution? Why can't that powerful group, which had control of the original chain take control of this new fork?
https://en.wikipedia.org/wiki/Fork_(software_development)
Confused about what you mean by "take control" of the new fork.
The powerful miners are going to download a different set of software with different rules, and mine on it? That would just be supporting the new fork by participating on it, giving it more legitimacy by way of giving it resources (hash power).
*EDIT: You can certainly attack a chain by dedicating your hash power to sabotaging their blocks. This however would make your own chain weaker, and generally not a profitable use of resources.
Confused about what you mean by "take control" of the new fork.
The powerful miners are going to download a different set of software with different rules, and mine on it? That would just be supporting the new fork by participating on it, giving it more legitimacy by way of giving it resources (hash power).
*EDIT: You can certainly attack a chain by dedicating your hash power to sabotaging their blocks. This however would make your own chain weaker, and generally not a profitable use of resources.
I think you mean to ask "why didn't they" since this has already happened multiple times in the past.
The answer is that miners would have to take mining power away from the chain that they were mining. In practice the mining power that each chain receives is proportional to its current price.
This is also something all the people upset about the electricity that bitcoin mining takes up need to understand. The electricity is being paid for by the people buying the balances that the miners mine. If people weren't buying the massive miner rewards every 10 minutes, the price of bitcoin would not stay the same and the same electricity usage would not be viable.
The answer is that miners would have to take mining power away from the chain that they were mining. In practice the mining power that each chain receives is proportional to its current price.
This is also something all the people upset about the electricity that bitcoin mining takes up need to understand. The electricity is being paid for by the people buying the balances that the miners mine. If people weren't buying the massive miner rewards every 10 minutes, the price of bitcoin would not stay the same and the same electricity usage would not be viable.
For reference, a quick Google search says there are ~1 million bitcoin miners. However, presumably there's a pareto-type distribution where some some small% of miners are responsible for the majority of the hashrate, so I'd be curious how many miners would need to agree to dictate the direction of Bitcoin. This is also probably complicated by the existence of huge mining pools and relatively apolitical miners who would go along with whatever client upgrades the pool said was required to keep mining with that pool -- although, OTOH, switching pools is not particularly difficult.
Something that's interesting to me is that forking the blockchain creates money out of thin air, if people accept both sides of the fork -- I've seen people who recovered old wallets make sure to collect the extra bit from Bitcoin Cash along with the main windfall of regular Bitcoin. If blockchains really do take over finance, there's interesting implications for inflation control / monetary policy there, I think.
Something that's interesting to me is that forking the blockchain creates money out of thin air, if people accept both sides of the fork -- I've seen people who recovered old wallets make sure to collect the extra bit from Bitcoin Cash along with the main windfall of regular Bitcoin. If blockchains really do take over finance, there's interesting implications for inflation control / monetary policy there, I think.
Of course miners would not oppose (usually) what developers propose because they have highly aligned and interlocked incentives.
This is an open system, but it's also very undemocratic, and it's design and direction are determined by the financial incentives of the beneficiaries and the developers.
This is an open system, but it's also very undemocratic, and it's design and direction are determined by the financial incentives of the beneficiaries and the developers.
> developers control the cryptocurrency issuance because despite the issuance is (usually) determined algorithmically, developers have the power to change these algorithms...If we compare this system with the US dollar system governed by the Federal Reserve, the Supreme Court of the US, the Congress, and the US government (in different ways), I’d say that the blockchain developers are at least as likely to become corrupt, coerced, or influenced by the system beneficiaries than the Fed and the Government officers and judges because the latter are 1) older on average, and more senior people tend to act more independently; 2) much better protected, physically and financially.
Don't miners and nodes then have to adopt those algorithmic changes though? It's essentially voting by adoption - if a majority of miners/nodes don't adopt a set of changes (e.g. increasing the supply cap or rate), then they aren't propagated to the blockchain.
This seems a lot more decentralized than the US/Fed monetary system that the article compares it to, where citizens have effectively zero influence on policy.
Don't miners and nodes then have to adopt those algorithmic changes though? It's essentially voting by adoption - if a majority of miners/nodes don't adopt a set of changes (e.g. increasing the supply cap or rate), then they aren't propagated to the blockchain.
This seems a lot more decentralized than the US/Fed monetary system that the article compares it to, where citizens have effectively zero influence on policy.
>It's essentially voting by adoption
Unlike democratic policy, the votes for bitcoin policy are not 1 citizens 1 vote. You can claim that citizens have effectively no control (although they clearly do have some control). If you're not a miner you have absolutely no control. Even if you are a miner, your control is some function of your hash power.
Unlike democratic policy, the votes for bitcoin policy are not 1 citizens 1 vote. You can claim that citizens have effectively no control (although they clearly do have some control). If you're not a miner you have absolutely no control. Even if you are a miner, your control is some function of your hash power.
> If you're not a miner you have absolutely no control.
The economic majority of Bitcoin users ultimately decides what "Bitcoin" even means and can enforce that against miners with e.g. a User Activated Soft Fork: https://uasf.co
The economic majority of Bitcoin users ultimately decides what "Bitcoin" even means and can enforce that against miners with e.g. a User Activated Soft Fork: https://uasf.co
I disagree. As a user, I have no real say. What ever the miners and exchanges decide if what I must use. And for the vast majority of users just don't care about which fork should be considered the true path.
As a user, I have about as much control over US currency. I can be very vocal, protest, and raise awareness for what I think is correct, but ultimately almost all decisions happen with governing bodies. And in the case of Bitcoin, the governing bodies are the miners and exchanges, which have very different incentives than the users.
As a user, I have about as much control over US currency. I can be very vocal, protest, and raise awareness for what I think is correct, but ultimately almost all decisions happen with governing bodies. And in the case of Bitcoin, the governing bodies are the miners and exchanges, which have very different incentives than the users.
I agree that you alone have no real say. The community does.
You may have diminished say in the governance process, but you can vote with your money.
If enough people leave a contentious network, the price falls. If you decide to use another chain, exchanges/wallets/miners become profit incentivized to support those chains.
If enough people leave a contentious network, the price falls. If you decide to use another chain, exchanges/wallets/miners become profit incentivized to support those chains.
And this is the problem. Blockchain represents a revolution against existing financial power structures. I am personally far from convinced that this will go well, since we know from history that revolutions intent on removing power structures tend replace them. Even before we factor in geopolitics, I am not extremely keen on replacing my country's already too unchecked banking sector with some entirely unregulated, supranational line-up of blue-eyed ancaps and other speculators whose main qualification is owning enough GPUs in places where power is cheap enough to mine. I really don't see that working out well for me at all, regardless of the theory of democratizing access to financial services. Money is infrastructure, and those who own the roads set the tolls.
This is an advantage of proof-of-stake: in order to 'mine', you only have to own some of the coin. It's still not one vote per citizen, but it's much closer to it--and it's more stable, since people holding large amounts of the coin are motivated to ensure it's stability and security.
Is proof of stake a plutocracy by definition or is there some other democratizing factor?
Vitalik had a good take on this; developers are in control only until they screw up, which means they were never really in control. https://vitalik.ca/general/2021/03/23/legitimacy.html
Developers control the means of software distribution, which does give them some staying power even if they make bad decisions. The tipping point to removing software developers from control is when it becomes preferable to set up new distribution channels instead of accept their code as-is.
> a lot more decentralized than the US/Fed monetary system [..]
The distribution of USD cash across the world would appear be (almost uniquely?) decentralized... If the Fed were to decide that as of midnight tonight, negative interest rates apply on all USD cash balances, how exactly could that affect the suitcase full of USD you buried at the bottom of your garden? [Spoiler: it wouldn't...]
The distribution of USD cash across the world would appear be (almost uniquely?) decentralized... If the Fed were to decide that as of midnight tonight, negative interest rates apply on all USD cash balances, how exactly could that affect the suitcase full of USD you buried at the bottom of your garden? [Spoiler: it wouldn't...]
Physical cash is a tiny portion of the USD mass in circulation.
> Physical cash is a tiny portion of the USD mass in circulation
We appear to be using the term "in circulation" somewhat differently.
"Currency in circulation refers to the amount of cash–in the form of paper notes or coins–within a country that is physically used to conduct transactions between consumers and businesses"[0]
"As of February 10, 2021, there is approximately US$2.10 trillion in circulation, $2.05 trillion of which is in the Federal Reserve Notes (the remaining $50 billion is in the form of U.S. notes and coins)"[1]
...of course you're correct to note that this ~$2 trillion is only a proportion of total money supply (assuming we can agree on which measure to use for 'money supply') but it's still a substantial sum. It's also decentralized.
How does ~$2 trillion of decentralized money compare with the total supply of one's favourite (allegedly decentralized) cryptocurrency?
[0] https://www.investopedia.com/terms/c/currency-in-circulation...
[1] https://en.wikipedia.org/wiki/United_States_dollar
We appear to be using the term "in circulation" somewhat differently.
"Currency in circulation refers to the amount of cash–in the form of paper notes or coins–within a country that is physically used to conduct transactions between consumers and businesses"[0]
"As of February 10, 2021, there is approximately US$2.10 trillion in circulation, $2.05 trillion of which is in the Federal Reserve Notes (the remaining $50 billion is in the form of U.S. notes and coins)"[1]
...of course you're correct to note that this ~$2 trillion is only a proportion of total money supply (assuming we can agree on which measure to use for 'money supply') but it's still a substantial sum. It's also decentralized.
How does ~$2 trillion of decentralized money compare with the total supply of one's favourite (allegedly decentralized) cryptocurrency?
[0] https://www.investopedia.com/terms/c/currency-in-circulation...
[1] https://en.wikipedia.org/wiki/United_States_dollar
> One feature that cryptocurrencies gain from their decentralised computing design is that they become very robust to potential attacks from national governments.
I was always under the impression that they would be more susceptible to attacks from national governments, since they'll have greater access to the resources needed for a 51% attack.
I was always under the impression that they would be more susceptible to attacks from national governments, since they'll have greater access to the resources needed for a 51% attack.
> more susceptible to attacks from national governments
The attacks don't need to be on the currency, it can be on the privacy.
The ledger is like a giant warrantless paper-trail of who paid whom.
As a side-note, how would I reject a payment that came through bitcoin?
If I were an unscrupulous government who wanted to target an individual, I'd just send them some money from a suspicious account and then bring them in for questioning over that payment.
The attacks don't need to be on the currency, it can be on the privacy.
The ledger is like a giant warrantless paper-trail of who paid whom.
As a side-note, how would I reject a payment that came through bitcoin?
If I were an unscrupulous government who wanted to target an individual, I'd just send them some money from a suspicious account and then bring them in for questioning over that payment.
So to my knowledge you can't choose to not accept a transaction but you can always send the transaction back to the sender.
I think both parties have to sign a transaction.
This is not the case at least on most major networks.
On UTxO (Unspent Transaction Output) based networks the transaction is signed by the sender and generates new UTxO for each recipient. The UTxO aren't signed by the recipient but they can be redeemed by the recipient using their private keys (as the UTxO is either signed by or derived from the recipient's public key/address). If you wanted to "return" the funds you'd just create a transaction containing the received UTxO as an input and deduct whatever fees that are used in the Tx from said UTxO. This "returns" the Tx without you spending any funds or having "kept" any amount of their funds.
On the Account/Balance model I believe the way it works is similar. The sender signs the Tx with their private key and the receiver signs the Tx with their public key. In this case the "return" Tx is just going to involve sending the fund amount back to the sender since there isn't any separation of Tx outputs in the account balance.
On UTxO (Unspent Transaction Output) based networks the transaction is signed by the sender and generates new UTxO for each recipient. The UTxO aren't signed by the recipient but they can be redeemed by the recipient using their private keys (as the UTxO is either signed by or derived from the recipient's public key/address). If you wanted to "return" the funds you'd just create a transaction containing the received UTxO as an input and deduct whatever fees that are used in the Tx from said UTxO. This "returns" the Tx without you spending any funds or having "kept" any amount of their funds.
On the Account/Balance model I believe the way it works is similar. The sender signs the Tx with their private key and the receiver signs the Tx with their public key. In this case the "return" Tx is just going to involve sending the fund amount back to the sender since there isn't any separation of Tx outputs in the account balance.
Maybe my wallet does that automatically, but that has not been my experience.
Yeah, China accounts for around 65% of Bitcoin mining globally. If they ever wanted to, I assume they could coerce many of their biggest miners to cooperate on a 51% attack.
> I’d say that the blockchain developers are at least as likely to become corrupt, coerced, or influenced
Some think that has already happened in the case of at least one major cryptocurrency, but what happens if a system is changed to depart from the core values that the users care about? Those users create and adopt new systems.
Many of the other criticisms are sort-of true, but not in a way that I think is particularly concerning.
It is true that currently people lose money when they lose their keys, and that most implementations of blockchain systems don't have the ability to recover mistaken or fraudulent transactions.
However, these are true because of the interests of the people using and leading development on blockchains at the moment. If we start to prioritise UX, or decide to create systems with some sort of authority to determine fraudulence (maybe government?), fixing these problems is not outside the realms of a smart contract system or a new blockchain system.
The broad technology is very flexible, and could even be adapted to incorporate government actions etc if that's what the developers and users want (so far it seems not to be).
For me, the aspect that I'm interested in is that with blockchain there are no gatekeepers that stop you creating software that does interesting things with value. This is still not true with the fiat ecosystem - even the OpenBanking API, forced on the banks by governments is not a great system for democratising algorithmic access to money, and for me that's the most exciting thing about decentralised money.
Some think that has already happened in the case of at least one major cryptocurrency, but what happens if a system is changed to depart from the core values that the users care about? Those users create and adopt new systems.
Many of the other criticisms are sort-of true, but not in a way that I think is particularly concerning.
It is true that currently people lose money when they lose their keys, and that most implementations of blockchain systems don't have the ability to recover mistaken or fraudulent transactions.
However, these are true because of the interests of the people using and leading development on blockchains at the moment. If we start to prioritise UX, or decide to create systems with some sort of authority to determine fraudulence (maybe government?), fixing these problems is not outside the realms of a smart contract system or a new blockchain system.
The broad technology is very flexible, and could even be adapted to incorporate government actions etc if that's what the developers and users want (so far it seems not to be).
For me, the aspect that I'm interested in is that with blockchain there are no gatekeepers that stop you creating software that does interesting things with value. This is still not true with the fiat ecosystem - even the OpenBanking API, forced on the banks by governments is not a great system for democratising algorithmic access to money, and for me that's the most exciting thing about decentralised money.
I see the same issue pop up when people ask about applications for NFTs in video games or similar ideas. The idea is that you use NFTs to represent some kind of in-game capability--whether it's ownership of the game license, ownership of game content, or ownership of an in-game item.
The main benefit I can think of that this gets you is the ability to trade the NFT itself on the blockchain, but most the other supposed advantages fall apart under any kind of scrutiny, at least from what I can tell.
The key problem here is that the experience or capability that the NFT provides is likely going to be entirely mediated by the game software itself, not by any smart contracts on the blockchain or anything like that. The NFT would most likely be validated by connecting to a server and making an API call... because validating the NFT locally would require downloading the relevant blocks in the blockchain. Since any "promises" about what the NFT are ultimately mediated by the game software, which is entirely controlled by the game developers, there is no real "ownership" in any sense beyond what you could achieve without blockchain... except for the fact that you can trade the NFTs in blockchain transactions.
The main benefit I can think of that this gets you is the ability to trade the NFT itself on the blockchain, but most the other supposed advantages fall apart under any kind of scrutiny, at least from what I can tell.
The key problem here is that the experience or capability that the NFT provides is likely going to be entirely mediated by the game software itself, not by any smart contracts on the blockchain or anything like that. The NFT would most likely be validated by connecting to a server and making an API call... because validating the NFT locally would require downloading the relevant blocks in the blockchain. Since any "promises" about what the NFT are ultimately mediated by the game software, which is entirely controlled by the game developers, there is no real "ownership" in any sense beyond what you could achieve without blockchain... except for the fact that you can trade the NFTs in blockchain transactions.
If I could buy an NFT that gave the bearer a license to stream a particular movie from any host, and had the ability to resell or transfer it, I would find that significantly more valuable than the license Amazon offers with their "Buy" button.
Could be fun to trade.
Lots of interesting economic effects would come out of the ability to resell IP at the same market as the author:
- if a movie came out, and nobody likes it, they may instantly resell it at a market price after viewing. If it's unpopular enough, perhaps the original creator would only be able to get hundreds of licenses on the market before price to consumer is forcibly reduced against the will of the creator. Bad creators have to compete in price against dissatisfied fans.
- Great IP owners will want to carefully manage number of circulating licenses to maximize their overall earnings. A great film will not be resold after viewing, so owner may choose to gradually increase price until sales volume falls off. This invites speculators and enables IP owners to capture the lifetime value of their property more rapidly via effectively selling off future profits. Perhaps let IP owners could 'lock' or declare a frequency limit on license issuance to guarantee a level of scarcity to encourage investment.
- Scalpers can try to corner properties, but the IP owner can always issue more licenses to break the corner. It'd be a risky bet.
- If all of this lives on a blockchain, it'd make a bunch of cool publicly available metrics to economically quantify the value of IP over time.
Could be fun to trade.
Lots of interesting economic effects would come out of the ability to resell IP at the same market as the author:
- if a movie came out, and nobody likes it, they may instantly resell it at a market price after viewing. If it's unpopular enough, perhaps the original creator would only be able to get hundreds of licenses on the market before price to consumer is forcibly reduced against the will of the creator. Bad creators have to compete in price against dissatisfied fans.
- Great IP owners will want to carefully manage number of circulating licenses to maximize their overall earnings. A great film will not be resold after viewing, so owner may choose to gradually increase price until sales volume falls off. This invites speculators and enables IP owners to capture the lifetime value of their property more rapidly via effectively selling off future profits. Perhaps let IP owners could 'lock' or declare a frequency limit on license issuance to guarantee a level of scarcity to encourage investment.
- Scalpers can try to corner properties, but the IP owner can always issue more licenses to break the corner. It'd be a risky bet.
- If all of this lives on a blockchain, it'd make a bunch of cool publicly available metrics to economically quantify the value of IP over time.
Yes, but there’s a catch—the people selling games would rather give you a non-transferable license, if possible.
I think someone at the publisher would do the math, and figure that they get more money by selling to two people, then selling a (possibly higher-priced) transferable license to one person.
If you want transferable licenses, make it happen. It’s the law in the EU, so if you pass similar laws in the US, you’ll get the ability to resell your game license, NFTs or no.
I think someone at the publisher would do the math, and figure that they get more money by selling to two people, then selling a (possibly higher-priced) transferable license to one person.
If you want transferable licenses, make it happen. It’s the law in the EU, so if you pass similar laws in the US, you’ll get the ability to resell your game license, NFTs or no.
Maybe...
But conversely, maybe an indie game studio could monetize their game hugely by getting a lot of hype and carefully sizing license issuance with demand.
If they said "We're only selling 10 copies per day" and the game was very popular, the price could shoot up very high as owning the game early becomes a status symbol, and developer would have a chance to do 'whale' sized monetization from initial customers.
If a million people wanted to play a game, but only 1000 licenses were available (and there was a good chance you could resell the game at the same or greater value) demand could get huge.
Other customers will complain, but there are definitely gamers that would pay 10x to be able to play a game before others - I think price discrimination that monetizes early hype around media is probably inevitable as there is demand currently left on the floor. Probably not great for society, but I bet it's coming.
But conversely, maybe an indie game studio could monetize their game hugely by getting a lot of hype and carefully sizing license issuance with demand.
If they said "We're only selling 10 copies per day" and the game was very popular, the price could shoot up very high as owning the game early becomes a status symbol, and developer would have a chance to do 'whale' sized monetization from initial customers.
If a million people wanted to play a game, but only 1000 licenses were available (and there was a good chance you could resell the game at the same or greater value) demand could get huge.
Other customers will complain, but there are definitely gamers that would pay 10x to be able to play a game before others - I think price discrimination that monetizes early hype around media is probably inevitable as there is demand currently left on the floor. Probably not great for society, but I bet it's coming.
One thing I'd like to see more stress on is that these systems, whatever degree of decentraliation they have, they are highly highly coupled systems, requiring nearly absolute cohesion. These protocols are built to establish consensus, and that almost always requires change to be accepted by a sizable majority.
Touched upon in the article:
> But in blockchains, we have something almost opposite to that. Since blockchain systems are logically indivisible, and also in many ways more formal and algorithmic than traditional financial systems, blockchains practically defy any authority, even the authority of people over their own accounts.
My bias is more towards how adaptable & flexible systems are. There's little loose coupling, little flexibility, it feels like. Sometimes flexibility is engineered in, with smart contracts, but those virtual machines are enormously unadaptable, unflexible systems, by design, and trying to extend or grow or adapt them feels highly unlikely. Governance models for these systems seem rare, and- speaking as an outsider, a not regular user- I rarely if ever come across descriptions of how these blockchains are changing or adapting. It takes many years it feels like to get basic life-preserving measures happen such as the bitcoin block size limits. Decentralized somewhat, but extremely high authority, extremely unadaptable, unchanging. They possess few of what we think of as the general resilliency, adaptability measures that decentralization & distributiziation beget.
Touched upon in the article:
> But in blockchains, we have something almost opposite to that. Since blockchain systems are logically indivisible, and also in many ways more formal and algorithmic than traditional financial systems, blockchains practically defy any authority, even the authority of people over their own accounts.
My bias is more towards how adaptable & flexible systems are. There's little loose coupling, little flexibility, it feels like. Sometimes flexibility is engineered in, with smart contracts, but those virtual machines are enormously unadaptable, unflexible systems, by design, and trying to extend or grow or adapt them feels highly unlikely. Governance models for these systems seem rare, and- speaking as an outsider, a not regular user- I rarely if ever come across descriptions of how these blockchains are changing or adapting. It takes many years it feels like to get basic life-preserving measures happen such as the bitcoin block size limits. Decentralized somewhat, but extremely high authority, extremely unadaptable, unchanging. They possess few of what we think of as the general resilliency, adaptability measures that decentralization & distributiziation beget.
I can attest to the headline of this article. I am one of the developers who helped launch Bitcoin Cash, and worked on the Bitcoin ABC client. I was in charge of building, signing, and releasing the software for a little over a year. And, I can attest to the fact that someone needs to build the code and release it. The developers can change that code at will.
However, there are a number of things right, and a number of things wrong in this article. I will use my experience as an example. But note, while I use Bitcoin Cash as an example for my response, I do not ideologically support it for a number of reasons outlined in this article. Although, I do still hold Bitcoin Cash for the time being.
> Who governs the blockchain system and issuance? > Usually this is an open-source community of developers. Note that I say that developers control the cryptocurrency issuance because despite the issuance is (usually) determined algorithmically, developers have the power to change these algorithms.
This is completely true. However, they still only release code/binaries. The users must run these binaries, and there is no "Nakamoto consensus" for doing so. This results in huge internet political battles where people launch propaganda campaigns to vying over whose code is ran. Take Bitcoin Cash as a primary example:
The people who moved to Bitcoin Cash from Bitcoin Core are ideologically opposed to the Bitcoin Core Team's roadmap for Bitcoin. There was a huge online propaganda war between r/Bitcoin and r/BTC with large amounts of disinformation being produced on both sides, as well as banning and censorship on these forums. Ultimately the "big blockers" lost and moved over to creating their own blockchain in 2017.
This kind of political warfare happened again when Bitcoin SV and nChain's development team was ousted off onto their own blockchain.
And then in 2019, when Bitcoin ABC -- the development team who launched Bitcoin Cash in the first place -- decided to change the issuance rules to send themself some funds out of the block reward, they lost the political battle and were kicked off the network generating another fork called Bitcoin ABC.
Ultimately the users and exchange determine what code represents the ticker and naming of the coin they trade. This is the stalwart to developer control.
> Also, I suspect that most cryptocurrency developers have big portions of their net worth stored in the very currency that they develop. The developers are biased when they make decisions regarding the project because the relative value of the cryptocurrency can change a lot as the result.
This is a good thing. It means the developers must be very careful with the thing they work on, and it aligns their incentives. You can see other Bitcoin Cash development groups (such as Bitcoin Unlimited) who do not hold their treasury in Bitcoin Cash constantly propose questionable ideas and attempt to push for them to be included in Bitcoin Cash.
> How the agents verify that the their counteragents transferred them some money?
This is a valid concern. In fact, Bitcoin Core is largely run by engineers who work for Blockstream. They took VC investment from PayPal and other companies who demand a return-on-investment. The product they pitched is called Liquid. Liquid itself depends on Bitcoin not processing very many transactions on-chain.
Common wisdom is that it simply doesn't work to do so. However, A quick look at the contingent of Bitcoiners who launched Bitcoin Cash, and their reasons for doing so will tell you this is false. Bitcoin Cash can easily process hundreds of transactions per second -- and can be scaled up to do quite a bit more -- using almost identical code to Bitcoin Core.
We fixed a number of quadratic scalability problems with how BTC operates at the protocol level that enabled this. Why do people still pretend that on-chain scaling doesn't work?
> When people say that blockchains are “decentralised”, they often conflate the computing operations structure and the logical structure of the system. Blockchains rely on distributed computation, but they also represent a singular logical stream of transaction history.
This is 100% correct, and I have written on it multiple times. There is no such thing as decentralized development. Decentralization is a network topology.
> In effect, blockchains are totalitarian algorithmic systems. They anticipate the rule of soulless machines over people described in many dystopias and that can very realistically come true if we as a society keep being as excited and mesmerised by the developments such as cryptocurrencies.
100%. The monetary policies of most cryptocurrencies are antithetical to functioning societies. The wild volatility in cryptocurrencies, in large part, is due to the issuance. Most cryptocurrency enthusiasts are ignorant of how money operates, or are attached to a particular ideology -- completely ignoring modern observations about how money (when functional) as always operated. The volatility makes them useless for denominating business contracts.
Ultimately, cryptocurrency is in its infancy. I think that eventually it will "work." But right now, it does not work for what people ultimately need it to be doing. As far as I am concerned, people are currently trading pogs or magic cards.
However, there are a number of things right, and a number of things wrong in this article. I will use my experience as an example. But note, while I use Bitcoin Cash as an example for my response, I do not ideologically support it for a number of reasons outlined in this article. Although, I do still hold Bitcoin Cash for the time being.
> Who governs the blockchain system and issuance? > Usually this is an open-source community of developers. Note that I say that developers control the cryptocurrency issuance because despite the issuance is (usually) determined algorithmically, developers have the power to change these algorithms.
This is completely true. However, they still only release code/binaries. The users must run these binaries, and there is no "Nakamoto consensus" for doing so. This results in huge internet political battles where people launch propaganda campaigns to vying over whose code is ran. Take Bitcoin Cash as a primary example:
The people who moved to Bitcoin Cash from Bitcoin Core are ideologically opposed to the Bitcoin Core Team's roadmap for Bitcoin. There was a huge online propaganda war between r/Bitcoin and r/BTC with large amounts of disinformation being produced on both sides, as well as banning and censorship on these forums. Ultimately the "big blockers" lost and moved over to creating their own blockchain in 2017.
This kind of political warfare happened again when Bitcoin SV and nChain's development team was ousted off onto their own blockchain.
And then in 2019, when Bitcoin ABC -- the development team who launched Bitcoin Cash in the first place -- decided to change the issuance rules to send themself some funds out of the block reward, they lost the political battle and were kicked off the network generating another fork called Bitcoin ABC.
Ultimately the users and exchange determine what code represents the ticker and naming of the coin they trade. This is the stalwart to developer control.
> Also, I suspect that most cryptocurrency developers have big portions of their net worth stored in the very currency that they develop. The developers are biased when they make decisions regarding the project because the relative value of the cryptocurrency can change a lot as the result.
This is a good thing. It means the developers must be very careful with the thing they work on, and it aligns their incentives. You can see other Bitcoin Cash development groups (such as Bitcoin Unlimited) who do not hold their treasury in Bitcoin Cash constantly propose questionable ideas and attempt to push for them to be included in Bitcoin Cash.
> How the agents verify that the their counteragents transferred them some money?
This is a valid concern. In fact, Bitcoin Core is largely run by engineers who work for Blockstream. They took VC investment from PayPal and other companies who demand a return-on-investment. The product they pitched is called Liquid. Liquid itself depends on Bitcoin not processing very many transactions on-chain.
Common wisdom is that it simply doesn't work to do so. However, A quick look at the contingent of Bitcoiners who launched Bitcoin Cash, and their reasons for doing so will tell you this is false. Bitcoin Cash can easily process hundreds of transactions per second -- and can be scaled up to do quite a bit more -- using almost identical code to Bitcoin Core.
We fixed a number of quadratic scalability problems with how BTC operates at the protocol level that enabled this. Why do people still pretend that on-chain scaling doesn't work?
> When people say that blockchains are “decentralised”, they often conflate the computing operations structure and the logical structure of the system. Blockchains rely on distributed computation, but they also represent a singular logical stream of transaction history.
This is 100% correct, and I have written on it multiple times. There is no such thing as decentralized development. Decentralization is a network topology.
> In effect, blockchains are totalitarian algorithmic systems. They anticipate the rule of soulless machines over people described in many dystopias and that can very realistically come true if we as a society keep being as excited and mesmerised by the developments such as cryptocurrencies.
100%. The monetary policies of most cryptocurrencies are antithetical to functioning societies. The wild volatility in cryptocurrencies, in large part, is due to the issuance. Most cryptocurrency enthusiasts are ignorant of how money operates, or are attached to a particular ideology -- completely ignoring modern observations about how money (when functional) as always operated. The volatility makes them useless for denominating business contracts.
Ultimately, cryptocurrency is in its infancy. I think that eventually it will "work." But right now, it does not work for what people ultimately need it to be doing. As far as I am concerned, people are currently trading pogs or magic cards.
> There was a huge online propaganda war between r/Bitcoin and r/BTC with large amounts of disinformation being produced on both sides, as well as banning and censorship on these forums. Ultimately the "big blockers" lost and moved over to creating their own blockchain in 2017.
This is what I want, my wealth to be tied up in a currency that's at the mercy of a Bitcoin subreddit flame war.
I'm sorry. I appreciate that a lot of people have become extremely wealthy from Bitcoin and other crypto-currencies. I also that a significant, maybe unprecedented, amount of technical excellence and labor has gone into developing this ecosystem. I appreciate that block chain and all of the other derivative technologies have a significant amount of realized and unrealized potential, and I'm sure that my comment will be downvoted to nothing.
I just can't, for the life of me, understand why I would want the intrinsic value of my daily labor locked into something like this. This reads like the type of drama that I - don't - want in any way, shape, or form associated with a legitimate currency or other store of value.
This is what I want, my wealth to be tied up in a currency that's at the mercy of a Bitcoin subreddit flame war.
I'm sorry. I appreciate that a lot of people have become extremely wealthy from Bitcoin and other crypto-currencies. I also that a significant, maybe unprecedented, amount of technical excellence and labor has gone into developing this ecosystem. I appreciate that block chain and all of the other derivative technologies have a significant amount of realized and unrealized potential, and I'm sure that my comment will be downvoted to nothing.
I just can't, for the life of me, understand why I would want the intrinsic value of my daily labor locked into something like this. This reads like the type of drama that I - don't - want in any way, shape, or form associated with a legitimate currency or other store of value.
I think US dollar hegemony has contributed to the deaths of hundreds of millions of people. Its pursuit has led to war, corruption, human rights abuses, increased fossil fuel usage and lots of other bad things.
Flame wars on forums are certainly immature and embarrassing, but I think what you refer to as "legitimate" currencies all have much worse associations.
Flame wars on forums are certainly immature and embarrassing, but I think what you refer to as "legitimate" currencies all have much worse associations.
I would agree. The flame wars are actually a nice alternative to physical wars IMO. I do have that good thing to say about crypto"currency."
I would agree with you, the cryptocurrency ecosystem is full of nonsense and staying away is what is probably best for most people.
Don't say "disinformation on both sides though", the heavy handed censoring of /r/bitcoin (and other forums) was open and intentional.
Anyone can go there and ask reasonable questions about why bitcoin has the transaction throughput of a 56k modem when the fee of a single transaction can pay for a hard drive that stores the entire chain. You will either get some reply that makes zero technical sense or you will get your comment deleted, shadow banned or banned. Sharp high quality people who wanted to make bitcoin better were in charge at first and it became a complete cesspool while being taken over slowly with a lot of lying in between.
Don't say "disinformation on both sides though", the heavy handed censoring of /r/bitcoin (and other forums) was open and intentional.
Anyone can go there and ask reasonable questions about why bitcoin has the transaction throughput of a 56k modem when the fee of a single transaction can pay for a hard drive that stores the entire chain. You will either get some reply that makes zero technical sense or you will get your comment deleted, shadow banned or banned. Sharp high quality people who wanted to make bitcoin better were in charge at first and it became a complete cesspool while being taken over slowly with a lot of lying in between.
r/btc is "uncensored" only insomuch as there are armies of trolls/sockpuppets lurking there manipulating votes and posting tons of noise.
It's easy to "not censor" when you run around with a loudspeaker making sure content you don't want seen never makes it past new.
There is also tons of false information posted there and upvoted; either through ignorance or mal-intent. Either way, it's disinformation.
An "unmoderated" forum is always controlled by the people with the most free time to post nonsense.
It's easy to "not censor" when you run around with a loudspeaker making sure content you don't want seen never makes it past new.
There is also tons of false information posted there and upvoted; either through ignorance or mal-intent. Either way, it's disinformation.
An "unmoderated" forum is always controlled by the people with the most free time to post nonsense.
>This is a valid concern. In fact, Bitcoin Core is largely run by engineers who work for Blockstream. They took VC investment from PayPal and other companies who demand a return-on-investment. The product they pitched is called Liquid. Liquid itself depends on Bitcoin not processing very many transactions on-chain.
This is the key point that small-blockers kept denying and obfuscating.
> The wild volatility in cryptocurrencies, in large part, is due to the issuance. [...] The volatility makes them useless for denominating business contracts.
Gold is "issued" at a slow and predictable rate just like Bitcoin and was very stable when it was used as currency. The volatility in Bitcoin is because most transactions are speculation instead of real commerce, just like gold is today.
This is the key point that small-blockers kept denying and obfuscating.
> The wild volatility in cryptocurrencies, in large part, is due to the issuance. [...] The volatility makes them useless for denominating business contracts.
Gold is "issued" at a slow and predictable rate just like Bitcoin and was very stable when it was used as currency. The volatility in Bitcoin is because most transactions are speculation instead of real commerce, just like gold is today.
> Gold is "issued" at a slow and predictable rate just like Bitcoin and was very stable when it was used as currency. The volatility in Bitcoin is because most transactions are speculation instead of real commerce, just like gold is today.
Oh really? Why does it go parabolic? Bitcoin issuance is nothing like gold. Gold supply responds to demand. The more people mine the more gold goes into circulation. With Bitcoin the more people mine, the same amount of bitcoin is issued.
Oh really? Why does it go parabolic? Bitcoin issuance is nothing like gold. Gold supply responds to demand. The more people mine the more gold goes into circulation. With Bitcoin the more people mine, the same amount of bitcoin is issued.
> But right now, it does not work for what people ultimately need it to be doing. As far as I am concerned, people are currently trading pogs or magic cards.
You're one of the developers who helped launch Bitcoin Cash. I'd be curious to hear you talk about why you find (or found?) the project worthwhile, if crytocurrency currently "does not work for what people ultimately need". Do you see yourself as laying the groundwork for a better future implementation?
You're one of the developers who helped launch Bitcoin Cash. I'd be curious to hear you talk about why you find (or found?) the project worthwhile, if crytocurrency currently "does not work for what people ultimately need". Do you see yourself as laying the groundwork for a better future implementation?
Well, I had not been involved in cryptocurrency development at all until Bitcoin Cash. I had a pre-existing relationship with Amaury Séchet who designed all the Bitcoin Cash protocol changes; and was asked for my help. There was a lot I didn't understand at the time.
Many details about how cryptocurrencies function -- in practice; as opposed to the dogma -- that aren't obvious until you're working on the node software itself and you start having to interact with industrial miners, exchanges, and the user base.
But yes, I think the technology is worthwhile and I still work on it heavily in my free time -- just not Bitcoin Cash. I have a couple projects I am slowly working on, but it's not my intent of my post to advertise them -- if you want to know ask and I'll tell you about them.
There are technical problems with cryptocurrency, but most of those are fixable. The biggest problem with cryptocurrency is people. My current projects are an attempt to address both sets of issues.
The following might be off-putting, but some of the unintuitive things I learned:
1. People en-masse almost always follow economic incentives. 2. People rationalize their behavior and will tell you reasonably sounding explanations; but they are really following incentives and are quite predictable. Not on an individual level, but on a group level. 3. People often are not able to understand counterfactual thinking regarding economics. They will explain how something makes economic sense -- but it only makes in the absence of considering alternative futures from the one under consideration. 4. Most people are not able to understand the economic incentives of other individuals. They lack "empathy" in this regard. 5. Money attracts sociopaths like moths to a flame. I have never seen so much toxicity in one "place" until I started working on Bitcoin Cash. I do not believe it is unique to that "community." 6. This is probably the most controversial thing: if you look at the core groups shilling any particular cryptocurrency, they are attracted to that cryptocurrency because the economic incentives align with their value system. Ultimately the value of cryptocurrency comes from how people value it, and that comes from a value system (or a belief system). They are best understood as pseudo-religious cults.
With 6 said, the relationship between the value system and the cryptocurrency is bi-directional. When you hitch your financial future to the success of a coin it has a way of perverting the beliefs of the individuals invested in them.
Money is now being issued by pseudo-religions for the benefit of the members. Imagine what would happen if Scientology had its own cryptocurrency? It would obtain "superpowers" as now there's an economic incentive to join. You get "paid" to join, and you have a large incentive to bring in new members due to the impact of Metcalfe's law (network value increases quadratically with number of users). Right now, these "communities" are coalescing organically, but eventually things like Scientology will "catch up". You can already see it with Bitcoin SV and it's personality cult around Craig Wright (who I met many times) backed by Calvin Ayre.
I was raised in a very problematic religious cult and managed to escape -- and I find this very troubling. I also think it is an inevitability.
Many details about how cryptocurrencies function -- in practice; as opposed to the dogma -- that aren't obvious until you're working on the node software itself and you start having to interact with industrial miners, exchanges, and the user base.
But yes, I think the technology is worthwhile and I still work on it heavily in my free time -- just not Bitcoin Cash. I have a couple projects I am slowly working on, but it's not my intent of my post to advertise them -- if you want to know ask and I'll tell you about them.
There are technical problems with cryptocurrency, but most of those are fixable. The biggest problem with cryptocurrency is people. My current projects are an attempt to address both sets of issues.
The following might be off-putting, but some of the unintuitive things I learned:
1. People en-masse almost always follow economic incentives. 2. People rationalize their behavior and will tell you reasonably sounding explanations; but they are really following incentives and are quite predictable. Not on an individual level, but on a group level. 3. People often are not able to understand counterfactual thinking regarding economics. They will explain how something makes economic sense -- but it only makes in the absence of considering alternative futures from the one under consideration. 4. Most people are not able to understand the economic incentives of other individuals. They lack "empathy" in this regard. 5. Money attracts sociopaths like moths to a flame. I have never seen so much toxicity in one "place" until I started working on Bitcoin Cash. I do not believe it is unique to that "community." 6. This is probably the most controversial thing: if you look at the core groups shilling any particular cryptocurrency, they are attracted to that cryptocurrency because the economic incentives align with their value system. Ultimately the value of cryptocurrency comes from how people value it, and that comes from a value system (or a belief system). They are best understood as pseudo-religious cults.
With 6 said, the relationship between the value system and the cryptocurrency is bi-directional. When you hitch your financial future to the success of a coin it has a way of perverting the beliefs of the individuals invested in them.
Money is now being issued by pseudo-religions for the benefit of the members. Imagine what would happen if Scientology had its own cryptocurrency? It would obtain "superpowers" as now there's an economic incentive to join. You get "paid" to join, and you have a large incentive to bring in new members due to the impact of Metcalfe's law (network value increases quadratically with number of users). Right now, these "communities" are coalescing organically, but eventually things like Scientology will "catch up". You can already see it with Bitcoin SV and it's personality cult around Craig Wright (who I met many times) backed by Calvin Ayre.
I was raised in a very problematic religious cult and managed to escape -- and I find this very troubling. I also think it is an inevitability.
Thanks a lot for putting these "unintuitive things". I'd really love to see a longer-form writing from you elaborating on them.
Sure, I can do that. If you want to talk about what kind of long-form information you'd like to see you let's talk on telegram? https://t.me/micropresident
Great to hear your perspective on things, thank you!
It isn't a mystery. Exactly what everyone said would happen (bitcoin blocks fill up and transactions are expensive while throughput is dismal) came to pass.
Bitcoin's average transaction cost has been anywhere from $18 to $60 over the last few months. Even dodge coin is approaching $2 for each transaction. Bitcoin Cash transactions cost $0.02 (2 cents) and the transaction throughput can grow 30x without the blocks being full.
In the venn diagram of (decentralized) cryptocurrencies that are widely accepted and have reasonable transaction costs, litecoin, monero and bitcoin cash are what end up being viable for real use right now.
Bitcoin's average transaction cost has been anywhere from $18 to $60 over the last few months. Even dodge coin is approaching $2 for each transaction. Bitcoin Cash transactions cost $0.02 (2 cents) and the transaction throughput can grow 30x without the blocks being full.
In the venn diagram of (decentralized) cryptocurrencies that are widely accepted and have reasonable transaction costs, litecoin, monero and bitcoin cash are what end up being viable for real use right now.
And yet the market values Bitcoin Cash at less than 1% of Bitcoin's value. It's almost as if the block size "debate" was a nothingburger -- the silent majority against a tiny screeching minority.
Bitcoin is great for people who want to speculate, have no idea how cryptocurrency works and have no interest in using it for actual transactions. They can buy a number on an exchange and pray the exchange gives it back to them. Go nuts.
For normal transactions bitcoin fails miserably. No one sane would make every day transactions with a $60 transaction fee.
For normal transactions bitcoin fails miserably. No one sane would make every day transactions with a $60 transaction fee.
Chains no one uses are cheap to use. Story at 11.
Bitcoin Cash has had more transactions than bitcoin for the last couple months. Ethereum has three to four times more while still being cheaper (though not much cheaper). It is cheap because the blocks are 32 times bigger so that throughput doesn't have to be only a few kilobytes per second.
Here is reality:
https://bitinfocharts.com/comparison/transactions-btc-eth-do...
Here is reality:
https://bitinfocharts.com/comparison/transactions-btc-eth-do...
The chart you share is buggy. If you click on the block size, you'll see it measures Bitcoin blocks as being around 800kb. This indicates that it's ignoring the segwit witness data.
In reality, BCH blocks are a about 1/3 the size as Bitcoin blocks for the last 7 days: https://fork.lol/blocks/size.
If you zoom out to the last year, you can see that BCH had a rise and fall in number of transactions per block, whereas Bitcoin was consistent: https://bitinfocharts.com/comparison/transactions-btc-bch.ht...
I don't see how Ethereum relates to the dearth of real-world traction BCH has versus Bitcoin. Moreover, Ethereum has a different block emission rate, a different pricing model for transactions, and a different wire format for representing them, so size and quantity measurement comparisons are apples to oranges. Suffice it to say that both Bitcoin and Ethereum's transaction capacities are maxed out (signaling high demand), whereas this is not the case for BCH.
In reality, BCH blocks are a about 1/3 the size as Bitcoin blocks for the last 7 days: https://fork.lol/blocks/size.
If you zoom out to the last year, you can see that BCH had a rise and fall in number of transactions per block, whereas Bitcoin was consistent: https://bitinfocharts.com/comparison/transactions-btc-bch.ht...
I don't see how Ethereum relates to the dearth of real-world traction BCH has versus Bitcoin. Moreover, Ethereum has a different block emission rate, a different pricing model for transactions, and a different wire format for representing them, so size and quantity measurement comparisons are apples to oranges. Suffice it to say that both Bitcoin and Ethereum's transaction capacities are maxed out (signaling high demand), whereas this is not the case for BCH.
I linked transaction count, not block size.
You said that Bitcoin Cash was cheap because "no one uses it" which is not true. It is 1/1000th the cost per transaction while still having more transactions than btc.
> I don't see how Ethereum relates to the dearth of real-world traction BCH has versus Bitcoin.
You said transactions on "chains no one uses are cheap". Ethereum has multiple times the transactions of bitcoin and still has slightly cheaper transactions.
> so size and quantity measurement comparisons are apples to oranges.
No they aren't. More transactions, not more expensive.
> Suffice it to say that both Bitcoin and Ethereum's transaction capacities are maxed out (signaling high demand), whereas this is not the case for BCH.
Bitcoin Cash is not maxed out because they expanded their maximum block size to 32MB instead of leaving it crippled like bitcoin. That's like saying there is no demand for ford fusions because they don't have a waiting list like tesla. It makes zero sense at all. It is baffling that you would say something like that.
The things you are saying are not true. It is clear that you aren't trying to find out what is true, you have something you want to convince other people or yourself of. You don't get on a subway car and see an empty seat and say there is no demand because you saw a full rickshaw. This isn't just a stretch, it is a ridiculous nonsense argument and makes me believe you are emotionally invested enough to say thing contradicted by basic logic.
You said that Bitcoin Cash was cheap because "no one uses it" which is not true. It is 1/1000th the cost per transaction while still having more transactions than btc.
> I don't see how Ethereum relates to the dearth of real-world traction BCH has versus Bitcoin.
You said transactions on "chains no one uses are cheap". Ethereum has multiple times the transactions of bitcoin and still has slightly cheaper transactions.
> so size and quantity measurement comparisons are apples to oranges.
No they aren't. More transactions, not more expensive.
> Suffice it to say that both Bitcoin and Ethereum's transaction capacities are maxed out (signaling high demand), whereas this is not the case for BCH.
Bitcoin Cash is not maxed out because they expanded their maximum block size to 32MB instead of leaving it crippled like bitcoin. That's like saying there is no demand for ford fusions because they don't have a waiting list like tesla. It makes zero sense at all. It is baffling that you would say something like that.
The things you are saying are not true. It is clear that you aren't trying to find out what is true, you have something you want to convince other people or yourself of. You don't get on a subway car and see an empty seat and say there is no demand because you saw a full rickshaw. This isn't just a stretch, it is a ridiculous nonsense argument and makes me believe you are emotionally invested enough to say thing contradicted by basic logic.
Look, if you don't understand the tech, just say so. I'm happy to provide any clarifications and answer any questions you might have.
EDIT: For example, do you still hold the misguided belief that non-mining nodes serve no purpose on a blockchain's peer network? We spoke of it a few months back.
EDIT: For example, do you still hold the misguided belief that non-mining nodes serve no purpose on a blockchain's peer network? We spoke of it a few months back.
Lol, to recap, you said things which are not only not true, but trivial to show have no relation to reality.
Then, when shown evidence you try to gish gallop on to unrelated topics and say "you don't understand".
Why can't you back up what you say? Bitcoin Cash has 32x the max block size. This isn't difficult to grasp. Bitcoin - $60 transactions while Bitcoin Cash has $0.02 transactions.
Then, when shown evidence you try to gish gallop on to unrelated topics and say "you don't understand".
Why can't you back up what you say? Bitcoin Cash has 32x the max block size. This isn't difficult to grasp. Bitcoin - $60 transactions while Bitcoin Cash has $0.02 transactions.
As an outsider to those discussions, is there a bullet point list of how money operates (when functional), and and what people ultimately need it to do?
I happen to know a bit about the mechanisms of totalitarianism, and the comments about politics sound like there is a de facto bluecoin/redcoin thing going on. Is the split actually ideological, or is it just a power struggle as an artifact of a vaccuum?
I happen to know a bit about the mechanisms of totalitarianism, and the comments about politics sound like there is a de facto bluecoin/redcoin thing going on. Is the split actually ideological, or is it just a power struggle as an artifact of a vaccuum?
> Is the split actually ideological
Of the 3 network splits I was involved in, they were always along ideological lines. However, if you go read through the forum posts at the time, you will see lots of plausible sounding falsehoods used to justify siding with one camp or the other.
I spent a lot of time writing essays debunking these talking points. However, hundreds of posts repeating a short semi-plausible phrase is much more effective in persuading people than the essays it takes to rebut them.
Of the 3 network splits I was involved in, they were always along ideological lines. However, if you go read through the forum posts at the time, you will see lots of plausible sounding falsehoods used to justify siding with one camp or the other.
I spent a lot of time writing essays debunking these talking points. However, hundreds of posts repeating a short semi-plausible phrase is much more effective in persuading people than the essays it takes to rebut them.
there are degrees of decentralization, but mostly people are just allergic to the word
trust minimized is valid as well
doesn't really matter. in less theoretically secure networks, validators don't reverse transactions because doing so deters commerce to their network. it works well enough, the market can bear it. a state that disagrees with it would still have trouble coercing all of the validators, and the state can buy up all the tokens with public money to try to become the majority of the validators... be my guest, I would call that success because its a moon cannon. All the holders get rich because a silly government agency pumped the coin to try and take over a network.
trust minimized is valid as well
doesn't really matter. in less theoretically secure networks, validators don't reverse transactions because doing so deters commerce to their network. it works well enough, the market can bear it. a state that disagrees with it would still have trouble coercing all of the validators, and the state can buy up all the tokens with public money to try to become the majority of the validators... be my guest, I would call that success because its a moon cannon. All the holders get rich because a silly government agency pumped the coin to try and take over a network.
When 65% of the currency is mined in China, that's not exactly decentralized. Folks long BTC are exposed to the risk that the CCP will weaponize their mining share into a 51% attack.
[1] https://cbeci.org/mining_map
[1] https://cbeci.org/mining_map
theoretically less secure networks and the nomenclature around "validators" refers to Proof of Stake networks and Delegated Proof of Stake networks, of which bitcoin is neither.
so this discussion isn't about Bitcoin
but I can understand how that might not have been clear. I'm not saying these points don't also apply to bitcoin in some degree, this thread just wasn't about it.
so this discussion isn't about Bitcoin
but I can understand how that might not have been clear. I'm not saying these points don't also apply to bitcoin in some degree, this thread just wasn't about it.
Fair point.
Just because a large amount of mining is done in one physical location doesn't mean it's not decentralized.
All mining is done on earth. Does that mean it's centralized?
I think the implication is that the Chinese government has influence over the currency. If that's true (and I don't think it is, or that they even have any interest, given the rise of crypto capitalism in HK and mainland China) then they could at most attack the network once, completely destroying its value. Sounds like a lot of wasted energy when people can 1) fork BTC to circumvent this 51% attack, and/or 2) opt for another currency to replace BTC as "digital gold".
All mining is done on earth. Does that mean it's centralized?
I think the implication is that the Chinese government has influence over the currency. If that's true (and I don't think it is, or that they even have any interest, given the rise of crypto capitalism in HK and mainland China) then they could at most attack the network once, completely destroying its value. Sounds like a lot of wasted energy when people can 1) fork BTC to circumvent this 51% attack, and/or 2) opt for another currency to replace BTC as "digital gold".
Why not the US? Or Russia? It would be easy for a large state to dwarf the hash rate of the network if they wanted to sabotage it.
I doubt this would happen, but I could very well see the CCP cracking down on coin mining for host of different reasons.
> ... There exists, therefore, an obvious discrepancy between the libertarian vision of Bitcoin as a decentralised infrastructure that cannot be regulated by any third party institution, and the actual governance structure that dictates the technological development of Bitcoin — which, in spite of its open-source nature, is highly centralised and undemocratic. ...
I'm a little surprised about the lack of discussion around code forks and hard forks.
Thousands upon thousands of networks based on either the actual Satoshi code or the ideas it embodies have been launched over the last ten years. Bitcoin itself sustained one major hard fork that persists to this day (Bitcoin Cash).
Each one of those projects represents someone making a choice that the status quo wasn't good enough. Most will die sooner than Bitcoin, but some won't.
The result is a kind of decentralization that's very hard to control: hundreds of competing projects, each one trying to be the next X.
I'm a little surprised about the lack of discussion around code forks and hard forks.
Thousands upon thousands of networks based on either the actual Satoshi code or the ideas it embodies have been launched over the last ten years. Bitcoin itself sustained one major hard fork that persists to this day (Bitcoin Cash).
Each one of those projects represents someone making a choice that the status quo wasn't good enough. Most will die sooner than Bitcoin, but some won't.
The result is a kind of decentralization that's very hard to control: hundreds of competing projects, each one trying to be the next X.
That might be true to some extent, but each of those new projects consist of one or more people at the top controlling the functionality for the rest of the users.
Bitcoin isn't really decentralised, in all kinds of ways. Look at the ownership of bitcoin, a handful of people have the majority. It's totally an elite phenomenon. But even within the elite it's a tiny amount. IMO we need something far more well distributed.
So like every asset in existence?
How about hard fork?
BLOCKCHAIN IS NOT BITCOIN.
Cardano is decentralized.
https://pooltool.io/
With 2,459 active stake pools operating all around the world to process Cardano transactions.
You can see the distribution of Cardano in Biggest Groups (Stake) on top left in the link below.
https://adapools.org/groups
It would take many many groups getting together to take over 50% of staked Ada in Cardano.
Bitcoin on the other hand is not that decentralized
Bitcoin Mining Pools 2020
https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2F...
You can see that if three major mining pools joined together, they could take control of the entire Bitcoin network.
Decentralized? - Charles Hoskinson https://youtu.be/0QtQGzqAIiU
China Could Hold 60% of the Residual Bitcoin- Tough Competition for Digital Yuan https://coinpedia.org/news/china-could-hold-60-of-the-residu...
(March 6, 2021) China Declares War on Bitcoin - China Uncensored
(April 19, 2021) After a bitcoin crackdown, China now calls it an ‘investment alternative’ in a significant shift in tone - CNBC https://www.cnbc.com/2021/04/19/china-calls-bitcoin-an-inves...
I know this is a site where everyone likes to think they are way more informed than the world population but in terms of cryptocurrency, I find the posts here woefully poor in quality and information.
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And I haven't even started on Cardano's Project Catalyst - their democratic method of funding new cryptocurrency projects/developers and adding projects on the Cardano Network. All decided and controlled by ADA holders and not necessarily IOHK/Cardano Foundation/Emurgo, the organizations who made Cardano.
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If you have a problem with my statement, then actually challenge what I have to say instead of hiding behind a downvote. Cut the bullshit propaganda and have an actual conversation about it.
Cardano is decentralized.
https://pooltool.io/
With 2,459 active stake pools operating all around the world to process Cardano transactions.
You can see the distribution of Cardano in Biggest Groups (Stake) on top left in the link below.
https://adapools.org/groups
It would take many many groups getting together to take over 50% of staked Ada in Cardano.
Bitcoin on the other hand is not that decentralized
Bitcoin Mining Pools 2020
https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2F...
You can see that if three major mining pools joined together, they could take control of the entire Bitcoin network.
Decentralized? - Charles Hoskinson https://youtu.be/0QtQGzqAIiU
China Could Hold 60% of the Residual Bitcoin- Tough Competition for Digital Yuan https://coinpedia.org/news/china-could-hold-60-of-the-residu...
(March 6, 2021) China Declares War on Bitcoin - China Uncensored
(April 19, 2021) After a bitcoin crackdown, China now calls it an ‘investment alternative’ in a significant shift in tone - CNBC https://www.cnbc.com/2021/04/19/china-calls-bitcoin-an-inves...
I know this is a site where everyone likes to think they are way more informed than the world population but in terms of cryptocurrency, I find the posts here woefully poor in quality and information.
------
And I haven't even started on Cardano's Project Catalyst - their democratic method of funding new cryptocurrency projects/developers and adding projects on the Cardano Network. All decided and controlled by ADA holders and not necessarily IOHK/Cardano Foundation/Emurgo, the organizations who made Cardano.
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If you have a problem with my statement, then actually challenge what I have to say instead of hiding behind a downvote. Cut the bullshit propaganda and have an actual conversation about it.
> A second component is decentralized cryptographic truth. With cryptocurrency, it is now possible for an Israeli and a Palestinian, a Chinese person, a Japanese person, a Democrat and a Republican to all agree on the state of the Bitcoin blockchain.
Does this guy know that there are already multiple forks with competing communities in Bitcoin?
Does this guy know that there are already multiple forks with competing communities in Bitcoin?
>Even if the US government would try to “cancel” some country by severing it from all major exchange infra such as SWIFT, Visa, Mastercard, etc., the central bank of that country can decide to convert all US dollar accounts in the local banks into the local currency.
But even 1,000,000 Zimbabwe dollars is not the same as 1 US dollar. International trade requires USD. The US can basically wipe out an entire country's saved wealth by flipping a switch in a computer. That can't happen with the decentralized nature of Bitcoin. This entire article is undefendable sophistry.
>However, from the global system perspective, creating such unstoppable systems is dangerous because at the root of the complex system evolution and stability is that the agents (subsystems) in the environment can die and give way for newer, better things.
Bitcoin was intended as an alternative to USD. USD has proven to be a tool of wall street to impose US imperialism on the third world, and on its own citizens. Obviously cryptocurrencies have proven way more opportunities for "giving way for newer better things" than the US banking system has.
EDIT: Here is the US using the dollar to mess with countries it had a beef with.
https://www.rferl.org/a/explainer_how_does_swift_ban_hurt_ir...
https://www.theguardian.com/us-news/2019/aug/06/trump-freeze...
But even 1,000,000 Zimbabwe dollars is not the same as 1 US dollar. International trade requires USD. The US can basically wipe out an entire country's saved wealth by flipping a switch in a computer. That can't happen with the decentralized nature of Bitcoin. This entire article is undefendable sophistry.
>However, from the global system perspective, creating such unstoppable systems is dangerous because at the root of the complex system evolution and stability is that the agents (subsystems) in the environment can die and give way for newer, better things.
Bitcoin was intended as an alternative to USD. USD has proven to be a tool of wall street to impose US imperialism on the third world, and on its own citizens. Obviously cryptocurrencies have proven way more opportunities for "giving way for newer better things" than the US banking system has.
EDIT: Here is the US using the dollar to mess with countries it had a beef with.
https://www.rferl.org/a/explainer_how_does_swift_ban_hurt_ir...
https://www.theguardian.com/us-news/2019/aug/06/trump-freeze...
The US doesn't have a switch to "turn off" a country's reserves of US dollars, I don't know where you get this notion from.
Aren't reserve in US dollars typically just an account at the Fed?
(Eurodollar are one way to bypass it tho)
(Eurodollar are one way to bypass it tho)
It depends. US dollars held by US banks, probably yes. US dollars held as reserves by foreign central banks, such as say, the central bank of Iran, I don't think so. These are reserves in the form of physical dollars and bank deposits, typically not in a US bank. There is no way the Fed can make them disappear.
Except declaring those dollars “not legal tender”, of course. But that's more likely to weaken their control over the dollar than actually destroy the dollars.
> There is no way the Fed can make them disappear.
There's no US precedent, but US government could do something like India's 2016 Demonitization: require new notes, exchange current notes for a limited time only, also limited per person. This might not completely wipe out foreign physical USD holdings, but it would probably make a dent; logistics alone for replacing all the bills would make a dent.
That said, I don't think there's any reason for the US government to do such a thing, and it would most likely lead to significantly lower confidence.
There's no US precedent, but US government could do something like India's 2016 Demonitization: require new notes, exchange current notes for a limited time only, also limited per person. This might not completely wipe out foreign physical USD holdings, but it would probably make a dent; logistics alone for replacing all the bills would make a dent.
That said, I don't think there's any reason for the US government to do such a thing, and it would most likely lead to significantly lower confidence.
correct me if I am wrong but, they don't have actually currency. they have an IOU, which is a promise that I will pay you back X amount of service/products. the moment US says I changed my mind, is "turning off" a switch.
No, this is a misconception. Fiat currency is not a IOU. An IOU is redeemable, fiat currency is not—you can't take one USD to the Federal Reserve and have it redeemed for some amount of something. (This was true in the past, when, at least theoretically, USD was redeemable for gold, but not any more).
I don't understand this argument. US dollars are legal currency, so all you have to do to redeem the underlying value is purchase something with it (or, if you want to be pedantic, use them to cover a public or private debt).
Of course, the underlying value of what you can get in exchange for them can change, but that's true for every medium of exchange in the first place. There's nothing magical about gold, silver, or any other commodity, nor is there anything special about tying a piece of paper to a commodity. If the government doesn't want you to use it or any derivative products as a currency, like what happened in the US with the 1933 Coinage Act, you're pretty much out of luck.
Of course, the underlying value of what you can get in exchange for them can change, but that's true for every medium of exchange in the first place. There's nothing magical about gold, silver, or any other commodity, nor is there anything special about tying a piece of paper to a commodity. If the government doesn't want you to use it or any derivative products as a currency, like what happened in the US with the 1933 Coinage Act, you're pretty much out of luck.
Legal currency simply means that a payment in that currency is considered, by courts of law, to extinguish a debt. (So a creditor can't demand to be paid in diamonds, for example. As long as the debtor pays in legal currency, the debt is considered extinguished.) On the other hand, a redeemable currency is a currency which the issuer promises to redeem for a certain amount of some commodity. This is independent from the fact that such a currency might (or might not) be accepted as payment in private transactions. The US dollar is legal currency, but is not redeemable.
My argument is that the same organization is the one specifying whether a particular piece of paper or commodity can or cannot be used, and under what conditions. As we've seen in the United States, currency is only legal tender because the US government says that it is - there is nothing intrinsic about either fiat, representative, or commodity-based currency as a legitimate means of exchange. All of these classifications can be changed at any time (Emergency Banking Act of 1933).
Why, again, should I care about whether or not my dollar can be converted into silver if the government can, overnight, revoke redemption and outright ban ownership of the underlying commodity?
Why, again, should I care about whether or not my dollar can be converted into silver if the government can, overnight, revoke redemption and outright ban ownership of the underlying commodity?
I'm not arguing that a redeemable currency is better or worse than a non-redeemable one. I'm merely pointing out that USD is fundamentally different from an IOU, because the US dollar is non-redeemable and an IOU is redeemable. None of this has anything to do with the status of USD as legal tender, which is something you brought up for reasons that elude me (it looked like you misinterpreted the term 'redeemable' to mean 'legal tender', that's why I was trying to clear this up).
The money is back up by US treasury bonds. When the government wants more cash, they issue new treasury bonds in order to print out more dollars. People buy US treasury bonds as a safe investment that they can cash in 10 years later at a certain % interest based on Federal Reserve interest rate.
If you keep printing out money faster than the economy grows, the money will depreciate. If the money depreciates too much, people lose a lot more money on treasury bonds. When people stop buying US treasury bonds, the government can't spend more/pay their bills.
If you keep printing out money faster than the economy grows, the money will depreciate. If the money depreciates too much, people lose a lot more money on treasury bonds. When people stop buying US treasury bonds, the government can't spend more/pay their bills.
Federal Reserve Notes are legal currency. They're called that because, when they were first issued, they replaced a similar system of notes issued by a system of Federally chartered, but essentially private and fully independent banks (many of which, such as Citibank, still exist today).
So sure, in theory people could be corrupted into for example changing the code that controls the monetary policy in the reference client, but you still need to get miners and full nodes to run your new version of the software. This is what makes it so hard to make any changes to Bitcoin, and forms the stability that many feel is one of its key strengths.