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Interesting. Naive "econ 101-ism" would suggest that Bitcoin's marketplace is "better," with its finer-grained and more evenly publicized price discovery, (i.e.

Interesting. Naive "econ 101-ism" would suggest that Bitcoin's marketplace is "better," with its finer-grained and more evenly publicized price discovery, (i.e. efficient markets.) But it seems this situation is worse for Bitcoin itself, since mass-involvement in price discovery can induce bubbles and panics, and therefore less confidence in the underlying product/service.

astrodust 10y ago
The thing that was so revolutionary and powerful about the internet was the elimination of scarcity. No longer were things walled off behind pay-by-the-minute systems (Compuserve) or provided on a cripplingly expensive subscription basis (LexisNexis), instead it was made free, open, and accessible to everyone with a way to connect to it. Bitcoin seems to be following the "classical" economic model where preserving scarcity is paramount, it only has any value whatsoever because of the artificial constraints placed on the currency. If Bitcoin's transaction ledger was instead simply a record of exchanges (e.g. A paid B $40, C paid D £30) and worked as a proof-of-payment system it would probably be more successful. Locking people into Bitcoin as both a transaction tracking system and a currency will likely be its downfall. Consider a free-market alternative: Anyone can provide their own currency or facilitate conversion to an existing fiat currency, but they can use the blockchain to manage transactions and resolve disputes. Blockchain participants (miners) are rewarded for their contributions by a small share of the transactions performed in whatever currency was transacted. They're free to be selective about which transactions they're willing to process: It's a truly free market. There's no incentive to destabilize the blockchain, history can't be re-written, double-spends can be ignored by the parties providing the endpoint of the transaction. There's no stored value at all to steal. There's also no way for a single entity to dominate the network and dictate terms, a significant problem now with Bitcoin being driven by mega-miners in China with peculiar requirements that are often contradictory to the long-term health of the network.
- mjevans 10y ago
  I like the idea of preserving public records with a block chain. However if the 'currency' of that block chain is in fact based on it tracking other assets as securities then it calls for a constant need to evaluate the actual value of those backing securities. This makes it so that there is not one value (BTC or equivalent) but instead a portfolio of assets (like stocks/bonds).
  - nickpsecurity 10y ago
    Archive.org concept + Backblaze storage appliances + replication. Way more efficient than Bitcoin or a blockchain in preserving public records. Also, has been working for some time in real world under large usage even without the Backblaze boxes. :)
- tveita 10y ago
  This is part of how the Ripple network was supposed to work, IIRC. You can issue an IOU in any currency, and it is up to the receiver to determine who they trust and what currencies they'll accept. It hasn't been much in the news lately due to the lack of going-ons / spectacular implosions compared to the larger networks.
- buttershakes 10y ago
  If Bitcoin were simply a ledger without the currency the carefully balanced incentives to run the network wouldn't be there. Similarly, if there was no stored value to steal then we wouldn't have digital money, but a tokenization system that still entirely relies on the existing system. This is in large part how Ripple already works, except with an intermediate currency XRP for technical reasons. It's also an extremely strong deterrent to various forms of denial of service on the ledger itself as a crucial but auxiliary purpose.

astrodust 10y ago

The thing that was so revolutionary and powerful about the internet was the elimination of scarcity. No longer were things walled off behind pay-by-the-minute systems (Compuserve) or provided on a cripplingly expensive subscription basis (LexisNexis), instead it was made free, open, and accessible to everyone with a way to connect to it. Bitcoin seems to be following the "classical" economic model where preserving scarcity is paramount, it only has any value whatsoever because of the artificial constraints placed on the currency. If Bitcoin's transaction ledger was instead simply a record of exchanges (e.g. A paid B $40, C paid D £30) and worked as a proof-of-payment system it would probably be more successful. Locking people into Bitcoin as both a transaction tracking system and a currency will likely be its downfall. Consider a free-market alternative: Anyone can provide their own currency or facilitate conversion to an existing fiat currency, but they can use the blockchain to manage transactions and resolve disputes. Blockchain participants (miners) are rewarded for their contributions by a small share of the transactions performed in whatever currency was transacted. They're free to be selective about which transactions they're willing to process: It's a truly free market. There's no incentive to destabilize the blockchain, history can't be re-written, double-spends can be ignored by the parties providing the endpoint of the transaction. There's no stored value at all to steal. There's also no way for a single entity to dominate the network and dictate terms, a significant problem now with Bitcoin being driven by mega-miners in China with peculiar requirements that are often contradictory to the long-term health of the network.

mjevans 10y ago
I like the idea of preserving public records with a block chain. However if the 'currency' of that block chain is in fact based on it tracking other assets as securities then it calls for a constant need to evaluate the actual value of those backing securities. This makes it so that there is not one value (BTC or equivalent) but instead a portfolio of assets (like stocks/bonds).
- nickpsecurity 10y ago
  Archive.org concept + Backblaze storage appliances + replication. Way more efficient than Bitcoin or a blockchain in preserving public records. Also, has been working for some time in real world under large usage even without the Backblaze boxes. :)
tveita 10y ago
This is part of how the Ripple network was supposed to work, IIRC. You can issue an IOU in any currency, and it is up to the receiver to determine who they trust and what currencies they'll accept. It hasn't been much in the news lately due to the lack of going-ons / spectacular implosions compared to the larger networks.
buttershakes 10y ago
If Bitcoin were simply a ledger without the currency the carefully balanced incentives to run the network wouldn't be there. Similarly, if there was no stored value to steal then we wouldn't have digital money, but a tokenization system that still entirely relies on the existing system. This is in large part how Ripple already works, except with an intermediate currency XRP for technical reasons. It's also an extremely strong deterrent to various forms of denial of service on the ledger itself as a crucial but auxiliary purpose.