6 ms·

How exactly are cryptocurrency markets less "corrupt" than our current capital markets?

by hendzen 9y ago

gaetanrickter 9y ago
To start, ever heard of Quantitative Easing or bailing out banks with billions over consumers?
- tuxxy 9y ago
  To add, I love Bitcoin, but this is why Proof of Stake/Ethereum is also not that great in my opinion. The DAO hardfork was nothing but a bailout.
  - deleted 9y ago
    [deleted]
  - oh_sigh 9y ago
    That's a somewhat scary problem for cryptocurrencies. Basically if 51% of the network decides that they don't like you then they can essentially take all of your currency(or, rather, make it worthless)
    - gruez 9y ago
      That's false. The most that can happen in a 50% attack is that transactions are rolled backs.
      - oh_sigh 9y ago
        Look at what happened in the etherium hard fork because of the dao shenanigans. That's why there are two etheriums now...etherium and etherium classic
        polotics 9y ago
        What happened was something else entirely, with a success in decentralised governance to punish the bad actor. What do you want us to look at exactly?
        oh_sigh 9y ago
        Isn't that exactly what I said in my original post? A majority of people in the network wanted to (effectively) take the bad actors coins, so they did.
      - magnetic 9y ago
        If I "control 50%+" of the hash power of the network can't I write my own transaction history from a given point for the world to gobble? If that is so, can't I simply transfer all the coins to my account, and go to some exchange and get $$ for my $COINs? You can roll back the history if you want, but as long as I controlled the network long enough to get $$ out of my ill gotten $COINs, it seems like I've been able to rob the network of it's market cap. And if you roll back history, isn't the exchange (that gave me $$ for my $COINs) going to be extremely upset to have neither the coins nor the $$?
        gruez 9y ago
        any point, yes but you'll have to play catch-up with the main chain. suppose you want to take over all the chain starting from 2 weeks ago. even if you have 51% of the network, you're at a disadvantage already because your chain is 2 weeks behind, and the main chain is constantly advancing. you only have a 1% speed advantage over the main chain, so it will take ages for you to catch up (almost 4 years to be exact, assuming the hashrate stays constant). keep in mind that getting 51% is hard as it is because it requires you to either double the current hash rate (ie. you add hashing power equal to the network's current hash rate) which is incredibly expensive, or hack 51% the pools which is easier, but also likely to be noticed. in either case, once the fork occurs, alarm bells will go off everywhere and every competent exchange/payment processor is going to shut down all withdraws/deposits until the situation is investigated. once it's discovered that a malicious actor successfully attempted a 51% attack, the price of the coin will drop to 0 and your efforts would be wasted. if all you want to do is crash bitcoin then you'd have achieved your goal (albeit at a huge expense), but it's certainly not a good way of making money.
        magnetic 9y ago
        Thanks for the reply. Could you please elaborate on a couple of things I didn't quite understand? First, why would I want to start from "2 weeks ago"? Why can't I simply start from the tip of the chain and start "writing history" as I see fit? (in other words: why do I need to start with a handicap?) Second, you claim that it is incredibly expensive, but have you done the math? As long as the cost is smaller than the market cap, it seems there's a reasonable opportunity for a positive ROI, and I know the market cap is very very large... For sure there will be some alarm bells that go off at some point, but the question is whether the window between the attack and the "exchanges shutting down" is large enough to have a positive ROI on the cost of the attack.
  - ojr 9y ago
    a pull request being approved by core developers in an open source project is different than a bank being bailed out by the government, different scales as well
- tedsanders 9y ago
  Quantitative easing was an act of monetary policy. Monetary policy helps stabilize the value of a currency and the output of a country. Bitcoin has no mechanisms to stabilize aggregate supply & demand, and therefore is inherently subject to higher volatility. I think that if there was any mistake of QE, the mistake was that it didn't go far enough. Looking back, the recession ended up being deeper and longer than initially expected, and worries over inflation ended up not proving true. With the benefit of this hindsight, it seems clear to me that more QE would have helped the country.
  - polotics 9y ago
    Wow you really drank the kool-aid did you? QE has meant huge asset inflation and huge profits for asset holders. At the expense mainly of future generations and current retirees. You know where the US-Fed balance sheet stands right now?
- hendzen 9y ago
  Why is QE corrupt? And bank bailouts, while politically unpopular turned out to be profitable for the government. In contrast, bitcoin exchanges have a high rate of getting hacked and losing all customers money. There is no protections against insider trading... and mining is controlled by a couple guys in China, not a body that we have democratic control over. How is that better than the current system?

How exactly are cryptocurrency markets less "corrupt" than our current capital markets?

gaetanrickter 9y ago

To start, ever heard of Quantitative Easing or bailing out banks with billions over consumers?

tuxxy 9y ago
To add, I love Bitcoin, but this is why Proof of Stake/Ethereum is also not that great in my opinion. The DAO hardfork was nothing but a bailout.
- deleted 9y ago
  [deleted]
- oh_sigh 9y ago
  That's a somewhat scary problem for cryptocurrencies. Basically if 51% of the network decides that they don't like you then they can essentially take all of your currency(or, rather, make it worthless)
  - gruez 9y ago
    That's false. The most that can happen in a 50% attack is that transactions are rolled backs.
    - oh_sigh 9y ago
      Look at what happened in the etherium hard fork because of the dao shenanigans. That's why there are two etheriums now...etherium and etherium classic
      - polotics 9y ago
        What happened was something else entirely, with a success in decentralised governance to punish the bad actor. What do you want us to look at exactly?
        oh_sigh 9y ago
        Isn't that exactly what I said in my original post? A majority of people in the network wanted to (effectively) take the bad actors coins, so they did.
    - magnetic 9y ago
      If I "control 50%+" of the hash power of the network can't I write my own transaction history from a given point for the world to gobble? If that is so, can't I simply transfer all the coins to my account, and go to some exchange and get $$ for my $COINs? You can roll back the history if you want, but as long as I controlled the network long enough to get $$ out of my ill gotten $COINs, it seems like I've been able to rob the network of it's market cap. And if you roll back history, isn't the exchange (that gave me $$ for my $COINs) going to be extremely upset to have neither the coins nor the $$?
      - gruez 9y ago
        any point, yes but you'll have to play catch-up with the main chain. suppose you want to take over all the chain starting from 2 weeks ago. even if you have 51% of the network, you're at a disadvantage already because your chain is 2 weeks behind, and the main chain is constantly advancing. you only have a 1% speed advantage over the main chain, so it will take ages for you to catch up (almost 4 years to be exact, assuming the hashrate stays constant). keep in mind that getting 51% is hard as it is because it requires you to either double the current hash rate (ie. you add hashing power equal to the network's current hash rate) which is incredibly expensive, or hack 51% the pools which is easier, but also likely to be noticed. in either case, once the fork occurs, alarm bells will go off everywhere and every competent exchange/payment processor is going to shut down all withdraws/deposits until the situation is investigated. once it's discovered that a malicious actor successfully attempted a 51% attack, the price of the coin will drop to 0 and your efforts would be wasted. if all you want to do is crash bitcoin then you'd have achieved your goal (albeit at a huge expense), but it's certainly not a good way of making money.
        magnetic 9y ago
        Thanks for the reply. Could you please elaborate on a couple of things I didn't quite understand? First, why would I want to start from "2 weeks ago"? Why can't I simply start from the tip of the chain and start "writing history" as I see fit? (in other words: why do I need to start with a handicap?) Second, you claim that it is incredibly expensive, but have you done the math? As long as the cost is smaller than the market cap, it seems there's a reasonable opportunity for a positive ROI, and I know the market cap is very very large... For sure there will be some alarm bells that go off at some point, but the question is whether the window between the attack and the "exchanges shutting down" is large enough to have a positive ROI on the cost of the attack.
- ojr 9y ago
  a pull request being approved by core developers in an open source project is different than a bank being bailed out by the government, different scales as well
tedsanders 9y ago
Quantitative easing was an act of monetary policy. Monetary policy helps stabilize the value of a currency and the output of a country. Bitcoin has no mechanisms to stabilize aggregate supply & demand, and therefore is inherently subject to higher volatility. I think that if there was any mistake of QE, the mistake was that it didn't go far enough. Looking back, the recession ended up being deeper and longer than initially expected, and worries over inflation ended up not proving true. With the benefit of this hindsight, it seems clear to me that more QE would have helped the country.
- polotics 9y ago
  Wow you really drank the kool-aid did you? QE has meant huge asset inflation and huge profits for asset holders. At the expense mainly of future generations and current retirees. You know where the US-Fed balance sheet stands right now?
hendzen 9y ago
Why is QE corrupt? And bank bailouts, while politically unpopular turned out to be profitable for the government. In contrast, bitcoin exchanges have a high rate of getting hacked and losing all customers money. There is no protections against insider trading... and mining is controlled by a couple guys in China, not a body that we have democratic control over. How is that better than the current system?