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Bitcoin Makes Even Smart People Feel Dumb

• dsfjksdf 9y ago
  Hyperbole - it's not really that hard. But it uses maths, so maybe not everybody has the stomach to try to understand it.
  • armandososa 9y ago
    It's not only the math involved in the creation of a bitcoin, there's also economics and networking and psychology involved. Granted, most people don't understand how money really works, but grasping a dollar bill in your wallet is easier than the a virtual something on some virtual place. See? I even feel dumb trying to explain why people feel dumb.
    • dsfjksdf 9y ago
      Sure - the economic dynamics and valuation are complicated (I don't understand them either), but I don't think that is what the article was talking about. The tech is fairly simply, at least the principles. As simple as basic cryptography, anyway. And most people use that on a daily basis.
  • deleted 9y ago
    [deleted]
  • honestlyreally 9y ago
    The whitepaper is mostly in layman's terms. It isn't hard, think many just refuse to start from the start. http://nakamotoinstitute.org/bitcoin/ http://nakamotoinstitute.org/bitcoin/
• Animats 9y ago
  The cryptosystem part is hard, but the rest is not all that complicated. The economics, though, are very strange. Valuing a cryptocoin is really hard. It's like valuing a penny stock with no business activity.
  • conistonwater 9y ago
    But isn't valuing a penny stock with no business activity really easy?
    • wmf 9y ago
      Oh BTW there are people manipulating this stock behind the scenes. Is it still easy to predict the price?
      • logfromblammo 9y ago
        Predicting the price is only an intermediate step to answering the question "How much should I invest in this stock?" In the case of the penny stock with no business activity, you can usually just skip the valuation step and go straight to "invest nothing". There are exceptions, of course, but all of them involve you having some information not generally available to the public.
        • wmf 9y ago
          Which leads to a conclusion of "never invest in crypto-anything" which works fine for me but is not what many people want to hear.
          • logfromblammo 9y ago
            Exactly. Even if I were a gambler, I would prefer by far Blackjack or Roulette to Poker. I'd rather play against the randomization of the equipment than directly pit my skill against a bunch of people that I know are all far better at playing that game than I am. I'll just continue to invest in robot-managed index funds, thanks. If you can't use the cryptocurrency effectively without buying in early, there is a fundamental problem with it, and the people who bought in early probably should not have done so. So the obvious conclusion is to not buy in early. Those stories I keep hearing about people who made fortunes off of Bitcoin are fun and inspiring, but there is no way I would have been any of those people, because I didn't have the extra disposable cash to invest in Bitcoin at the times when it would have been most advantageous to do so, and it has never matched my risk profile since 2009. If it had been invented in 2000, yeah, I could have been a Bitcoin millionaire. But that's not how it worked out. Those grapes aren't sour; I just couldn't reach them. And right now, this very instant, the next big thing could be staring me right in the face, and I would still choose not to invest in it, because I don't have enough investment money left after the sure things, boring but prudent choices, and dubious but exciting possibilities to put a single penny into moon-jumping unicorns that fart nuclear-powered rainbows. I'd rather have 98% confidence of retiring at 65 than make a gamble between between retiring two years from now and never retiring at all. So cryptocoins can be the playground of the young and foolish, the old and treacherous, and the financial geniuses.
• TazeTSchnitzel 9y ago
  Bitcoin is a distributed economic cryptosystem designed by someone with at least a rudimentary understanding of these topics. A lot of Bitcoin enthusiasts understand neither cryptography, nor distributed systems, nor economics. What could go wrong?
  • sremani 9y ago
    Speculation is part of any market. It is true to understand the Mathematics, Crypto-tech and Economics part of BitCoin and CryptoCurrencies in general is very hard. But doable by intelligent people. The idea of facebook or iPhone would be hard to explain in 1990, similar is the case with Crypto, the tech is way ahead of the culture.
• exelius 9y ago
  The hard part here is market making. Market making is almost pure game theory, and unless you worked at a big market making trading house (i.e. Goldman, JP Morgan, etc) the learning curve can be really expensive. In this type of work, it's not that bitcoin is making people feel dumb, it's that the smartest people playing in Bitcoin are making money at the expense of everyone else. There are a lot of really smart people playing in Bitcoin who are comparatively dumb. Bitcoin is just the stock market 2.0: the big guys manipulate the market with impunity, except there aren't any laws to stop them (nevermind the government ignores the rules in the stock market if you're "too big to fail"...)
  • atemerev 9y ago
    So are other currencies. FX market is strange, to say the least.
    • exelius 9y ago
      Yeah, the whole FX market operates largely outside international law unless you're talking about a handful of currencies. And even there the conversion path for almost everything runs through USD or EUR (with some regional exceptions).
• phailhaus 9y ago
  I've noticed this about Bitcoin. It's not hard to understand at all, but everyone attempts to dive into the technical details right from the start and this loses most people. The core conceit that people gloss over is the fact there is no such thing as a "wallet" that "stores" bitcoins. The only thing that exists is a public record of numbers saying they're giving bitcoins to other numbers. When you create a "wallet", you're choosing a private number that nobody knows and nobody has already picked. You use this private number to create another number, the public number, the "wallet address". Since this number doesn't exist anywhere in the public record, we say you have "zero bitcoins." Then, you get someone to claim "I am giving x bitcoins to your number". If you can get this claim (a transaction) into the public record (the blockchain), we all decide to agree "This happened." And now we say you have x bitcoins. Why? Because now you're allowed to make a transaction saying you're giving those bitcoins to another number! It's all made up. This is what currency is, it only exists because of collective trust.
  • albertgoeswoof 9y ago
    What's really hard is to get your head around is the random number- what are the chances someone will have the same number as me? For anyone that asks, the answer is basically 0, because maths For a trustless currency there's a lot of trust going on there!
    • phailhaus 9y ago
      The private key is usually a 256-bit number, which means your private key is going to be anywhere between 1 and 2^256 - 1. 2^256 - 1 is around 1.15e+77, which is ridiculously huge (to put it technically :P)
    • runeks 9y ago
      It’s not really hard to explain: the probability of two people generating the same random 256 bit number is roughly equal to buying four tickets to the national lottery four weeks in a row, and winning the jackpot on all four of them. No one has ever won the jackpot even two times in a row, so do we really need to worry about someone doing it four times in a row? (Two people generating the same 256 bit number is a collision, which means the probability is 1/sqrt(2^256))
• albertgoeswoof 9y ago
  When we say we "understand money" we mean we know how to spend it, aquire it and store it. When someone says they "understand bitcoin" it means grappling with cryptography, mining, ledgers, economics, game theory, fiat currencies, deflation, dapps, etc. etc. Very few people need to really understand all of that to "get" bitcoin, mainly because most of the use cases aren't figured out. Most people are overthinking at this point and not attacking it from a "how is this useful to me and what do I need to know" perspective, but trying to grok it all, which is pretty hard.
  • placeybordeaux 9y ago
    > Very few people need to really understand all of that to "get" bitcoin Except when a fork comes, or why control of 51% of the hashing power is bad.
    • albertgoeswoof 9y ago
      Only miners and investors should care about this. Normal people should be able to use Btc without worrying about it.
      • SadWebDeveloper 9y ago
        Until transaction fees start to rise due those people pushing their own agenda on the network.
        • oxide 9y ago
          Cost me a couple dollars last night to send 70 dollars in btc to a friend. Last month it was 3 dollars and change. I'm thankful it was slightly more reasonable. I might use an alt coin for awhile to save on fees.
          • PeterisP 9y ago
            3 dollars per payment seems extremely expensive - that's how much an inefficient international bank wire transfer costs, with the more reasonable bank-to-bank systems (including international e.g. in EU) costing a few cents.
• atemerev 9y ago
  What's hard to understand about the fork? Bitcoin is an equation. A mathematical specification of how much bitcoins are there at any given moment of time, how new blocks are added to the chain, which sequence of blocks is accepted to be authoritative, etc. This is why it is a work of genius. An equation can't be hacked, unless you can challenge underlying mathematical assumptions, which is somewhat hard to do. However, you can't run an equation on its own. You need an implementation, which actually runs calculations in the equation ("mining", verifying transactions etc). Technically, anybody can write their own implementation of the Bitcoin equation for running the blockchain, substituting their own parameters (e.g. maximum block size, how often the blocks are generated, the reward amount etc.) I can write a Bitcoin client today where new blocks will be attached to the chain the way I want it to. Giving me free money, for example. Or increasing the block size to shovel more transactions in. However, the Bitcoin network consists of many thousands of clients (A.K.A. "full node" clients). They have to accept my blocks to consider them valid, and sign the acceptance, and they won't accept anything that is not hardcoded in their implementation. tl;dr I (or anybody else) can fork Bitcoin today -- the only idea is that I will have hard time to persuade others to accept my fork. And without acceptance, anything stored or transacted in this fork will have no value. However, some people manage to persuade others to run their fork as it has some feature some see as valid. As they are accepted by some people, they start to have value (and can be bought and sold by gamblers). However, more often than not, these forks fail to catch traction and deemed to obscurity, and as their user base diminishes, so it their value.
  • joemi 9y ago
    Most of what you wrote won't make sense to non-developers. Hell, it won't even make sense to all developers. I'd say that's hard to understand, then.
    • ozim 9y ago
      Like for instance GIT, it still is considered hard by a lot of developers. Try to explain it to some common people. But also nowadays most developers use Git daily anyway.
  • eudoxus 9y ago
• nostroso 9y ago
  Well, bitcoin makes people who think that they are smart, realize that they are way less smart than they thought they were. The author understands that he could impossibly understand the underlying mechanics of bitcoin. Hence, he came to realize that there must be other people, who are substantially smarter than he is.
  • placeybordeaux 9y ago
    smart or intelligence is not a scalar.
  • booleandilemma 9y ago
    This happens when trying to study anything really. The more you learn, the more you realize just how much there is to learn.
• tuddman 9y ago
  Author is projecting. Replaced "me" with "people" in writing this. Considered himself smart; tried to wrap head around Bitcoin, but lacks math/cs/finance background, and or curiosity to dig below surface level hype or read blockchain-y things beyond what's written by other lazy journalists ...? (now I'm projecting). Doesn't 'get it'. Plenty of people understand Bitcoin. Go read the whitepaper.
  • dlwdlw 9y ago
    That's how people think...Creating models and theories via abstraction from personal experience and thoughts. All original ideas are projections in some way, requiring courage to put through into the world.
  • puranjay 9y ago
    Which is what makes Bitcoin's democratic credentials so ridiculous. "It will free us from fiat money!" No it won't. It's just a transfer of wealth from educated elite to other educated elite. 99% of the world's population can't understand it. 99.5% can't mine it. It's so damn elitist that it's not even funny.
    • dsego 9y ago
      F*k 'em, they can eat their prayers and nationalism.
      • dang 9y ago
        Comments like this break the HN guidelines. Please post civilly and substantively, or not at all.
    • atemerev 9y ago
      The key difference is that you can _learn_ what Bitcoin is. And you can do it on your own, without prestigious colleges and country clubs.
    • elmar 9y ago
      Many people in Venezuela have turned to Bitcoin mining in a desperate attempt to fend off starvation and keep their families alive. http://bitcoinist.com/starving-venezuelans-turn-to-bitcoin-mining-in-desperation/ http://bitcoinist.com/starving-venezuelans-turn-to-bitcoin-m...
• bitL 9y ago
  "Cryptology Makes Even Smart People Feel Dumb"
• reallynice 9y ago
  I think someone hasn't read the whitepaper.
• SadWebDeveloper 9y ago
  Ethereum is harder than bitcoin, specially the dApps thing of ETH
• jondubois 9y ago
  Most cryptocurrencies are complex but if you have a background in computer science/software engineering then they're not difficult to understand; it just takes time.
• mathperson 9y ago
  It also makes dumb people feel smart...and act upon these feelings
  • oculusthrift 9y ago
    sounds like someone's been on /r/bitcoin
• alde 9y ago
  "Pound Sterling Made Smart People Feel Dumb" (Black Wednesday).
• Talyen42 9y ago
  How many people understand the federal reserve, money supply, minting process, and quantitative easing? How on earth do people use USD?! It's so complicated!
  • pbhjpbhj 9y ago
    If the USA government used BTC as default then people would probably use it without caring too. Early adopters need to understand things to be sure they're not falling for a con; people getting electric vehicles are probably much more interested in the technical and financial details than your average car buyer. Once they've established the system works then others can get in.
• MrFantastic 9y ago
  My problem with most of the cryptocurrencies is that they are so thinly traded (150k average) and many buyer naive that prices could be easily manipulated by professional Currency Traders or Hedge funds. It not normal for prices to fluctuate up and down 50% so quickly.
  • deleted 9y ago
    [deleted]
• oculusthrift 9y ago
  To be fair, a vast vast majority of people have no idea how central banking works or Forex etc.
• sebringj 9y ago
  I would say understanding HTML is a bit harder than being able to use a smart phone for bitcoin transactions. Not very many know how to program network protocols for the internet and not very many know how to program blockchain networks either. The blind trust in Central Banks is the real mystery.
• amackera 9y ago
  Bitcoin makes arrogant developers realize they don't know everything?
  • SolarNet 9y ago
    > arrogant journalists
• sowbug 9y ago
  Bitcoin is simple the same way Git is simple. Appreciating it is less about understanding the technology and more about caring why the solution matters. Git is just a way to deal with objects in a DAG (insert standard joke about homeomorphic endofunctors mapping submanifolds of a Hilbert space). Not super difficult. But unless you have worked in a horrible version-control system, you probably just don't care about having that capability, so when someone starts excitedly jumping up and down while showing you how easy it is to draw a line connecting two circles, you might figure you just aren't smart enough to get it. Likewise, Bitcoin is a combination of recognizing a certain problem and exploiting a certain technology to solve it. If you understand that distributed, trustless consensus is a hard problem, and that digital signatures and proof-of-work algorithms combine in this exciting way to solve it, then Bitcoin makes perfect sense. But otherwise your inner voice keeps asking "why are we even discussing this?" and making you feel dumb.