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"Code is governance" -- the article does support the idea of cryptocurrency as fiat money because the laws, in this case, are the code. The developers and miner

by amb23 9y ago

"Code is governance" -- the article does support the idea of cryptocurrency as fiat money because the laws, in this case, are the code. The developers and miners, no matter their good intentions, do hold power over the currency that everyday investors do not have. No matter how egalitarian the distributed ledger set up looks on paper, we'd be remiss to think the power structures behind cryptocurrencies are so radically different from the fiat currencies developed in the past and used at present. With time, especially if the cryptocurrency bubble pops, we'll be sure to see those structures made more explicit than they seem now.

AlphaWeaver 9y ago
Ethereum's upcoming Proof of Stake mechanism is supposed to put more power into the hands of investors compared to miners.
- UncleMeat 9y ago
  That doesn't really help. Early adopters get huge sums of ETH compared to those who join after the price rises. The distribution of coins is massively unequal.
  - johndevor 9y ago
    In the short term, yes. Not in the long run as early investors sell their coins.
Taek 9y ago
This is a big misunderstanding of bitcoin, and if you believe it I can understand why you might think bitcoin is not special. The truth is that the everyday user gets full control over the law of their currency simply by running a full node. Your node will reject any transactions that do not comply with the rules of your node. The soveirgnty of bitcoin comes from knowing that the devs can't force an update upon you or the network, if you do not consent you can always reject the change.
- Retric 9y ago
  Without massive investments in ASIC's you have effectively zero influence. Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority.
  - tomsthumb 9y ago
    > Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority This is exactly their point. This applies to everyone and all organizational entities.
    - Robotbeat 9y ago
      Well, "whoever is in power makes the rules" applies to everyone and all organizational entities, too. In this case, we're talking hash power, but same thing, isn't it?
      - _coldfire 9y ago
        A huge amount of hashpower was behind the desire for bitcoin cash, and that didn't work out. Think some underestimate firstmover advantage and end-user inertia.
  - Taek 9y ago
    The point is not that you can set rules, it's that you can prevent other people from changing the rules without your consent, even if they are the majority. You still have freedom to pick the rules to a small degree though - you choose which blockchain to use. Don't like bitcoin? Try bitcoin cash/ethereum/ethereum classic/litecoin/dogecoin/Monero/siacoin/decred/etc etc. A common misconception is that miners can pick the rules, but they can't. They can only choose to enforce additional rules (which is powerful), they can't ever violate the original rules.
  - sneak 9y ago
    Actually, even with 51% of hashpower, you cannot force all the other nodes to forward or propagate your invalid blocks if you decide to start changing the rules. This is a common misconception about bitcoin. Every single node on the network validates every single block, not just miners.
mirimir 9y ago
Yes, that's the distinction. With Bitcoin, a codebase prevails if it attracts enough miners, merchants and users. Those parties in aggregate have "fiat power". It's arguable that fiat power for each state similarly reflects preferences of banks, merchants and users. However, some of us doubt that money policy typically favors users. With government fiat, forking isn't really possible, without a revolution, no matter how unhappy users are. But with Bitcoin etc, that is possible. It's a common misconception that miners drive Bitcoin policy. In my opinion, miners are parasitic. When I first started using Bitcoin, there were virtually no professional miners. Users did all of the mining, locally. So difficulty was very low. Now, with so many professional miners, difficulty is very high. However, blocks get solved in 10 minutes on average, just as they did in the beginning. Anyway, it's true that Bitcoin is a fiat currency. But governments aren't in control, and that's a good thing.
- labster 9y ago
  So you're telling me that government money, where everyone gets a say in policy through republican institutions, is worse than a system where the most wealthy users get more control of the currency. Um, okay. I guess the oligarchy is more explicit in the cryptocurrency.
  - kemiller 9y ago
    It’s not really government money though, is it? It’s bank money.
  - mirimir 9y ago
    I don't think that it's necessarily the wealthiest users. There could be a fork with lots of interest, no particularly wealthy users, and no non-user miners. One could probably impose the "no non-user miners" rule in code. But even then, I prefer it, because with enough interest, it can always be forked. And that's much easier than changing governmental monitary policy. That is clearly dominated by the wealthy.
  - AlexCoventry 9y ago
    If you really think you have a say in monetary policy, I suggest you read Barofsky's Bailout.

by amb23 9y ago

AlphaWeaver 9y ago

Ethereum's upcoming Proof of Stake mechanism is supposed to put more power into the hands of investors compared to miners.

UncleMeat 9y ago
That doesn't really help. Early adopters get huge sums of ETH compared to those who join after the price rises. The distribution of coins is massively unequal.
- johndevor 9y ago
  In the short term, yes. Not in the long run as early investors sell their coins.

Taek 9y ago

This is a big misunderstanding of bitcoin, and if you believe it I can understand why you might think bitcoin is not special. The truth is that the everyday user gets full control over the law of their currency simply by running a full node. Your node will reject any transactions that do not comply with the rules of your node. The soveirgnty of bitcoin comes from knowing that the devs can't force an update upon you or the network, if you do not consent you can always reject the change.

Retric 9y ago
Without massive investments in ASIC's you have effectively zero influence. Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority.
- tomsthumb 9y ago
  > Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority This is exactly their point. This applies to everyone and all organizational entities.
  - Robotbeat 9y ago
    Well, "whoever is in power makes the rules" applies to everyone and all organizational entities, too. In this case, we're talking hash power, but same thing, isn't it?
    - _coldfire 9y ago
      A huge amount of hashpower was behind the desire for bitcoin cash, and that didn't work out. Think some underestimate firstmover advantage and end-user inertia.
- Taek 9y ago
  The point is not that you can set rules, it's that you can prevent other people from changing the rules without your consent, even if they are the majority. You still have freedom to pick the rules to a small degree though - you choose which blockchain to use. Don't like bitcoin? Try bitcoin cash/ethereum/ethereum classic/litecoin/dogecoin/Monero/siacoin/decred/etc etc. A common misconception is that miners can pick the rules, but they can't. They can only choose to enforce additional rules (which is powerful), they can't ever violate the original rules.
- sneak 9y ago
  Actually, even with 51% of hashpower, you cannot force all the other nodes to forward or propagate your invalid blocks if you decide to start changing the rules. This is a common misconception about bitcoin. Every single node on the network validates every single block, not just miners.

mirimir 9y ago

Yes, that's the distinction. With Bitcoin, a codebase prevails if it attracts enough miners, merchants and users. Those parties in aggregate have "fiat power". It's arguable that fiat power for each state similarly reflects preferences of banks, merchants and users. However, some of us doubt that money policy typically favors users. With government fiat, forking isn't really possible, without a revolution, no matter how unhappy users are. But with Bitcoin etc, that is possible. It's a common misconception that miners drive Bitcoin policy. In my opinion, miners are parasitic. When I first started using Bitcoin, there were virtually no professional miners. Users did all of the mining, locally. So difficulty was very low. Now, with so many professional miners, difficulty is very high. However, blocks get solved in 10 minutes on average, just as they did in the beginning. Anyway, it's true that Bitcoin is a fiat currency. But governments aren't in control, and that's a good thing.

labster 9y ago
So you're telling me that government money, where everyone gets a say in policy through republican institutions, is worse than a system where the most wealthy users get more control of the currency. Um, okay. I guess the oligarchy is more explicit in the cryptocurrency.
- kemiller 9y ago
  It’s not really government money though, is it? It’s bank money.
- mirimir 9y ago
  I don't think that it's necessarily the wealthiest users. There could be a fork with lots of interest, no particularly wealthy users, and no non-user miners. One could probably impose the "no non-user miners" rule in code. But even then, I prefer it, because with enough interest, it can always be forked. And that's much easier than changing governmental monitary policy. That is clearly dominated by the wealthy.
- AlexCoventry 9y ago
  If you really think you have a say in monetary policy, I suggest you read Barofsky's Bailout.