5 ms·

Satoshi was wrong

30 points by qznc 9y ago

tardo99 9y ago
What actual real world problem does bitcoin solve other than foreign exchange transfers and black market operations?
- homero 9y ago
  With more civil asset forfeiture, bitcoin is the only easy to store value, gold can be seized
  - jrimbault 9y ago
    "They" need only seize you and beat you with a wrench to get your passphrase/convoluted security mechanism(s) protecting your private key(s). Or just pass a law requiring you comply or else.
    - homero 9y ago
      True but I can have a hidden bigger wallet
      - tardo99 9y ago
        The size of your wallet doesn't matter when you're in prison or dead.
  - 0xfeba 9y ago
    Bitcoins can and have been seized.
  - emodendroket 9y ago
    Besides the objection that government Bitcoin seizure is not impossible, consider your threat model. You arguably have less exposure to government seizure (again, questionable, to me), but you have far more exposure and less protection from more prosaic kinds of theft and fraud, which I think most of us are far more likely to encounter.
- romanovcode 9y ago
  99% of black market operations use either dollars or euro. It's not even that popular in black-market, unless you are living in your silicon bubble.
  - emodendroket 9y ago
    If we're looking at Bitcoin as a proportion of black-market transactions, I have no doubt that is correct. But the more interesting question to me is what percentage of Bitcoin transactions are black market, especially if we exclude speculation?
- laichzeit0 9y ago
  The Bitcoin blockchain can be used for proof of ownership, proof of existence, proof of integrity, etc. It can be used as a decentralized trusted time stamping authority [1]. Try this out for a real implementation: https://proofofexistence.com https://proofofexistence.com It could be used by digital forensics to timestamp digital evidence and prove that it was not "tampered with" during the analysis phase. The Bitcoin blockchain can be used for many things other than a "currency". [1] http://arxiv.org/pdf/1502.04015v1 http://arxiv.org/pdf/1502.04015v1
  - vec 9y ago
    The blockchain is a towering achievement in theoretical computer science, but that wasn't the question. What is bitcoin, the currency, actually useful for?
  - tardo99 9y ago
    Are those even problems in modern society? Setting aside conspiracy theories and outlier cases like the OJ Simpson trial, do people really fight (with meaningful evidence) over chains of ownership for things like assets and pieces of evidence? To expand on this, a simple cryptographic hash stored in a safe can be used to do something like proving a digital item hasn't been tampered with. The blockchain seems to me to only solve for the problem where the "system" is so corrupt that you can't trust anyone. I just don't think the "system" is that corrupt. So, I doubt blockchain has any real-world merit. Time will tell.
- andrewla 9y ago
  Reading from the book of Genesis Block: > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks A real-world problem is governments giving trillions of made-up dollars to the huge companies that lost trillions of dollars, while allowing them to keep the money they made when they started taking these risks. A real-world problem is that governments creating trillions of dollars is not a risk-free endeavor; the value has to come from somewhere, and it comes from you. A real-world problem is that central banks are not good at their jobs, and they enable governments to behave irresponsibly with their currencies.
  - emodendroket 9y ago
    Well, I think even in a zero-inflation or even deflationary world we could imagine ways a government could still take money from citizens and give it to businesses.
quadcore 9y ago
The post seems at least decent but the title is terrible I think.
zero_k 9y ago
Sure, he was wrong. So was Newton. Einstein fixed some of it, and then a lot of others fixed some of the remaining parts, etc. Writing "Satoshi was wrong" as a headline, is misleading at best. Why would someone talk about Satoshi with such disrespect? I don't get it. Can somone explain?
- golergka 9y ago
  That's exactly the point being made in this post. Have you read it to the end?
- vpeters25 9y ago
  The article's title seems click-bait. It makes good points identifying some of the already known weaknesses in bitcoin's design, but he is basically complaining that Satoshi didn't predict how his creation would evolve over time which seems unfair.
  - vec 9y ago
    He's complaining that Satoshi did predict how his creation would evolve, he just guessed wrong in a lot of the particulars. Because of course he was. Predicting the future is hard. But predicting the past is much easier. We have a privileged position to see that, as implemented, Bitcoin is a pretty shitty currency (and a decent high risk investment vehicle). It's way too volatile, transactions are very high friction, and both of those problems look like they'll continue to get worse as Bitcoin continues to mature. More over, it's looking like none of this will actually avoid state capture now that a state actor (China) has decided they care. No piece of software in human history has been perfect on day one. The real world always has a few surprises. But Bitcoin doesn't have a viable mechanism for change. No central authority and no privileged user means all but the most glaring bugs are unfixable.
- emodendroket 9y ago
  Frankly, the article compares him to the Wright Brothers, so I think it already agrees with you. But beyond that, I'm not really sure I personally would be even that charitable.
codegladiator 9y ago
Very poorly written article. Throwing a lot of shit at someone and discrediting them for some mistakes.
- k__ 9y ago
  If we can finally accept that Bitcoin was made by the CIA it doesn't feel too bad ;)
cflynnus 9y ago
I would classify this article as typical FUD that consistent observers of the Bitcoin/cryptocurrency space see quite often.
subverter 9y ago
> 1. A cap at 21M. It made the currency deflationary by nature. Ask an economist, no one thinks it’s a good idea long term http://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp http://www.investopedia.com/articles/personal-finance/030915... Most economists, not all economists. And most of those economists are the ones destroying economies, in my opinion. If you're interested in reading a counter-viewpoint on why deflation is actually good – it's the policies aimed at countering it that are really what's bad – here you go: https://mises.org/blog/deflation-always-good-economy https://mises.org/blog/deflation-always-good-economy
- emodendroket 9y ago
  Widespread deflation would drive the economy to a halt because it would be crazy to take out large loans (imagine paying down your mortgage without ever getting any equity) and it would discourage business investment in favor of the safer option of just sitting on huge piles of cash. Even your Mises institute guy seems to want zero inflation more than rapid deflation.
- raiflip 9y ago
  That article is pretty bad. Even at this point in the article it is clear he does not understand why a small amount of inflation is good. For example he says: "According to popular thinking, in response to a high rate of inflation, consumers will speed up their expenditure on goods at present, which should boost economic growth. So why then is a rate of inflation of 10% or higher regarded by experts as a bad thing?" According to this line of thinking if a little bit of something is good, then more of it should be good, right? I think we can all see the faultiness in this logic. What he doesn't get is after inflation reaches a certain point, people start expecting their money to be not worth as much in the very short term, leading to increase in buying, leading to higher inflation, and so on. This spiral is how economies like Zimbabwe end up with crazy inflation. However at a low rate, around 2% and a little higher, people do not immediately expect their money to be worth less in the short term, and therefore the economy does not enter this spiral. The rest of the article goes into some decently complex economics. Suffice to say his core argument - that inflation hurts wealth creators because it decreases the value of said wealth- does not hold water unless said wealth creators are putting all their money in places with interest rates less than inflation. This means no investment in their or a business, but just parking the money in a bank. Anybody with that kind of money will know to put large amounts of money in inflation-protecting assets. Because risk of an investment is generally the amount of interest you get above and beyond inflation, parking money in assets growing at the rate of inflation is generally very safe.
granitosaurus 9y ago
A lot of criticism here. Yes the title is a clickbait and soem of the content is questionable but I think the author has a good point - cryptocurrency is not completely there yet. We already see a bunch of people subscribing to one-true-god like mentality. "BTC is the only worthwhile crypto, no it's BTH now; no it's Ethereum" If your in for digital gold - sure, but if you are looking at technology and ideology - it's still important to keep your mind open.
andrewla 9y ago
> 1. A cap at 21M. It made the currency deflationary by nature. Ask an economist, no one thinks it’s a good idea long term http://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp http://www.investopedia.com/articles/personal-finance/030915... Most economists thought that "Chancellor on brink of second bailout for banks" The Times 03/Jan/2009 was a good thing, but many, including Satoshi, disagree on this. As for Bitcoin being deflationary, that's a more subtle point. Nobody (to a reasonable approximation) thinks that there is a direct link between monetary base and inflation/deflation. There is a relationship, but total money supply is generally considered more important, and that includes liquid monetary instruments (like demand deposits, etc.) that are not reflected in the monetary base. The notion that Bitcoin is worthless because it is deflationary is self-contradictory -- if it increases in value it cannot decrease in value. The contradiction here is that the price of Bitcoin will fluctuate with market forces just like everything else, but if supply chains begin to materialize denominated in Bitcoin, then by necessity the output and intermediate products of that supply chain will be stable in value relative to Bitcoin itself. > 2. He offered a system where the inputs/outputs blockchain is the state itself, and in order to prune your chain you need to store UTXO set. Agreed here; this was definitely a design flaw. I'm not totally sold on the ETH solution, which depends strongly on transactions being ordered properly, and has some odd race conditions that are a pain to deal with (that is, a transaction which is not currently valid may "become" valid, either by advancing the nonce or increasing the momentary balance at an address). One problem with the UTXO solution is that offline (air-gapped) signing solutions are very complex, because you need to locate UTXOs, rather than just signing "send X bitcoins from this address to this address". > 3. He didn’t oversee the idea of Root of Trust Eh; this seems like an independent problem to me. If you want to trust someone, by all means trust them, and use whatever web of trust primitives you want to expand that trust into trusting their software. But putting it in the blockchain means that the chain of custody becomes suspect; what if an individual (or their key) is compromised? That extends the surface area of any attack significantly. That's not to say that it wouldn't be nice to have some notion of trust, but so far I haven't seen any ideas that seem even a little attractive for solving this problem. Satoshi didn't cure cancer either. > 4. He offered “new payment — new address” as a rule This rule still makes sense for a lot of situations just because there's no "receipt" mechanism. I sell widgets, and a customer buys a widget -- did they send the money or not? If I have a single payment address, all I see are hundreds of payments for .01 BTC. On an individual level, using a new address for the change from a transaction doesn't seem to add a lot of value, but since Bitcoin tracks UTXO, not address balances, there's relatively little bloat associated with this. > 5. He never defined clearly threat model of Bitcoin. Who’s the attacker? ... The one and only real attacker ... is ... governments. The threat model, on the contrary, was extremely well defined. The only threat that Satoshi took seriously is the threat of double spend attacks. The nation-state threat model is more subtle -- currency controls and police actions against users and miners. That's a little out of scope of a software project. If a nation-state chooses to take over mining, then all they do is increase the security of the network by adding hash power. If they try to use their hash power to facilitate double-spending (for some reason?) then that's easily detectable by humans. But mainly it just doesn't make sense as an attack, especially for a nation-state with a police force and a justice system, which can be used to enforce arbitrary rules much more cheaply than building a huge mining farm can. > 6. Complete lack of governance was sold to us as a good thing. What we got now? There’s nothing Bitcoin can do that Ethereum can’t, there’s no clear strategy or way of resolution of conflicts when one side whats 2x of blocks and another wants to keep it 1 Mb. Better to have the debate, and have the forking and contention, than just sticking with a bad policy set by a bad policy maker. This is just inefficient democracy vs. efficient totalitarianism -- your mileage may vary, but I side pretty hard with the inefficient here. As for Ethereum, I love a lot of what it brings to the table, but in the end, it brings too much, at the cost of a huge amount of complexity that makes trust decisions, already complex, exponentially worse. Also, I don't understand what Ethereum has to do with a governance failure of Bitcoin. Ethereum has not yet taken over from Bitcoin in the space that Bitcoin was designed for, so I don't think we can count it as proof of Satoshi's mistakes. > 7. Lack of vision what Bitcoin would do when transactions reach maximum of capacity. In fact Satoshi himself envisioned it as a constantly growing onchain without any second layers. It’s only now when people realized that increasing onchain further is ridiculously stupid idea since it’s already way too hard to be a full node. And utopian hot-patches with completely broken incentives models like Lightning Network are another proof Satoshi had no idea how to fit all people onchain. The whitepaper says nothing about block sizes or off-chain settlement. Satoshi went away before block sizes became a contentious issue, so we'll never know if whatever he thought was right or wrong. And frankly, although I'm a "big-blocker" myself, I don't think the answer here is settled. Whether on-chain can scale as storage costs drop and light-weight payment verification becomes more common and full nodes rarer, or whether we need a formal off-chain solution like LN or an informal off-chain solution like "some company maintains a ledger", the jury is still out.

Satoshi was wrong

30 points by qznc 9y ago

tardo99 9y ago

What actual real world problem does bitcoin solve other than foreign exchange transfers and black market operations?

homero 9y ago
With more civil asset forfeiture, bitcoin is the only easy to store value, gold can be seized
- jrimbault 9y ago
  "They" need only seize you and beat you with a wrench to get your passphrase/convoluted security mechanism(s) protecting your private key(s). Or just pass a law requiring you comply or else.
  - homero 9y ago
    True but I can have a hidden bigger wallet
    - tardo99 9y ago
      The size of your wallet doesn't matter when you're in prison or dead.
- 0xfeba 9y ago
  Bitcoins can and have been seized.
- emodendroket 9y ago
  Besides the objection that government Bitcoin seizure is not impossible, consider your threat model. You arguably have less exposure to government seizure (again, questionable, to me), but you have far more exposure and less protection from more prosaic kinds of theft and fraud, which I think most of us are far more likely to encounter.
romanovcode 9y ago
99% of black market operations use either dollars or euro. It's not even that popular in black-market, unless you are living in your silicon bubble.
- emodendroket 9y ago
  If we're looking at Bitcoin as a proportion of black-market transactions, I have no doubt that is correct. But the more interesting question to me is what percentage of Bitcoin transactions are black market, especially if we exclude speculation?
laichzeit0 9y ago
The Bitcoin blockchain can be used for proof of ownership, proof of existence, proof of integrity, etc. It can be used as a decentralized trusted time stamping authority [1]. Try this out for a real implementation: https://proofofexistence.com https://proofofexistence.com It could be used by digital forensics to timestamp digital evidence and prove that it was not "tampered with" during the analysis phase. The Bitcoin blockchain can be used for many things other than a "currency". [1] http://arxiv.org/pdf/1502.04015v1 http://arxiv.org/pdf/1502.04015v1
- vec 9y ago
  The blockchain is a towering achievement in theoretical computer science, but that wasn't the question. What is bitcoin, the currency, actually useful for?
- tardo99 9y ago
  Are those even problems in modern society? Setting aside conspiracy theories and outlier cases like the OJ Simpson trial, do people really fight (with meaningful evidence) over chains of ownership for things like assets and pieces of evidence? To expand on this, a simple cryptographic hash stored in a safe can be used to do something like proving a digital item hasn't been tampered with. The blockchain seems to me to only solve for the problem where the "system" is so corrupt that you can't trust anyone. I just don't think the "system" is that corrupt. So, I doubt blockchain has any real-world merit. Time will tell.
andrewla 9y ago
Reading from the book of Genesis Block: > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks A real-world problem is governments giving trillions of made-up dollars to the huge companies that lost trillions of dollars, while allowing them to keep the money they made when they started taking these risks. A real-world problem is that governments creating trillions of dollars is not a risk-free endeavor; the value has to come from somewhere, and it comes from you. A real-world problem is that central banks are not good at their jobs, and they enable governments to behave irresponsibly with their currencies.
- emodendroket 9y ago
  Well, I think even in a zero-inflation or even deflationary world we could imagine ways a government could still take money from citizens and give it to businesses.

quadcore 9y ago

The post seems at least decent but the title is terrible I think.

zero_k 9y ago

Sure, he was wrong. So was Newton. Einstein fixed some of it, and then a lot of others fixed some of the remaining parts, etc. Writing "Satoshi was wrong" as a headline, is misleading at best. Why would someone talk about Satoshi with such disrespect? I don't get it. Can somone explain?

golergka 9y ago
That's exactly the point being made in this post. Have you read it to the end?
vpeters25 9y ago
The article's title seems click-bait. It makes good points identifying some of the already known weaknesses in bitcoin's design, but he is basically complaining that Satoshi didn't predict how his creation would evolve over time which seems unfair.
- vec 9y ago
  He's complaining that Satoshi did predict how his creation would evolve, he just guessed wrong in a lot of the particulars. Because of course he was. Predicting the future is hard. But predicting the past is much easier. We have a privileged position to see that, as implemented, Bitcoin is a pretty shitty currency (and a decent high risk investment vehicle). It's way too volatile, transactions are very high friction, and both of those problems look like they'll continue to get worse as Bitcoin continues to mature. More over, it's looking like none of this will actually avoid state capture now that a state actor (China) has decided they care. No piece of software in human history has been perfect on day one. The real world always has a few surprises. But Bitcoin doesn't have a viable mechanism for change. No central authority and no privileged user means all but the most glaring bugs are unfixable.
emodendroket 9y ago
Frankly, the article compares him to the Wright Brothers, so I think it already agrees with you. But beyond that, I'm not really sure I personally would be even that charitable.

codegladiator 9y ago

Very poorly written article. Throwing a lot of shit at someone and discrediting them for some mistakes.

k__ 9y ago
If we can finally accept that Bitcoin was made by the CIA it doesn't feel too bad ;)

cflynnus 9y ago

I would classify this article as typical FUD that consistent observers of the Bitcoin/cryptocurrency space see quite often.

subverter 9y ago

emodendroket 9y ago
Widespread deflation would drive the economy to a halt because it would be crazy to take out large loans (imagine paying down your mortgage without ever getting any equity) and it would discourage business investment in favor of the safer option of just sitting on huge piles of cash. Even your Mises institute guy seems to want zero inflation more than rapid deflation.
raiflip 9y ago
That article is pretty bad. Even at this point in the article it is clear he does not understand why a small amount of inflation is good. For example he says: "According to popular thinking, in response to a high rate of inflation, consumers will speed up their expenditure on goods at present, which should boost economic growth. So why then is a rate of inflation of 10% or higher regarded by experts as a bad thing?" According to this line of thinking if a little bit of something is good, then more of it should be good, right? I think we can all see the faultiness in this logic. What he doesn't get is after inflation reaches a certain point, people start expecting their money to be not worth as much in the very short term, leading to increase in buying, leading to higher inflation, and so on. This spiral is how economies like Zimbabwe end up with crazy inflation. However at a low rate, around 2% and a little higher, people do not immediately expect their money to be worth less in the short term, and therefore the economy does not enter this spiral. The rest of the article goes into some decently complex economics. Suffice to say his core argument - that inflation hurts wealth creators because it decreases the value of said wealth- does not hold water unless said wealth creators are putting all their money in places with interest rates less than inflation. This means no investment in their or a business, but just parking the money in a bank. Anybody with that kind of money will know to put large amounts of money in inflation-protecting assets. Because risk of an investment is generally the amount of interest you get above and beyond inflation, parking money in assets growing at the rate of inflation is generally very safe.

granitosaurus 9y ago

A lot of criticism here. Yes the title is a clickbait and soem of the content is questionable but I think the author has a good point - cryptocurrency is not completely there yet. We already see a bunch of people subscribing to one-true-god like mentality. "BTC is the only worthwhile crypto, no it's BTH now; no it's Ethereum" If your in for digital gold - sure, but if you are looking at technology and ideology - it's still important to keep your mind open.

andrewla 9y ago

> 1. A cap at 21M. It made the currency deflationary by nature. Ask an economist, no one thinks it’s a good idea long term http://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp http://www.investopedia.com/articles/personal-finance/030915... Most economists thought that "Chancellor on brink of second bailout for banks" The Times 03/Jan/2009 was a good thing, but many, including Satoshi, disagree on this. As for Bitcoin being deflationary, that's a more subtle point. Nobody (to a reasonable approximation) thinks that there is a direct link between monetary base and inflation/deflation. There is a relationship, but total money supply is generally considered more important, and that includes liquid monetary instruments (like demand deposits, etc.) that are not reflected in the monetary base. The notion that Bitcoin is worthless because it is deflationary is self-contradictory -- if it increases in value it cannot decrease in value. The contradiction here is that the price of Bitcoin will fluctuate with market forces just like everything else, but if supply chains begin to materialize denominated in Bitcoin, then by necessity the output and intermediate products of that supply chain will be stable in value relative to Bitcoin itself. > 2. He offered a system where the inputs/outputs blockchain is the state itself, and in order to prune your chain you need to store UTXO set. Agreed here; this was definitely a design flaw. I'm not totally sold on the ETH solution, which depends strongly on transactions being ordered properly, and has some odd race conditions that are a pain to deal with (that is, a transaction which is not currently valid may "become" valid, either by advancing the nonce or increasing the momentary balance at an address). One problem with the UTXO solution is that offline (air-gapped) signing solutions are very complex, because you need to locate UTXOs, rather than just signing "send X bitcoins from this address to this address". > 3. He didn’t oversee the idea of Root of Trust Eh; this seems like an independent problem to me. If you want to trust someone, by all means trust them, and use whatever web of trust primitives you want to expand that trust into trusting their software. But putting it in the blockchain means that the chain of custody becomes suspect; what if an individual (or their key) is compromised? That extends the surface area of any attack significantly. That's not to say that it wouldn't be nice to have some notion of trust, but so far I haven't seen any ideas that seem even a little attractive for solving this problem. Satoshi didn't cure cancer either. > 4. He offered “new payment — new address” as a rule This rule still makes sense for a lot of situations just because there's no "receipt" mechanism. I sell widgets, and a customer buys a widget -- did they send the money or not? If I have a single payment address, all I see are hundreds of payments for .01 BTC. On an individual level, using a new address for the change from a transaction doesn't seem to add a lot of value, but since Bitcoin tracks UTXO, not address balances, there's relatively little bloat associated with this. > 5. He never defined clearly threat model of Bitcoin. Who’s the attacker? ... The one and only real attacker ... is ... governments. The threat model, on the contrary, was extremely well defined. The only threat that Satoshi took seriously is the threat of double spend attacks. The nation-state threat model is more subtle -- currency controls and police actions against users and miners. That's a little out of scope of a software project. If a nation-state chooses to take over mining, then all they do is increase the security of the network by adding hash power. If they try to use their hash power to facilitate double-spending (for some reason?) then that's easily detectable by humans. But mainly it just doesn't make sense as an attack, especially for a nation-state with a police force and a justice system, which can be used to enforce arbitrary rules much more cheaply than building a huge mining farm can. > 6. Complete lack of governance was sold to us as a good thing. What we got now? There’s nothing Bitcoin can do that Ethereum can’t, there’s no clear strategy or way of resolution of conflicts when one side whats 2x of blocks and another wants to keep it 1 Mb. Better to have the debate, and have the forking and contention, than just sticking with a bad policy set by a bad policy maker. This is just inefficient democracy vs. efficient totalitarianism -- your mileage may vary, but I side pretty hard with the inefficient here. As for Ethereum, I love a lot of what it brings to the table, but in the end, it brings too much, at the cost of a huge amount of complexity that makes trust decisions, already complex, exponentially worse. Also, I don't understand what Ethereum has to do with a governance failure of Bitcoin. Ethereum has not yet taken over from Bitcoin in the space that Bitcoin was designed for, so I don't think we can count it as proof of Satoshi's mistakes. > 7. Lack of vision what Bitcoin would do when transactions reach maximum of capacity. In fact Satoshi himself envisioned it as a constantly growing onchain without any second layers. It’s only now when people realized that increasing onchain further is ridiculously stupid idea since it’s already way too hard to be a full node. And utopian hot-patches with completely broken incentives models like Lightning Network are another proof Satoshi had no idea how to fit all people onchain. The whitepaper says nothing about block sizes or off-chain settlement. Satoshi went away before block sizes became a contentious issue, so we'll never know if whatever he thought was right or wrong. And frankly, although I'm a "big-blocker" myself, I don't think the answer here is settled. Whether on-chain can scale as storage costs drop and light-weight payment verification becomes more common and full nodes rarer, or whether we need a formal off-chain solution like LN or an informal off-chain solution like "some company maintains a ledger", the jury is still out.