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The need for incentives is true, but the community has—erroneously, in my opinion—conflated 'incentive' with 'currency'. Follow this: - The core technology he

by basseq 9y ago

The need for incentives is true, but the community has—erroneously, in my opinion—conflated 'incentive' with 'currency'. Follow this: - The core technology here is a crypto-backed distributed ledger. We call this the 'blockchain'. - You need a unit of trust to enable the blockchain to work. We call this unit of trust a 'bitcoin', or to be more precise, the smallest divisible unit thereof. (1 Satoshi = 0.00000001 BTC) - These units of trust have value, which also gives you incentive to create ('mine') them. If we stop here, that's all well and good. The problem with 'bitcoin' and the currency argument is that we're basically going back to the barter system. Instead of gold or foodstuffs, we're trading one good (a unit of trust) for another (whatever you're buying with BTC). Then, on top of that (and as a result), we've created a speculative commodities market in BTC. There's no true scarcity here. This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. ----- Then you also get gems like this, from the article: A more radical idea is to use digital currency, issued and supervised by the central bank, at the retail level to replace physical cash. What percentage of retail transactions today are in physical cash? What percentage of USD holdings (bank deposits, etc.) can be backed up with physical notes and coins? (Hint: not 100%). USD is already a digital currency.

jstanley 9y ago
> This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. If you really think that, you don't understand bitcoin. How do you load your USD on to this hypothetical block chain? How do you prove you destroyed the physical notes? Is there a mechanism to turn it back into physical notes? How do you hand out a block reward without creating counterfeit USD? For bitcoin to work, it needs to be its own currency.
- basseq 9y ago
  (Point of pedantic clarification: I'm really using lowercase-B 'blockchain' to really mean 'distributed ledger', of which the capital-B 'Blockchain' is a form. Distributed ledgers that do not rely on mining or 'coins' have been proposed, but obviously haven't been implemented broadly. So let's limit this to the Bitcoin/Blockchain archetype.) So to answer your question, a couple points: 0. You can use the blockchain without bitcoin as the token of choice. You create your own limited tokens and go from there. This has already happened with various altcoins. 1. You can create private chains. Bitcoin mining and the associated value (currency) therein is one way to create a (public) ledger, but not the only way. 2. You don't 'load your USD' onto the blockchain. That ignores the point of a distributed ledger. Emphasis on that last word, because what we're talking about here is a trusted record of transactions. That's why the blockchain isn't just about currency, and gives participants a way to immutably record all kinds of things.
  - jstanley 9y ago
    Fair points. I'm interested how you see the ledger working if you don't load any USD on to it? How does the first $1 come to exist on your ledger? Are you thinking of something like Tether?

by basseq 9y ago

jstanley 9y ago

> This is why the arguments get so confusing. I could transfer any currency on the blockchain and get the so-called benefits of bitcoin: immutable transactions, low transaction costs, etc. If you really think that, you don't understand bitcoin. How do you load your USD on to this hypothetical block chain? How do you prove you destroyed the physical notes? Is there a mechanism to turn it back into physical notes? How do you hand out a block reward without creating counterfeit USD? For bitcoin to work, it needs to be its own currency.

basseq 9y ago
(Point of pedantic clarification: I'm really using lowercase-B 'blockchain' to really mean 'distributed ledger', of which the capital-B 'Blockchain' is a form. Distributed ledgers that do not rely on mining or 'coins' have been proposed, but obviously haven't been implemented broadly. So let's limit this to the Bitcoin/Blockchain archetype.) So to answer your question, a couple points: 0. You can use the blockchain without bitcoin as the token of choice. You create your own limited tokens and go from there. This has already happened with various altcoins. 1. You can create private chains. Bitcoin mining and the associated value (currency) therein is one way to create a (public) ledger, but not the only way. 2. You don't 'load your USD' onto the blockchain. That ignores the point of a distributed ledger. Emphasis on that last word, because what we're talking about here is a trusted record of transactions. That's why the blockchain isn't just about currency, and gives participants a way to immutably record all kinds of things.
- jstanley 9y ago
  Fair points. I'm interested how you see the ledger working if you don't load any USD on to it? How does the first $1 come to exist on your ledger? Are you thinking of something like Tether?