5 ms·

(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for

(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for a reason and I'm really not on board with everyone "being their own bank" as I feel it'd be a step backwards from what we have today. What I do agree with is the need for more audit-able, accountable systems so the institutions we trust are less susceptible to corruption.

lumberjack 9y ago
Are you sure that was Bitcoin's initial goal? Or just speculation from early adopters? In the actual white paper, Satoshi does not mention any of this, although like you, I do remember these motivations being used very early on. I don't know their origin, but Satoshi simply talks about non reversible transactions, in the context of payments over the Internet.
- SippinLean 9y ago
  Satoshi did mention it elsewhere: >The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#selection-33.0-33.538 http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#... Even the whitepaper has a bit about the weaknesses in financial institutions in the intro: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
  - ummjackson 9y ago
    + the genesis block included the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" (Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block)
  - Robotbeat 9y ago
    What's really fantastic, though, is that cryptocurrencies are currently in a large bubble themselves. Privacy of the exchanges is no better as you literally have to send them a picture of your ID. And several exchanges have been hacked with the money stolen. So far, I'd say cryptocurrencies (for the average joe/jane) are WORSE than regular banks. And, on the last point about micropayments, well Bitcoin now has such massive transaction fees and massive overhead that micropayments are even more impossible (without adding more layers). The ideological/theoretical purity of cryptocurrencies is completely negated by using exchanges and by the perverse incentives of proof of work leading to enormous returns to scale for those who have developed custom ASICs. Decentralization requires more effort than centralization, but something that requires effort doesn't generally grow very fast... And so we've centralized cryptocurrencies in a haphazard way, making them a lot easier for people to use--thus enabling cryptocurrencies to grow very fast--but also negating all the theoretical benefits. Something useful will eventually come out of the current mess (and there are various initiatives that help address many of these flaws), but probably not before the Zeitgeist becomes disillusioned with cryptocurrencies.
    - chrisco255 9y ago
      If we went back, like 100 years...banks were not these secure, Federally-insured institutions with complex regulations, etc. Banks were robbed. There were runs on banks. They went out of business, people lost their deposits or their accounts. Just look at "It's a Wonderful Life" for a fictional example. Everyone criticizing the current state of crypto as being worse than banks is missing the forest for the trees. These systems are early tech. Ethereum is barely 2 years old. It was easy to criticize dial-up internet, too. I'm sure Barnes & Nobles scoffed at Amazon at one point. Easy to do this, and assume this "dot-com" thing is just a bubble that's going away at some point. Decentralization is ONE feature of crypto currency. One of several. It's not decentralization alone, but the combination of features that brings value to crypto, including programmable economic incentives (a powerful concept we're just learning the implications of). To answer some of your other points: even exchanges are being built on the blockchain now. We have 0x, EtherDelta, etc, which allow you to trade tokens without revealing your identity. So, that problem is starting to resolve itself. We have Proof-of-Stake coins like Qtum, which avoid the Proof-of-Work issues (Ethereum will be moving to PoS soon). Still not sold on the idea that proof-of-work is inherently bad though. I consider that system very secure, as Bitcoin has proven. The blockchain itself has proven quite resilient to hackers, DDoS attacks, government intervention, etc.
- temp-dude-87844 9y ago
  As others are saying, Satoshi made some political-sounding statements about financial systems around the time of release, but the paper only refers to facets of traditional financial institutions in measured, objective terms. Then again, given that Satoshi's true identity is unknown, a lot of this is necessarily speculation by interpreting a small set of clues.
  - cornyNetHandle 9y ago
    Satoshi worked online with a group of developers for more than a year while keeping perfect operational security. Developed a solution to the byzantine generals problem, but has no published maths papers, otherwise something would have come up through text analysis. Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. Has mined enough bitcoin to be on the list of the world's 100 richest people, but hasn't shifted them. Satoshi is a team employed by something very rich, probably a government.
    - chrisco255 9y ago
      What incentives would a government have to undermine their own monetary system?
      - cornyNetHandle 9y ago
        Governments undermining their own monetary systems is hardly novel, both for stupid reasons and occasionally for clever ones. Governments often implement new economic systems or currencies, with fairly mixed results.
    - AgentME 9y ago
      >Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. what Bitcoin is just the clever but natural progression from previous cryptographic cash systems like b-money. The cypherpunks mailing list had long been interested in making more decentralized cryptographic cash systems along those lines. The fact that one of them finally combined the right cryptographic primitives in the right way to make such a system is hardly a sign of any insider knowledge or outside influence. The creation of Bitcoin was by someone who had been following the cypherpunks' progress in the area for a long time, and finally noticed a clever way to combine standard tools to get the job done. There's certainly nothing superhuman about it. It hardly looks like a problem that was solved by a government throwing money and a team of pros from out of nowhere at it.
- igorgue 9y ago
  It's in the intro of the white paper.
meri_dian 9y ago
Hey! I definitely agree that accountability is important. How do we improve accountability though? I'm skeptical about bitcoin or any other cryptocurrency doing so. From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. It doesn't seem to me that a distributed currency will eliminate financial complexity or perverse incentives. But as an aside, I remember laughing about Dogecoin with friends back in 2014 when we first discovered it. It must feel awesome to have created something people around the world know about.
- ric2b 9y ago
  > From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. Bitcoin wouldn't prevent the mortgage fraud, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".
otakucode 9y ago
They did come to exist for a reason: geography. Primarily, they served as a way to deposit money in one physical location and withdraw it at a different one at a different time. In the modern era, more and more of the economy as a whole flows through these institutions who do nothing more than shuffle numbers down a network link - and yet they charge a percentage cut of the transaction. It costs no more to transmit a larger number, yet they see fit to take more and more depending upon its size. Payment processors are taxing bodies. Mostly unregulated and entirely non-governmental bodies that have as much, if not more, control over the supply of money in the economy than the Federal Reserve. If the Federal Reserve sought to increase the supply of money in the economy, but the payment processors disagreed, who would (or even could) stop them from raising their rates for payment processing to directly counteract the actions of the Fed? No one. They could do it, and they will do it eventually. How anyone could be comfortable with middlemen who provide nothing of significant value sitting in on almost every single transaction which occurs in the entire economy and skimming off the top I have no idea.
- semanticist 9y ago
  > who would The financial services regulator in the appropriate country. In the UK that's mostly the FCA, in the US it's apparently the guys listed here: https://en.wikipedia.org/wiki/List_of_financial_regulatory_authorities_by_country#U-Z https://en.wikipedia.org/wiki/List_of_financial_regulatory_a... > (or even could) stop them from raising their rates for payment processing Using financial services regulation. It's not like they're immune to laws. Your argument is for more regulation, not a deregulated cryptocurrency.
- Jesus_Jones 9y ago
  But also those large bodies provide a certain amount of safety when transferring money, so you can see where it went or if a transfer got lost. That's not true with crypto always, people are on their own. There are endless stories of big banks screwing customers over, often because of uncaring bureaucracy, but I do believe a giant bank will set things right, even if I had to complain - I've never had a problem really, but I have heard of people who do, and don't forget Wells Fargo.
cornyNetHandle 9y ago
What I never understood with the blockchain is the idea that it would change the politics of finance in favour of the little guy. As far as I can tell, financial institutions are exceedingly well practiced at co-opting new monetary systems, as they have been doing exactly that for a very long time, so I never thought that a new model of ledger was ever going to really faze them.
- Certhas 9y ago
  It should be a bonanza for them. Unregulated market. Every trade/contract they want.
  - deleted 9y ago
    [deleted]
  - Demiurge 9y ago
    I don't think anyone wants unregulated markets for everyone, just like no one really wants anarchy. There are criminal, or rebellious elements in every group, but co-beneficial arbitrage is what we've evolved to.
    - cornyNetHandle 9y ago
      Do you mean anomie? I know a few Kropotkin fans who are fairly certain that they want anarchy.
- ummjackson 9y ago
  Absolutely, and that's what is happening right now. I honestly don't have a solution for this problem... other than trying to make it as least appealing to these institutions are possible.
  - cornyNetHandle 9y ago
    The only 'solution' I can see to this problem, is to develop an alternative to the floating monetary unit, of solving the calculation of exchanging goods and labour. Money is useful, because it solves for the 'n' of a given trade by using all the pricing of transactions as a form of parallel computation, so the fact that it may often give sub-optimal results is outweighed by the fact that it has such a low overhead, compared to the traditional alternatives, such as planned resource based economies, which have historically been plagued by both sub-optimal results and a very high overhead. The revolutionary work in economics isn't being done on the blockchain, or in any other new currencies for that matter. It is being done in the world of AI and big-data, when applied to logistics. If you really want to revolutionise money, you have to try and make it obsolete. edit: Also, seeking sources of funding may be problematic for such an enterprise - "Please can you invest in this plan to destroy capitalism." - being a particularly difficult sell. Perhaps if it can be reframed as - "Please can you invest in this plan to destroy capitalism that also has excellent quarterly returns." - then it might get somewhere.
frik 9y ago
Related to joke DogeCoin: One of the US crypto exchanges "Kraken" went dodo. It has been offline for more than 30 hours without prior notice. Maybe another joke, or MtGox -.- https://news.ycombinator.com/item?id=16131750 https://news.ycombinator.com/item?id=16131750 ***MAINTENANCE ANNOUNCEMENT*** Kraken is presently offline for maintenance. While maintenance is underway, the website and API will not be reachable, and orders will not be able to be placed or canceled. The Kraken Team https://www.kraken.com https://www.kraken.com - a former(?) major US crypto exchange
wellboy 9y ago
Also in yhe case of the dozens of countries with incredible inflation, Venezuela, African countries?

lumberjack 9y ago

Are you sure that was Bitcoin's initial goal? Or just speculation from early adopters? In the actual white paper, Satoshi does not mention any of this, although like you, I do remember these motivations being used very early on. I don't know their origin, but Satoshi simply talks about non reversible transactions, in the context of payments over the Internet.

SippinLean 9y ago
Satoshi did mention it elsewhere: >The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#selection-33.0-33.538 http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#... Even the whitepaper has a bit about the weaknesses in financial institutions in the intro: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- ummjackson 9y ago
  + the genesis block included the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" (Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block)
- Robotbeat 9y ago
  What's really fantastic, though, is that cryptocurrencies are currently in a large bubble themselves. Privacy of the exchanges is no better as you literally have to send them a picture of your ID. And several exchanges have been hacked with the money stolen. So far, I'd say cryptocurrencies (for the average joe/jane) are WORSE than regular banks. And, on the last point about micropayments, well Bitcoin now has such massive transaction fees and massive overhead that micropayments are even more impossible (without adding more layers). The ideological/theoretical purity of cryptocurrencies is completely negated by using exchanges and by the perverse incentives of proof of work leading to enormous returns to scale for those who have developed custom ASICs. Decentralization requires more effort than centralization, but something that requires effort doesn't generally grow very fast... And so we've centralized cryptocurrencies in a haphazard way, making them a lot easier for people to use--thus enabling cryptocurrencies to grow very fast--but also negating all the theoretical benefits. Something useful will eventually come out of the current mess (and there are various initiatives that help address many of these flaws), but probably not before the Zeitgeist becomes disillusioned with cryptocurrencies.
  - chrisco255 9y ago
    If we went back, like 100 years...banks were not these secure, Federally-insured institutions with complex regulations, etc. Banks were robbed. There were runs on banks. They went out of business, people lost their deposits or their accounts. Just look at "It's a Wonderful Life" for a fictional example. Everyone criticizing the current state of crypto as being worse than banks is missing the forest for the trees. These systems are early tech. Ethereum is barely 2 years old. It was easy to criticize dial-up internet, too. I'm sure Barnes & Nobles scoffed at Amazon at one point. Easy to do this, and assume this "dot-com" thing is just a bubble that's going away at some point. Decentralization is ONE feature of crypto currency. One of several. It's not decentralization alone, but the combination of features that brings value to crypto, including programmable economic incentives (a powerful concept we're just learning the implications of). To answer some of your other points: even exchanges are being built on the blockchain now. We have 0x, EtherDelta, etc, which allow you to trade tokens without revealing your identity. So, that problem is starting to resolve itself. We have Proof-of-Stake coins like Qtum, which avoid the Proof-of-Work issues (Ethereum will be moving to PoS soon). Still not sold on the idea that proof-of-work is inherently bad though. I consider that system very secure, as Bitcoin has proven. The blockchain itself has proven quite resilient to hackers, DDoS attacks, government intervention, etc.
temp-dude-87844 9y ago
As others are saying, Satoshi made some political-sounding statements about financial systems around the time of release, but the paper only refers to facets of traditional financial institutions in measured, objective terms. Then again, given that Satoshi's true identity is unknown, a lot of this is necessarily speculation by interpreting a small set of clues.
- cornyNetHandle 9y ago
  Satoshi worked online with a group of developers for more than a year while keeping perfect operational security. Developed a solution to the byzantine generals problem, but has no published maths papers, otherwise something would have come up through text analysis. Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. Has mined enough bitcoin to be on the list of the world's 100 richest people, but hasn't shifted them. Satoshi is a team employed by something very rich, probably a government.
  - chrisco255 9y ago
    What incentives would a government have to undermine their own monetary system?
    - cornyNetHandle 9y ago
      Governments undermining their own monetary systems is hardly novel, both for stupid reasons and occasionally for clever ones. Governments often implement new economic systems or currencies, with fairly mixed results.
  - AgentME 9y ago
    >Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. what Bitcoin is just the clever but natural progression from previous cryptographic cash systems like b-money. The cypherpunks mailing list had long been interested in making more decentralized cryptographic cash systems along those lines. The fact that one of them finally combined the right cryptographic primitives in the right way to make such a system is hardly a sign of any insider knowledge or outside influence. The creation of Bitcoin was by someone who had been following the cypherpunks' progress in the area for a long time, and finally noticed a clever way to combine standard tools to get the job done. There's certainly nothing superhuman about it. It hardly looks like a problem that was solved by a government throwing money and a team of pros from out of nowhere at it.
igorgue 9y ago
It's in the intro of the white paper.

meri_dian 9y ago

Hey! I definitely agree that accountability is important. How do we improve accountability though? I'm skeptical about bitcoin or any other cryptocurrency doing so. From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. It doesn't seem to me that a distributed currency will eliminate financial complexity or perverse incentives. But as an aside, I remember laughing about Dogecoin with friends back in 2014 when we first discovered it. It must feel awesome to have created something people around the world know about.

ric2b 9y ago
> From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. Bitcoin wouldn't prevent the mortgage fraud, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".

otakucode 9y ago

They did come to exist for a reason: geography. Primarily, they served as a way to deposit money in one physical location and withdraw it at a different one at a different time. In the modern era, more and more of the economy as a whole flows through these institutions who do nothing more than shuffle numbers down a network link - and yet they charge a percentage cut of the transaction. It costs no more to transmit a larger number, yet they see fit to take more and more depending upon its size. Payment processors are taxing bodies. Mostly unregulated and entirely non-governmental bodies that have as much, if not more, control over the supply of money in the economy than the Federal Reserve. If the Federal Reserve sought to increase the supply of money in the economy, but the payment processors disagreed, who would (or even could) stop them from raising their rates for payment processing to directly counteract the actions of the Fed? No one. They could do it, and they will do it eventually. How anyone could be comfortable with middlemen who provide nothing of significant value sitting in on almost every single transaction which occurs in the entire economy and skimming off the top I have no idea.

semanticist 9y ago
> who would The financial services regulator in the appropriate country. In the UK that's mostly the FCA, in the US it's apparently the guys listed here: https://en.wikipedia.org/wiki/List_of_financial_regulatory_authorities_by_country#U-Z https://en.wikipedia.org/wiki/List_of_financial_regulatory_a... > (or even could) stop them from raising their rates for payment processing Using financial services regulation. It's not like they're immune to laws. Your argument is for more regulation, not a deregulated cryptocurrency.
Jesus_Jones 9y ago
But also those large bodies provide a certain amount of safety when transferring money, so you can see where it went or if a transfer got lost. That's not true with crypto always, people are on their own. There are endless stories of big banks screwing customers over, often because of uncaring bureaucracy, but I do believe a giant bank will set things right, even if I had to complain - I've never had a problem really, but I have heard of people who do, and don't forget Wells Fargo.

cornyNetHandle 9y ago

What I never understood with the blockchain is the idea that it would change the politics of finance in favour of the little guy. As far as I can tell, financial institutions are exceedingly well practiced at co-opting new monetary systems, as they have been doing exactly that for a very long time, so I never thought that a new model of ledger was ever going to really faze them.

Certhas 9y ago
It should be a bonanza for them. Unregulated market. Every trade/contract they want.
- deleted 9y ago
  [deleted]
- Demiurge 9y ago
  I don't think anyone wants unregulated markets for everyone, just like no one really wants anarchy. There are criminal, or rebellious elements in every group, but co-beneficial arbitrage is what we've evolved to.
  - cornyNetHandle 9y ago
    Do you mean anomie? I know a few Kropotkin fans who are fairly certain that they want anarchy.
ummjackson 9y ago
Absolutely, and that's what is happening right now. I honestly don't have a solution for this problem... other than trying to make it as least appealing to these institutions are possible.
- cornyNetHandle 9y ago
  The only 'solution' I can see to this problem, is to develop an alternative to the floating monetary unit, of solving the calculation of exchanging goods and labour. Money is useful, because it solves for the 'n' of a given trade by using all the pricing of transactions as a form of parallel computation, so the fact that it may often give sub-optimal results is outweighed by the fact that it has such a low overhead, compared to the traditional alternatives, such as planned resource based economies, which have historically been plagued by both sub-optimal results and a very high overhead. The revolutionary work in economics isn't being done on the blockchain, or in any other new currencies for that matter. It is being done in the world of AI and big-data, when applied to logistics. If you really want to revolutionise money, you have to try and make it obsolete. edit: Also, seeking sources of funding may be problematic for such an enterprise - "Please can you invest in this plan to destroy capitalism." - being a particularly difficult sell. Perhaps if it can be reframed as - "Please can you invest in this plan to destroy capitalism that also has excellent quarterly returns." - then it might get somewhere.

frik 9y ago

Related to joke DogeCoin: One of the US crypto exchanges "Kraken" went dodo. It has been offline for more than 30 hours without prior notice. Maybe another joke, or MtGox -.- https://news.ycombinator.com/item?id=16131750 https://news.ycombinator.com/item?id=16131750 ***MAINTENANCE ANNOUNCEMENT*** Kraken is presently offline for maintenance. While maintenance is underway, the website and API will not be reachable, and orders will not be able to be placed or canceled. The Kraken Team https://www.kraken.com https://www.kraken.com - a former(?) major US crypto exchange

wellboy 9y ago

Also in yhe case of the dozens of countries with incredible inflation, Venezuela, African countries?