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> Bitcoin and Zcash are stores of value that allow users to participate in this decentralized application space without the need for fiat currencies. How is Bi

by Ologn 8y ago

> Bitcoin and Zcash are stores of value that allow users to participate in this decentralized application space without the need for fiat currencies. How is Bitcoin a store of value? An ounce of gold is a store of value - someone had to do the work of finding and mining it, and it can be used to fill teeth and conduct electricity. Gold is portable, uniform, durable and divisible, so it is a commodity that has good currency qualities. But almost every commodity that can be sold is a store of value - what value does Bitcoin have? Bitcoin boosters scout around the world for some commodity to compare it to and fail, as it is inherently valueless and ultimately worthless, i.e. ultimately worth nothing. So they come across the US dollar, an item whose value has a question mark over it. So they say "this is like a dollar". Of course, one can then just say a joke cryptocoin like Dogecoin should have a market cap that is over half a billion dollars. And it does ( https://coinmarketcap.com/currencies/dogecoin/ https://coinmarketcap.com/currencies/dogecoin/ ). Even Dogecoin's creator says the half billion dollar market cap is all just a big joke. Bitcoin doesn't even have the portable quality of a good currency. Bitcoin transactions have hit large transaction latency issues (or had them when I last looked into it when I did a transaction a few months ago). So the "currency" isn't even good as a currency any more. US fiat currency was indirectly backed by gold until 47 years ago, and with the window then shut, it is now doubly-indirectly backed by that gold (the US did not get rid of its 8000 tons of gold at Fort Knox and other locations in 1971 when, apparently, a magic wand was waved over Treasury department printing presses, giving them the power to create value). I won't go into why the dollar and Bitcoin are not equivalent here (but if someone makes a coherent explanation why the US did not get rid of its 8000 tons of gold, I will). At least Pets.com, subprime new housing development real estate and so forth had value at some level. These cryptocurrencies have no value. They are all going to crash. I wondered for a while when and how that will happen, but now I know - things like Dogecoin and its clones will bring it down. Another thing - anyone who bought Bitcoin, Ethereum or Lumen in January is currently under water. All three currencies dipped at that time, and in fact all cryptocurrencies dipped simultaneously. So when the (total) crash comes, I predict all cryptocurrencies will go to zero. As Keynes said, markets can remain irrational longer than you or I can remain solvent.

Jommi 8y ago
>How is Bitcoin a store of value? An ounce of gold is a store of value - someone had to do the work of finding and mining it, and it can be used to fill teeth and conduct electricity. Gold is portable, uniform, durable and divisible, so it is a commodity that has good currency qualities. But almost every commodity that can be sold is a store of value - what value does Bitcoin have? Why do we keep going over this? There are tons of material online to help you to the other side of this argument, not to mention the article itself. One value of Bitcoin is in its decentralization. How can you say that is worthless? Is it worthless to have an alternative means of payment that is available to nearly anyone around the world and is not controlled by a single authority? I would very much like to see your thoughts on this topic, but please, before responding take a moment to think. Your current comment is so full of vitriol that I think it might blind your rationality.
- hudon 8y ago
  > One value of Bitcoin is in its decentralization. There is surmounting evidence that this is not true and that Bitcoin is actually quite centralized and would benefit from being more centralized [0][1][2][3][4]. [0] https://arxiv.org/abs/1801.03998 https://arxiv.org/abs/1801.03998 [1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-bitcoin-fork-centralized-decision-making-saved-the-day/ https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-... [2] https://arewedecentralizedyet.com/ https://arewedecentralizedyet.com/ [3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf [4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2017/wp_tse_817.pdf https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/... > Why do we keep going over this? Because blockchainers are not listening to the science... why would they? It invalidates their whole investment thesis.
  - Jommi 8y ago
    Thanks for these links, usually when talking about it not being decentralized the source is either Forbes or Business Insider. Let's see what your sources have in store. EDIT: [0] https://arxiv.org/abs/1801.03998 https://arxiv.org/abs/1801.03998 Good paper, lots of good research. Identifies that top pools do not change position too often. Shows also that system profits prefer higher pool sizes. However, fails to notice that pools are made of individual miners/groups and do not represenet single huge datacenters. Groups/individuals can often change pools, and this is not an uncommon practive. [1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-.. https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-.... First thing to note is that this is 2013, when the bitcoin world was a lot more centralized (Only one major exchange, MT.Gox, much less visbiiltiy and credibility. I argue that more coverage results in a more decentralized system) Also, this is not really a decision of centralization, but feels akin to an UN meeting, where multiple actors discuss rationally the best course of action for their community, and then move in regards to that course. No one forced the community to follow their moves, but when they did, the results were better for the whole community. Of course, if they had not given advice from an authoritarian position, nobody might have listened. Yet, still Bitcoin would have survived, as explained by Buterin: https://bitcoinmagazine.com/articles/bitcoin-network-shaken-by-blockchain-fork-1363144448/ https://bitcoinmagazine.com/articles/bitcoin-network-shaken-... [2] https://arewedecentralizedyet.com/ https://arewedecentralizedyet.com/ See: Pools are not huge data centers >% of money supply held by top 100 accounts = 19% Not an accurate measure of centralization. Addresses do not mean single people, or even single organizations. Most of these addresses belong to either: >Zombie addresses of huge amounts of bitcoin gathered in the early days >Exchange cold and hot wallets >Huge organizations [3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf Commentary on the developer activity of bitcoin compared to other open source code projects. Shows some centralization, but still not even close to a central authority. Not to mention that anyone can join the project at any time. If we say Linux development is decentralized, then we can say bitcoin development is decentralized. This is not evne taking into account the interaction that needs to be done between the developers and the miners. [4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/.. https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/.... Mostly about ineffieciencies in mining and decentralization. The core conclusion from the text is this: "This points to a major dilemma for distributed ledgers: On the one hand, the anonymity and decentralisation of public blockchains expose them to coordination failures and externalities. On the other hand, private blockchains can restore coordination and internalise externalities, but only to the extent that they involve the intervention of a centralised authority, which goes against the fundamental motivation for blockchain." Which I absolutely agree. Decentralized does not mean efficient, I dont argue that. ---- ---- ---- So all in all, the sources show that the decentralization of Bitcoin could be better. Yet, in all cases decentralization exists, and is not in imminent threat. To all Bitcoin "centralized" is not only erroneus, but disingenious.

by Ologn 8y ago

Jommi 8y ago

>How is Bitcoin a store of value? An ounce of gold is a store of value - someone had to do the work of finding and mining it, and it can be used to fill teeth and conduct electricity. Gold is portable, uniform, durable and divisible, so it is a commodity that has good currency qualities. But almost every commodity that can be sold is a store of value - what value does Bitcoin have? Why do we keep going over this? There are tons of material online to help you to the other side of this argument, not to mention the article itself. One value of Bitcoin is in its decentralization. How can you say that is worthless? Is it worthless to have an alternative means of payment that is available to nearly anyone around the world and is not controlled by a single authority? I would very much like to see your thoughts on this topic, but please, before responding take a moment to think. Your current comment is so full of vitriol that I think it might blind your rationality.

hudon 8y ago
> One value of Bitcoin is in its decentralization. There is surmounting evidence that this is not true and that Bitcoin is actually quite centralized and would benefit from being more centralized [0][1][2][3][4]. [0] https://arxiv.org/abs/1801.03998 https://arxiv.org/abs/1801.03998 [1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-bitcoin-fork-centralized-decision-making-saved-the-day/ https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-... [2] https://arewedecentralizedyet.com/ https://arewedecentralizedyet.com/ [3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf [4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2017/wp_tse_817.pdf https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/... > Why do we keep going over this? Because blockchainers are not listening to the science... why would they? It invalidates their whole investment thesis.
- Jommi 8y ago
  Thanks for these links, usually when talking about it not being decentralized the source is either Forbes or Business Insider. Let's see what your sources have in store. EDIT: [0] https://arxiv.org/abs/1801.03998 https://arxiv.org/abs/1801.03998 Good paper, lots of good research. Identifies that top pools do not change position too often. Shows also that system profits prefer higher pool sizes. However, fails to notice that pools are made of individual miners/groups and do not represenet single huge datacenters. Groups/individuals can often change pools, and this is not an uncommon practive. [1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-.. https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-.... First thing to note is that this is 2013, when the bitcoin world was a lot more centralized (Only one major exchange, MT.Gox, much less visbiiltiy and credibility. I argue that more coverage results in a more decentralized system) Also, this is not really a decision of centralization, but feels akin to an UN meeting, where multiple actors discuss rationally the best course of action for their community, and then move in regards to that course. No one forced the community to follow their moves, but when they did, the results were better for the whole community. Of course, if they had not given advice from an authoritarian position, nobody might have listened. Yet, still Bitcoin would have survived, as explained by Buterin: https://bitcoinmagazine.com/articles/bitcoin-network-shaken-by-blockchain-fork-1363144448/ https://bitcoinmagazine.com/articles/bitcoin-network-shaken-... [2] https://arewedecentralizedyet.com/ https://arewedecentralizedyet.com/ See: Pools are not huge data centers >% of money supply held by top 100 accounts = 19% Not an accurate measure of centralization. Addresses do not mean single people, or even single organizations. Most of these addresses belong to either: >Zombie addresses of huge amounts of bitcoin gathered in the early days >Exchange cold and hot wallets >Huge organizations [3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf Commentary on the developer activity of bitcoin compared to other open source code projects. Shows some centralization, but still not even close to a central authority. Not to mention that anyone can join the project at any time. If we say Linux development is decentralized, then we can say bitcoin development is decentralized. This is not evne taking into account the interaction that needs to be done between the developers and the miners. [4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/.. https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/.... Mostly about ineffieciencies in mining and decentralization. The core conclusion from the text is this: "This points to a major dilemma for distributed ledgers: On the one hand, the anonymity and decentralisation of public blockchains expose them to coordination failures and externalities. On the other hand, private blockchains can restore coordination and internalise externalities, but only to the extent that they involve the intervention of a centralised authority, which goes against the fundamental motivation for blockchain." Which I absolutely agree. Decentralized does not mean efficient, I dont argue that. ---- ---- ---- So all in all, the sources show that the decentralization of Bitcoin could be better. Yet, in all cases decentralization exists, and is not in imminent threat. To all Bitcoin "centralized" is not only erroneus, but disingenious.