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>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 a

by 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.
  - hudon 8y ago
    > 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 practice. citation needed. The trend in proof-of-work mining is consolidation of costs into large data centers[0], hence why it is no longer profitable for you to run an ASIC in your garage. Furthermore, there are very few profitable pools to choose from [0]. Large miners risk losing a lot of money by changing pools partly because not all pools provide as much revenue as the others. > 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. 3 individuals decided Bitcoin would orphan the longest chain [1]. The community had no say in the matter. How is that not centralized consensus making? > Which I absolutely agree. Decentralized does not mean efficient, I dont argue that. It is not only efficiency, it is also robustness. The more centralized the consensus-making mechanism of a blockchain is, the least likely consensus failures are [2]. If no one would have took control in 2013, there would have been 2 chains for an undetermined amount of time, leading to massive levels of fraud and money loss [1]. Do you think society would benefit more from a Bitcoin that has massive consensus failures like that or would you rather a Bitcoin that has a central authority (the handful of GitHub commiters + mining pool operators) that can quickly fix consensus failures and prevent large institutions from losing a ton of money? [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://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/...
- Jommi 8y ago
  Updated my response.
YZF 8y ago
You can decentralize without block chain and proof of work. You can also create an infinite number of block chain "currencies" that are all decentralized. How many do we have already? Hundreds? What makes bitcoin special? Nothing. The only thing that makes it special is the ongoing speculation on its value, i.e. the supply of people buying it for the hope that other people will buy it at a higher price. Some of those buyers are "miners" some of those buyers buy it directly. But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did.
- 21 8y ago
  > What makes bitcoin special? Nothing. Being first is not nothing. It's called first mover advantage. > But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did. Funny, you also just described VCs with that phrase. Put $1 mil in this company today in the hope of flipping it for $100 mil in two years. They also brag loudly about it, how they "exited" for many times more than they put in. I presume you also find VCs incredibly stupid and unproductive as bitcoin.
  - YZF 8y ago
    VC's can't "flip" a company for $100M unless that company is actually valued at $100M. VCs invest in a team and an idea that they believe will build that company. This is why they are productive (as opposed to bitcoin). The way companies are valued, in general, is by their discounted cash flow. That is the only way you can sell a company for $100M is if you convince someone that company's business will earn at least $100M in present value (typically a lot more). This is exactly the difference between investment and speculation. EDIT: VC's don't need someone to pay more. They need a good business. It's true they're generally interested in selling those businesses but they might stay an owner for a very long time if it's a great business. It's not the other people who pay their money that makes VC's money, it's the business creating value. As to their motivation, of course it is partly to make more money through investment, but they don't rely on a bigger fool to succeed.
    - 8y ago
Ologn 8y ago
> One value of Bitcoin is in its decentralization Gold, bread etc. have value because they can be consumed as commodities. A bitcoin can not be consumed, thus it has no utility, no use value. Currencies (like gold) are commodities with extraordinary properties which make them good currencies. Properties on top of their base utility. Those properties are portablility, divisibility, durability and uniformity. You are saying Bitcoin has a good currency property. But it is a property of an object (a non-object actually) which has no utility. As I said before, then people bring up the last 47 years of the dollar, but that is a whole other discussion.
- Jommi 8y ago
  It can be argued that over 50% of the value of gold is not at all related to it being able to be consumed. Dollars cannot be consumed, or more broadly a network cannot be consumed. Yet one can enjoy the benefits of this network and this can be seen as generating value. Being able to do global transactions without trusting a single authority has value. How is this so hard to see?

by Jommi 8y ago

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.
- hudon 8y ago
  > 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 practice. citation needed. The trend in proof-of-work mining is consolidation of costs into large data centers[0], hence why it is no longer profitable for you to run an ASIC in your garage. Furthermore, there are very few profitable pools to choose from [0]. Large miners risk losing a lot of money by changing pools partly because not all pools provide as much revenue as the others. > 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. 3 individuals decided Bitcoin would orphan the longest chain [1]. The community had no say in the matter. How is that not centralized consensus making? > Which I absolutely agree. Decentralized does not mean efficient, I dont argue that. It is not only efficiency, it is also robustness. The more centralized the consensus-making mechanism of a blockchain is, the least likely consensus failures are [2]. If no one would have took control in 2013, there would have been 2 chains for an undetermined amount of time, leading to massive levels of fraud and money loss [1]. Do you think society would benefit more from a Bitcoin that has massive consensus failures like that or would you rather a Bitcoin that has a central authority (the handful of GitHub commiters + mining pool operators) that can quickly fix consensus failures and prevent large institutions from losing a ton of money? [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://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/...
Jommi 8y ago
Updated my response.

YZF 8y ago

You can decentralize without block chain and proof of work. You can also create an infinite number of block chain "currencies" that are all decentralized. How many do we have already? Hundreds? What makes bitcoin special? Nothing. The only thing that makes it special is the ongoing speculation on its value, i.e. the supply of people buying it for the hope that other people will buy it at a higher price. Some of those buyers are "miners" some of those buyers buy it directly. But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did.

21 8y ago
> What makes bitcoin special? Nothing. Being first is not nothing. It's called first mover advantage. > But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did. Funny, you also just described VCs with that phrase. Put $1 mil in this company today in the hope of flipping it for $100 mil in two years. They also brag loudly about it, how they "exited" for many times more than they put in. I presume you also find VCs incredibly stupid and unproductive as bitcoin.
- YZF 8y ago
  VC's can't "flip" a company for $100M unless that company is actually valued at $100M. VCs invest in a team and an idea that they believe will build that company. This is why they are productive (as opposed to bitcoin). The way companies are valued, in general, is by their discounted cash flow. That is the only way you can sell a company for $100M is if you convince someone that company's business will earn at least $100M in present value (typically a lot more). This is exactly the difference between investment and speculation. EDIT: VC's don't need someone to pay more. They need a good business. It's true they're generally interested in selling those businesses but they might stay an owner for a very long time if it's a great business. It's not the other people who pay their money that makes VC's money, it's the business creating value. As to their motivation, of course it is partly to make more money through investment, but they don't rely on a bigger fool to succeed.
  - 8y ago

Ologn 8y ago

> One value of Bitcoin is in its decentralization Gold, bread etc. have value because they can be consumed as commodities. A bitcoin can not be consumed, thus it has no utility, no use value. Currencies (like gold) are commodities with extraordinary properties which make them good currencies. Properties on top of their base utility. Those properties are portablility, divisibility, durability and uniformity. You are saying Bitcoin has a good currency property. But it is a property of an object (a non-object actually) which has no utility. As I said before, then people bring up the last 47 years of the dollar, but that is a whole other discussion.

Jommi 8y ago
It can be argued that over 50% of the value of gold is not at all related to it being able to be consumed. Dollars cannot be consumed, or more broadly a network cannot be consumed. Yet one can enjoy the benefits of this network and this can be seen as generating value. Being able to do global transactions without trusting a single authority has value. How is this so hard to see?