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My assessment is that the greatest vulnerability in Bitcoin is its breathless supporters, who will look past the dynamics of Bitcoin in adoration of the mechani

by beager 8y ago

My assessment is that the greatest vulnerability in Bitcoin is its breathless supporters, who will look past the dynamics of Bitcoin in adoration of the mechanics of Bitcoin. To that end, larger, more sophisticated enterprises (banks, hedge funds, etc) are likely leeching slowly off the system, propping the price up and inflating it when they can, so they can extract as much value as possible out of its correction to a value commensurate to its utility. Every other technical vulnerability, notional or demonstrated, is at least an order of magnitude harder to exploit.

wpietri 8y ago
I think the split you draw between people looking at Bitcoin-the-real-thing and people adoring the machinery is an excellent one. If you look at the original paper, it's pretty clear that Bitcoin was meant to be peer-to-peer electronic cash: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf In practice, it has failed at this aim. I don't think that was necessarily so; plenty of things start out rough and become more useful over time. But the mechanics-adorers I've talked with seemed willfully blind to all the practical issues. We can't fix problems we refuse to see, so Bitcoin has preserved its machinery at the expense of fulfilling its vision.
- nicky0 8y ago
  How would you change the machinery?
  - wpietri 8y ago
    Personally, I wouldn't. Most people don't want digital cash for the same reasons they don't use real cash: your risk of theft is higher, it's not as convenient to use, transactions can't be reversed, and you lose a lot of buyer protections. I use technology to solve problems for people. The few niches Bitcoin has found (e.g., speculation, money laundering, ransoms, light drug crime) are not really what I would call solving problems for people.
    - GuthL 8y ago
      Your personal opinion on cash is irrelevant to the subject. Cash has property you say you don't want. Some people might and do want them. Just have a look at what the relationship between Germans and cash. Bitcoin has property similar to cash to many extend. It was not technically possible before its invention and as such as it is a real intrinsect value (dont ask me to quantify it)
      - wpietri 8y ago
        It wasn't my personal opinion. In the US, the use of cash is below half of personal transactions and has been declining for years; most countries are similar. I personally am more like the Germans here, but I recognize that I'm an outlier. Regardless, your point doesn't make a lot of sense, because many Germans surveyed on this say they use cash because it gives them better control over spending and more clarity as to where their money goes. Bitcoin is in no way superior to a debit card in that regard. The value of new possibility isn't really intrinsic; you measure it through seeing if people actually use it. With Bitcoin they mostly don't, which suggests that it is at best more useful to a small slice of people.
- dnautics 8y ago
  In practice, Airbnb has failed at its aim of providing airbed style accommodations for conference goers.
  - cheschire 8y ago
    Airbnb is a service, where bitcoin is a commodity. I don't mean to imply you are wrong. I simply mean that there may be an even more interesting parallel out there where a commodity is no longer being used in its originally intended way which may support bitcoin's evolution of purpose.
    - aje403 8y ago
      Airbnb is a service. Bitcoin is a commodity in the same way online poker chips are a commodity
    - optimuspaul 8y ago
      How is bitcoin a commodity? I think you give it too much credit to elevate it to that status.
      - this_user 8y ago
        It's structure and behaviour much more resembles a commodity than it does any other asset class; it is basically digital gold. The CFTC agrees and considers itself the responsible regulator.
        wpietri 8y ago
        With the important distinction that it's not an economically useful commodity. Sure, the CFTC regulated it, because their remit is one of the broadest. So you could call it a commodity by default. But it's not like you could make jewelry or breakfast cereal from Bitcoins in the same way you could use commodities like gold or wheat. So it's arguably more like a gambling instrument than any real commodity. Really, though, I think the closest financial match is a private currency: https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Private_currency These are illegal in most places because they historically have caused a lot of problems without much in the way of redeeming value: https://en.wikipedia.org/wiki/Banking_in_the_United_States#1837%E2%80%931863:_%22Free_Banking%22_Era https://en.wikipedia.org/wiki/Banking_in_the_United_States#1...
erikpukinskis 8y ago
What’s the difference between dynamics and mechanics?
- rvense 8y ago
  The mechanics would be the internal workings, a tamper-proof shared ledger. It's so amazing! Think of all the possibilities! Then it hits the real world, and suddenly what people actually do with it and its valuation is dependent on how the exchanges operate (are exchanges even mentioned in the original paper?), energy prices in China, media coverage, interactions with alt-coins, etc.
  - Erlich_Bachman 8y ago
    You seem to assume that the greatest feat of Bitcoin is it's price. Yes, sure the price might be affected (somewhat) by how exchanges operate and media covers. However, many people don't care too much about the monetary price, and play the long game. In the long run, the market always adjusts. In in the end, it is the same with any other commodity or currency.
    - bitreality 8y ago
      Mr. Bachman, with all due respect, I would argue that the majority of people proclaiming they don't care about the price are bluffing. Perhaps even bluffing themselves. Bitcoin's price increase has far outpaced its adoption or disruption of the financial system.
    - Nursie 8y ago
      What game are you playing if you don't care about the price?
      - radisb 8y ago
        Do you care about the price of 1 dollar? "In what?" you will ask. "Exactly. In what?" I will respond.
JKCalhoun 8y ago
I see so many red flags with Bitcoin that is amazes me that it still has its backers. There would seem to be organizations (states?) that can wield tremendous resources to mine Bitcoins. I would think this would devalue the currency and, as is so often the case in life, fuck over the little people. Never mind the insane amount of actual energy resources needed for this virtual currency. It almost seems immoral. And with exploits like the one in this article, how can anyone continue to have confidence in it? It feels more akin to Confederate money printed during the U.S. Civil War.

by beager 8y ago

wpietri 8y ago

I think the split you draw between people looking at Bitcoin-the-real-thing and people adoring the machinery is an excellent one. If you look at the original paper, it's pretty clear that Bitcoin was meant to be peer-to-peer electronic cash: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf In practice, it has failed at this aim. I don't think that was necessarily so; plenty of things start out rough and become more useful over time. But the mechanics-adorers I've talked with seemed willfully blind to all the practical issues. We can't fix problems we refuse to see, so Bitcoin has preserved its machinery at the expense of fulfilling its vision.

nicky0 8y ago
How would you change the machinery?
- wpietri 8y ago
  Personally, I wouldn't. Most people don't want digital cash for the same reasons they don't use real cash: your risk of theft is higher, it's not as convenient to use, transactions can't be reversed, and you lose a lot of buyer protections. I use technology to solve problems for people. The few niches Bitcoin has found (e.g., speculation, money laundering, ransoms, light drug crime) are not really what I would call solving problems for people.
  - GuthL 8y ago
    Your personal opinion on cash is irrelevant to the subject. Cash has property you say you don't want. Some people might and do want them. Just have a look at what the relationship between Germans and cash. Bitcoin has property similar to cash to many extend. It was not technically possible before its invention and as such as it is a real intrinsect value (dont ask me to quantify it)
    - wpietri 8y ago
      It wasn't my personal opinion. In the US, the use of cash is below half of personal transactions and has been declining for years; most countries are similar. I personally am more like the Germans here, but I recognize that I'm an outlier. Regardless, your point doesn't make a lot of sense, because many Germans surveyed on this say they use cash because it gives them better control over spending and more clarity as to where their money goes. Bitcoin is in no way superior to a debit card in that regard. The value of new possibility isn't really intrinsic; you measure it through seeing if people actually use it. With Bitcoin they mostly don't, which suggests that it is at best more useful to a small slice of people.
dnautics 8y ago
In practice, Airbnb has failed at its aim of providing airbed style accommodations for conference goers.
- cheschire 8y ago
  Airbnb is a service, where bitcoin is a commodity. I don't mean to imply you are wrong. I simply mean that there may be an even more interesting parallel out there where a commodity is no longer being used in its originally intended way which may support bitcoin's evolution of purpose.
  - aje403 8y ago
    Airbnb is a service. Bitcoin is a commodity in the same way online poker chips are a commodity
  - optimuspaul 8y ago
    How is bitcoin a commodity? I think you give it too much credit to elevate it to that status.
    - this_user 8y ago
      It's structure and behaviour much more resembles a commodity than it does any other asset class; it is basically digital gold. The CFTC agrees and considers itself the responsible regulator.
      - wpietri 8y ago
        With the important distinction that it's not an economically useful commodity. Sure, the CFTC regulated it, because their remit is one of the broadest. So you could call it a commodity by default. But it's not like you could make jewelry or breakfast cereal from Bitcoins in the same way you could use commodities like gold or wheat. So it's arguably more like a gambling instrument than any real commodity. Really, though, I think the closest financial match is a private currency: https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Private_currency These are illegal in most places because they historically have caused a lot of problems without much in the way of redeeming value: https://en.wikipedia.org/wiki/Banking_in_the_United_States#1837%E2%80%931863:_%22Free_Banking%22_Era https://en.wikipedia.org/wiki/Banking_in_the_United_States#1...

erikpukinskis 8y ago

What’s the difference between dynamics and mechanics?

rvense 8y ago
The mechanics would be the internal workings, a tamper-proof shared ledger. It's so amazing! Think of all the possibilities! Then it hits the real world, and suddenly what people actually do with it and its valuation is dependent on how the exchanges operate (are exchanges even mentioned in the original paper?), energy prices in China, media coverage, interactions with alt-coins, etc.
- Erlich_Bachman 8y ago
  You seem to assume that the greatest feat of Bitcoin is it's price. Yes, sure the price might be affected (somewhat) by how exchanges operate and media covers. However, many people don't care too much about the monetary price, and play the long game. In the long run, the market always adjusts. In in the end, it is the same with any other commodity or currency.
  - bitreality 8y ago
    Mr. Bachman, with all due respect, I would argue that the majority of people proclaiming they don't care about the price are bluffing. Perhaps even bluffing themselves. Bitcoin's price increase has far outpaced its adoption or disruption of the financial system.
  - Nursie 8y ago
    What game are you playing if you don't care about the price?
    - radisb 8y ago
      Do you care about the price of 1 dollar? "In what?" you will ask. "Exactly. In what?" I will respond.

JKCalhoun 8y ago

I see so many red flags with Bitcoin that is amazes me that it still has its backers. There would seem to be organizations (states?) that can wield tremendous resources to mine Bitcoins. I would think this would devalue the currency and, as is so often the case in life, fuck over the little people. Never mind the insane amount of actual energy resources needed for this virtual currency. It almost seems immoral. And with exploits like the one in this article, how can anyone continue to have confidence in it? It feels more akin to Confederate money printed during the U.S. Civil War.