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Markets are constantly manipulated and what we consider acceptable or not seems at times quite arbitrary. For instance quantitative easing is a practice we enga

Markets are constantly manipulated and what we consider acceptable or not seems at times quite arbitrary. For instance quantitative easing is a practice we engage in whose entire purpose is to artificially inflate the value of markets to help spur 'growth.' Is the problem that people may be trying to manipulate the price of decentralized commodity or that people are investing in a decentralized commodity without realizing that there may be people trying to manipulate it? I think there is a place for 'hard regulations' but I think there is also a time when the focus should be more on information than trying to enforce national rules on a global scale. Even more so when those rules are likely to fall subject to all the failings of political systems including graft, corruption, and the like.

sine 8y ago
decentralized commodity This is a misconception about cryptocurrencies such as Bitcoin or Ethereum. Both are highly centeralized, in the hands of a tiny oligarchical ownership along with a small group of mining warehouses. https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c...
- TangoTrotFox 8y ago
  Decentralization does not mean owned by everybody, it means owned by nobody. For instance imagine we had a mine that was effectively infinitely large (for the sake of the analogy). If we allowed absolutely anybody with a pickaxe to to come in and mine it, we might call it decentralized. Nobody would own the mine. That one group sent a million miners to go mine it would not suddenly make them owners, even if they happened to receive the largest benefit from the it. By contrast centralization would be when one individual or group forcefully stops, generally with government support, any other individual from mining in "their" mine. In this case they would indeed own the mine. In the case of Bitcoin there is absolutely and literally nothing stopping from somebody from starting up a mass mining farm becoming the new plurality beneficiary.
  - Retric 8y ago
    Due to centralization of hardware the Chinese government can trivially do a 51% attack. That's a form of centralization your ignoring due to an overly specific definition. The tiny block size is arguably an ongoing 51% attack from an oligarchy that is in collusion. Again, depending on what you consider centralization having a tiny group that's in direct communication easily qualifies. Pas: In your example if the only option is to use picks from one company or your hands because other tools are confiscated at the enterance then it's very centralized.
    - donjoy 8y ago
      Besides double spending attack they can also censor certain transactions not allowing them to be confirmed.
      - deleted 8y ago
        [deleted]
    - TangoTrotFox 8y ago
      51% attacks are mostly overblown. If a group decides to engage in a 51% attack, all they are doing is effectively revoking their own license to print money - which is what having a > 51% mining capacity in a major crypto translates to. Bitcoin is a public ledger and double spend transactions would be completely visible to all. All this means is that the coin would end up getting forked, similar to what happened when Ethereum screwed up - and it continued on with minimal fanfare. And in that case their screw up was of their own fault instead of something inherent - even fewer people would be inclined to stay on a Bitcoin line that has been 51%'d. Rolling with the mine analogy, a 51% attack is equivalent our group that sent in a million miners changing the diamond mine into a 'glass' one. It becomes fake, and loses nearly all of its value and people move to the new 'real' mine. You do nothing except critically hurt yourself.
      - Retric 8y ago
        This assumes the entity wants Bitcoin to survive. The Chinease government has zero intrest in keeping Bitcoin alive and would happily kill it off. Forks don't help with 51% attacks as the attacker can continue to use their hardware on the fork. Further, you can use a proxy to hid the origin of a block, so Bitcoin would need to move to a new hash which would take a long time and prevent any obvious successor.
- bhouston 8y ago
  And they are likely going to get more centralized over time. The smaller currencies, outside of the top 10, are now all likely vulnerable to 51% attacks. I wouldn't be surprised if that grows to include any outside of the top 5 soon. It looks like this is how smaller currencies die, they are vulnerable at any time to 51% attacks thus no one wants to use them. At least in the traditional banking system if you had a lot of money you could manipulate exchange rates, but you couldn't just outright steal when you had extreme market power.
  - deleted 8y ago
    [deleted]
  - zdkl 8y ago
    The case of coins that optimise for consumer/general purpose hardware (by employing PoW algorithms suited for CPUs, or explicitely switching algorithms periodically) is interesting in this context. Traditional cloud platform providers are also in a position to impact mining on those. I doubt that any coin could cope with those warehouses of potential mining power. I'm looking closely at monero on this subject. Despite or because of their hardcore emphasis on privacy, that project has made interesting decisions regarding how to deal with potentially hostile miners. Disclaimer: Yep, you guessed it, I hold coins, and monero is among them. I'm not saying buy XMR, but definitely take a look at their "politics".
    - simias 8y ago
      I think it's only postponing the inevitable. If any cryptocoin manages to become "the new dollar" the incentives to micro-optimize the mining will be tremendous. Even assuming that they manage to create an algo (or change it often enough) to make custom ASIC pointless it just means that it's CPU vendors who have the edge. Intel, AMD and friends could sell their first batches of new and improved CPUs for a primer during the first months. And it's even less risky for them than for cryptocurrency ASIC vendors because CPUs don't immediately become useless if they can't be used to mine cryptocurrency. It's just a bonus. On top of that even if a cryptocurrency manages somehow to completely level the playing field when it comes to mining hardware you still have significant differences when it comes to cost of electricity. Bitmain will stop building ASICs and start building hydroelectric dams instead. I can't see how you can imagine a future where cryptocurrencies are successful and it's still worthwhile for individuals to mine in their basements. There's always be economies of scale that'll favor the cartels. Beyond that it might even be possible that PoW algorithms designed to run on general purpose CPUs can end up giving more power to the cartel than an ASIC optimized algorithm because in the latter case the network consensus can decide to hard fork and change the PoW algorithm, hurting immensely the ASIC vendors and their users. That gives leverage. Similarly a new cryptocurrency or minority fork can protect itself from a 51% attack by changing the PoW algorithm, making highly-optimized mining farms unable to attack the coin (Bitcoin Gold should probably have considered that). Meanwhile if everybody uses general-purpose server farms to mine then they can easily be repurposed to attack any small coin, making sure that the coin they favor remains dominant.
the_mitsuhiko 8y ago
QE is announced and done by central banks. It’s their job to do that. I don’t see how that is arbitrary.
bhouston 8y ago
Central banks are in the business of market manipulation via interest rates, and money supply. This is to control growth and inflation so that business cycles are smoothed out to a degree.
- mamon 8y ago
  The problem with that approach is that market cycles serve important purpose: they faciliate best allocation of our resources by ensuring that inefficient companies will go bankrupt. Smoothing those cycles out enables poorly managed companies to stay in business for way too long. Then, since there's a limit to a market manipulation that central banks can do we end up with one huge crisis, like Great Depression, or 2008 housing buble, instead of series of small ones.
  - ufo 8y ago
    This austrian-style economic thinking about market cycles lines up with bitcoin ideology but is far from being accepted in mainstream economcs. It is flimsy pseudoscience.
    - TangoTrotFox 8y ago
      Appeals to authority are generally not great, but this is made even more bizarre given that our current economic systems seem to be teetering on a precipice. Think about how truly desperate we are when we need to resort to quantitative easing, zero interest rates, and even flirting with negative interest rates - just to desperately try to maintain the status quo. This doesn't mean any alternative is better, but rather that trying to refute alternatives by appeals to authority is an even worse idea than it usually is. And it's usually already an awful idea!
      - frockington 8y ago
        Europe did even more than flirt with negative interest rates and yesterdays reports proved the negative outcome of that experiment
staplers 8y ago
Never get in the way of web devs inflated egos when they're ranting about things which are vastly outside their scope of expertise. Bitcoin is a trigger word for the HN community and unless you're using every big word to insinuate it's a scam, then you'll get downvoted/ridiculed. You're absolutely right by the way, libor rates have been rigged for decades and governments simply "fine" companies doing it. A simple google search will bring up sources for this claim.

sine 8y ago

decentralized commodity This is a misconception about cryptocurrencies such as Bitcoin or Ethereum. Both are highly centeralized, in the hands of a tiny oligarchical ownership along with a small group of mining warehouses. https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c...

TangoTrotFox 8y ago
Decentralization does not mean owned by everybody, it means owned by nobody. For instance imagine we had a mine that was effectively infinitely large (for the sake of the analogy). If we allowed absolutely anybody with a pickaxe to to come in and mine it, we might call it decentralized. Nobody would own the mine. That one group sent a million miners to go mine it would not suddenly make them owners, even if they happened to receive the largest benefit from the it. By contrast centralization would be when one individual or group forcefully stops, generally with government support, any other individual from mining in "their" mine. In this case they would indeed own the mine. In the case of Bitcoin there is absolutely and literally nothing stopping from somebody from starting up a mass mining farm becoming the new plurality beneficiary.
- Retric 8y ago
  Due to centralization of hardware the Chinese government can trivially do a 51% attack. That's a form of centralization your ignoring due to an overly specific definition. The tiny block size is arguably an ongoing 51% attack from an oligarchy that is in collusion. Again, depending on what you consider centralization having a tiny group that's in direct communication easily qualifies. Pas: In your example if the only option is to use picks from one company or your hands because other tools are confiscated at the enterance then it's very centralized.
  - donjoy 8y ago
    Besides double spending attack they can also censor certain transactions not allowing them to be confirmed.
    - deleted 8y ago
      [deleted]
  - TangoTrotFox 8y ago
    51% attacks are mostly overblown. If a group decides to engage in a 51% attack, all they are doing is effectively revoking their own license to print money - which is what having a > 51% mining capacity in a major crypto translates to. Bitcoin is a public ledger and double spend transactions would be completely visible to all. All this means is that the coin would end up getting forked, similar to what happened when Ethereum screwed up - and it continued on with minimal fanfare. And in that case their screw up was of their own fault instead of something inherent - even fewer people would be inclined to stay on a Bitcoin line that has been 51%'d. Rolling with the mine analogy, a 51% attack is equivalent our group that sent in a million miners changing the diamond mine into a 'glass' one. It becomes fake, and loses nearly all of its value and people move to the new 'real' mine. You do nothing except critically hurt yourself.
    - Retric 8y ago
      This assumes the entity wants Bitcoin to survive. The Chinease government has zero intrest in keeping Bitcoin alive and would happily kill it off. Forks don't help with 51% attacks as the attacker can continue to use their hardware on the fork. Further, you can use a proxy to hid the origin of a block, so Bitcoin would need to move to a new hash which would take a long time and prevent any obvious successor.
bhouston 8y ago
And they are likely going to get more centralized over time. The smaller currencies, outside of the top 10, are now all likely vulnerable to 51% attacks. I wouldn't be surprised if that grows to include any outside of the top 5 soon. It looks like this is how smaller currencies die, they are vulnerable at any time to 51% attacks thus no one wants to use them. At least in the traditional banking system if you had a lot of money you could manipulate exchange rates, but you couldn't just outright steal when you had extreme market power.
- deleted 8y ago
  [deleted]
- zdkl 8y ago
  The case of coins that optimise for consumer/general purpose hardware (by employing PoW algorithms suited for CPUs, or explicitely switching algorithms periodically) is interesting in this context. Traditional cloud platform providers are also in a position to impact mining on those. I doubt that any coin could cope with those warehouses of potential mining power. I'm looking closely at monero on this subject. Despite or because of their hardcore emphasis on privacy, that project has made interesting decisions regarding how to deal with potentially hostile miners. Disclaimer: Yep, you guessed it, I hold coins, and monero is among them. I'm not saying buy XMR, but definitely take a look at their "politics".
  - simias 8y ago
    I think it's only postponing the inevitable. If any cryptocoin manages to become "the new dollar" the incentives to micro-optimize the mining will be tremendous. Even assuming that they manage to create an algo (or change it often enough) to make custom ASIC pointless it just means that it's CPU vendors who have the edge. Intel, AMD and friends could sell their first batches of new and improved CPUs for a primer during the first months. And it's even less risky for them than for cryptocurrency ASIC vendors because CPUs don't immediately become useless if they can't be used to mine cryptocurrency. It's just a bonus. On top of that even if a cryptocurrency manages somehow to completely level the playing field when it comes to mining hardware you still have significant differences when it comes to cost of electricity. Bitmain will stop building ASICs and start building hydroelectric dams instead. I can't see how you can imagine a future where cryptocurrencies are successful and it's still worthwhile for individuals to mine in their basements. There's always be economies of scale that'll favor the cartels. Beyond that it might even be possible that PoW algorithms designed to run on general purpose CPUs can end up giving more power to the cartel than an ASIC optimized algorithm because in the latter case the network consensus can decide to hard fork and change the PoW algorithm, hurting immensely the ASIC vendors and their users. That gives leverage. Similarly a new cryptocurrency or minority fork can protect itself from a 51% attack by changing the PoW algorithm, making highly-optimized mining farms unable to attack the coin (Bitcoin Gold should probably have considered that). Meanwhile if everybody uses general-purpose server farms to mine then they can easily be repurposed to attack any small coin, making sure that the coin they favor remains dominant.

the_mitsuhiko 8y ago

QE is announced and done by central banks. It’s their job to do that. I don’t see how that is arbitrary.

bhouston 8y ago

Central banks are in the business of market manipulation via interest rates, and money supply. This is to control growth and inflation so that business cycles are smoothed out to a degree.

mamon 8y ago
The problem with that approach is that market cycles serve important purpose: they faciliate best allocation of our resources by ensuring that inefficient companies will go bankrupt. Smoothing those cycles out enables poorly managed companies to stay in business for way too long. Then, since there's a limit to a market manipulation that central banks can do we end up with one huge crisis, like Great Depression, or 2008 housing buble, instead of series of small ones.
- ufo 8y ago
  This austrian-style economic thinking about market cycles lines up with bitcoin ideology but is far from being accepted in mainstream economcs. It is flimsy pseudoscience.
  - TangoTrotFox 8y ago
    Appeals to authority are generally not great, but this is made even more bizarre given that our current economic systems seem to be teetering on a precipice. Think about how truly desperate we are when we need to resort to quantitative easing, zero interest rates, and even flirting with negative interest rates - just to desperately try to maintain the status quo. This doesn't mean any alternative is better, but rather that trying to refute alternatives by appeals to authority is an even worse idea than it usually is. And it's usually already an awful idea!
    - frockington 8y ago
      Europe did even more than flirt with negative interest rates and yesterdays reports proved the negative outcome of that experiment

staplers 8y ago

Never get in the way of web devs inflated egos when they're ranting about things which are vastly outside their scope of expertise. Bitcoin is a trigger word for the HN community and unless you're using every big word to insinuate it's a scam, then you'll get downvoted/ridiculed. You're absolutely right by the way, libor rates have been rigged for decades and governments simply "fine" companies doing it. A simple google search will bring up sources for this claim.