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How are blockchain assets, whose scarcity is defined by the protocol and agreed upon by all participating node operators, infinite in supply? Edit: Arguing in

How are blockchain assets, whose scarcity is defined by the protocol and agreed upon by all participating node operators, infinite in supply? Edit: Arguing in good faith... you could suggest changing the protocol, sure, however you would need follow that particular blockchain's rules for gaining consensus about changing the rules first.

lottin 6y ago
Yes, but it's an artificial scarcity. Like you say, these assets are only scarce because all the participants agree that they're scarce. This is different from physical objects, which are scarce because of the laws of nature.
- mikegreenberg 6y ago
  I'm not sure why that distinction is important. Value is realized in use of a complete product and are not represented by the sum of its parts. (Value is not zero sum. A log and a plank together can arguably provide more value as a slope than the log and the plank can provide value on their own.) Sure, you can decompose the system to remove artificial scarcity, but that's part of the product. The market has manifested it into existence because it is valuable and users trust the protocol sufficiently that it will not be changed from underneath them. And without evidence that the protocol is brittle enough to allow rules to break, that trust in the protocol is more valuable than any human's promise.
  - lottin 6y ago
    I have no idea what you're talking about :(
    - mikegreenberg 6y ago
      You could've focused on responding to my first sentence, but maybe you're not interested in engaging in honest discourse? Best of luck!
  - hakfoo 6y ago
    I think the question is less about "can it maintain a (premise of) scarcity" and more "are the scarce tokens worth having?" There's plenty of things that are scarce but essentially worthless. There's no robust secondary market in Penn Central Railroad timetables, the little plastic caps that SNES cartridges came with, or copies of the May 18, 1986 edition of Arizona Republic. Having a built in utility factor is a very strong way to answer the "is it worth having?" question. It provides a stickiness to the asset, rather than just being a pump-and-dump vehicle. Gold says "I'm worth having! I can be made into jewelry and really good connectors for premium audio cables." The paper dollar says "I'm worth having! I can keep the IRS from sending you to jail." Hell, even MMORPG gold says "I'm worth having, because you can trade me for a Sparkly Unicorn Rainbow Dragon of Death mount." Different cryptocurrencies are making a wide range of cases, ranging from "I can let you transfer value cheaply and quickly across borders" to "I can let you buy contraband goods without an obvious paper trail." And a lot of these claims are still to be proven or fully realized. It's entirely possible we're barking up the wrong tree with blockchain. Maybe there's a killer app for it that's not currency, but the current trends seem to be predominantly about it. (It feels like a lot of the supply-chain-tracking and registry-of-ownership hype died down)
zaphar 6y ago
Bitcoin already forked once and magically duplicated the digital assets. I profited quite handsomly as a result. The scarcity is not enforced by the protocol it's enforced by community agreement.
- selestify 6y ago
  How is that different from the USD, the scarcity of which is enforced by the USG?
- mikegreenberg 6y ago
  Disagree. Bitcoin forked into other tokens, but the original token's guarantees have not changed. The other tokens are free to function independently of one another but there was never a guarantee (by the protocol or agreement) that Bitcoin would be the only token in existence. Your profit was actually made possible by others adopting these other tokens which is entirely external to Bitcoin's protocol or community's desires. And as we've seen with some Bitcoin spinoffs, forking does not guarantee profit.

lottin 6y ago

Yes, but it's an artificial scarcity. Like you say, these assets are only scarce because all the participants agree that they're scarce. This is different from physical objects, which are scarce because of the laws of nature.

mikegreenberg 6y ago
I'm not sure why that distinction is important. Value is realized in use of a complete product and are not represented by the sum of its parts. (Value is not zero sum. A log and a plank together can arguably provide more value as a slope than the log and the plank can provide value on their own.) Sure, you can decompose the system to remove artificial scarcity, but that's part of the product. The market has manifested it into existence because it is valuable and users trust the protocol sufficiently that it will not be changed from underneath them. And without evidence that the protocol is brittle enough to allow rules to break, that trust in the protocol is more valuable than any human's promise.
- lottin 6y ago
  I have no idea what you're talking about :(
  - mikegreenberg 6y ago
    You could've focused on responding to my first sentence, but maybe you're not interested in engaging in honest discourse? Best of luck!
- hakfoo 6y ago
  I think the question is less about "can it maintain a (premise of) scarcity" and more "are the scarce tokens worth having?" There's plenty of things that are scarce but essentially worthless. There's no robust secondary market in Penn Central Railroad timetables, the little plastic caps that SNES cartridges came with, or copies of the May 18, 1986 edition of Arizona Republic. Having a built in utility factor is a very strong way to answer the "is it worth having?" question. It provides a stickiness to the asset, rather than just being a pump-and-dump vehicle. Gold says "I'm worth having! I can be made into jewelry and really good connectors for premium audio cables." The paper dollar says "I'm worth having! I can keep the IRS from sending you to jail." Hell, even MMORPG gold says "I'm worth having, because you can trade me for a Sparkly Unicorn Rainbow Dragon of Death mount." Different cryptocurrencies are making a wide range of cases, ranging from "I can let you transfer value cheaply and quickly across borders" to "I can let you buy contraband goods without an obvious paper trail." And a lot of these claims are still to be proven or fully realized. It's entirely possible we're barking up the wrong tree with blockchain. Maybe there's a killer app for it that's not currency, but the current trends seem to be predominantly about it. (It feels like a lot of the supply-chain-tracking and registry-of-ownership hype died down)

zaphar 6y ago

Bitcoin already forked once and magically duplicated the digital assets. I profited quite handsomly as a result. The scarcity is not enforced by the protocol it's enforced by community agreement.

selestify 6y ago
How is that different from the USD, the scarcity of which is enforced by the USG?
mikegreenberg 6y ago
Disagree. Bitcoin forked into other tokens, but the original token's guarantees have not changed. The other tokens are free to function independently of one another but there was never a guarantee (by the protocol or agreement) that Bitcoin would be the only token in existence. Your profit was actually made possible by others adopting these other tokens which is entirely external to Bitcoin's protocol or community's desires. And as we've seen with some Bitcoin spinoffs, forking does not guarantee profit.