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Because it's the one that's caught on. There's no actual need for inherent utility of it that can't be papered over by running everything through one of a few b

Because it's the one that's caught on. There's no actual need for inherent utility of it that can't be papered over by running everything through one of a few big exchanges. Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin. (I'm drawing a comparison to gold here, but this is also true for other commodities, and for that matter, stocks.)

danShumway 6y ago
> Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin. That's an important point, because it prompts the question: what is the problem that Bitcoin is solving if the preferable outcome is that it does exactly the same things that gold and centralized banks already do? The more that I hear people justify slow transaction times, high fees, and a general lack of platform evolution, the more it sounds to me like the only problem that Bitcoin is solving in the real world is that gold is already stable, and speculators need a new thing to jump on. The arguments people are making today about why slow transactions are irrelevant are not the same arguments that people were making when Bitcoin was new. It's revisionist history. And when people are talking about centralization as the end goal... this is also part of why I'm skeptical about claims that proof of stake is going to solve anything on the environmental front, or that microtransactions are ever actually going to get better. The overwhelming perspective I'm seeing here is that nobody involved in speculating on Bitcoin cares about the technological side at all, and I don't see what incentive there is for anyone to make mining easier, cheaper, more democratic, or more environmentally friendly. The whole point seems to be that people want to get in early and then erect as high barriers of entry as possible. What makes people think that anyone speculating on Bitcoin is going to care about proof of stake? At the point where bitcoin becomes a nationally backed currency that is just a backbone for other smaller systems and is (for most people) completely independent from their regular everyday transactions -- there's no advantage to creating that world, that is the world we already have. The only difference is that a few people on Reddit haven't gotten rich off of the world we have. The fact that the majority of the market is still standardized on Bitcoin despite a plurality of clearly better coins drives home to me that the discussion about Bitcoin has nothing to do with practical merits of the system, and everything to do with a bunch of people trying to extract as much money as possible before tragedy of the commons sets in. We can make centralized banks without bitcoin. If that's the end goal, then we should absolutely get rid of the blockchain because blockchain is not necessary for a centralized bank exchange with a small number of government-level actors. I'm surrounded by people who tell me that Bitcoin is a giant innovation, but who are then openly hostile to any kind of improvement to the platform and who are continually dismissing valid criticisms of its technology and governance model as irrelevant because those criticisms don't directly impact Bitcoin's value as a purely speculative currency. What you're describing when you propose a single, centralized exchange is, "we want to make banks a second time the same way, except less efficiently with fundamentally outdated technology, because we want some of the pie this time." Which, great, but as a non-speculator, why on earth should I support that or care about it?
- freeone3000 6y ago
  The problem it solves is that currently, it's not possible for any single central entity to prove anything about ownership changes directly. Now, you can simply trace every on-chain transaction on the chain -- it's as if there were a universal log of every SWIFT transaction, available to the public. It's incredibly useful for forensics! And we can leverage the huge amount of compute power directed here to do useful work as a side effect, by putting in identity stakes and layer2'ing things like proof-of-identity or proof-of-ownership.
  - danShumway 6y ago
    But no, it doesn't solve those problems. Because you're talking about setting up a central exchange and layering separate currencies on top of it. You're talking about the majority of settlements and transactions taking place off-chain. So when you think about tracking on-chain transactions, what you're really talking about is tracking government-level, giant transactions that are largely divorced from the kind of detailed forensics that people would want to do. Which... there are better ways to audit giant government-level agencies than a blockchain. Similarly, leveraging the blockchain to handle things like proof-of-identity doesn't work if the transaction speed for ordinary people can't keep up. If you want to use Bitcoin for proof of identity transactions, you need ordinary people interacting with the network, not a central exchange. Because again, if you have a few central exchanges that everyone is interacting with, then it's almost strictly better to just let them handle proof of identity and proof of ownership in shared centralized databases. The only reason Bitcoin could matter is if it actually did scale enough that it was feasible for ordinary people to use it for micro-transactions and as a performant, robust API. But the problem is that Bitcoin as a technology is poorly suited for that use case, and none of the people hyping are interesting in solving those problems, evolving the technology, or moving to other coins that would be better suited. In a world with centralized exchanges and secondary layers on top of bitcoin that consolidate and batch transactions, all of the problems you're describing end up being easier and better to solve by just having the centralized exchanges coordinate with each other, the same way that banks already do. And to the extent that banks don't coordinate with each other right now, it's unrealistic to assume that the blockchain is going to suddenly change their incentives or force them to do so.

danShumway 6y ago

> Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin. That's an important point, because it prompts the question: what is the problem that Bitcoin is solving if the preferable outcome is that it does exactly the same things that gold and centralized banks already do? The more that I hear people justify slow transaction times, high fees, and a general lack of platform evolution, the more it sounds to me like the only problem that Bitcoin is solving in the real world is that gold is already stable, and speculators need a new thing to jump on. The arguments people are making today about why slow transactions are irrelevant are not the same arguments that people were making when Bitcoin was new. It's revisionist history. And when people are talking about centralization as the end goal... this is also part of why I'm skeptical about claims that proof of stake is going to solve anything on the environmental front, or that microtransactions are ever actually going to get better. The overwhelming perspective I'm seeing here is that nobody involved in speculating on Bitcoin cares about the technological side at all, and I don't see what incentive there is for anyone to make mining easier, cheaper, more democratic, or more environmentally friendly. The whole point seems to be that people want to get in early and then erect as high barriers of entry as possible. What makes people think that anyone speculating on Bitcoin is going to care about proof of stake? At the point where bitcoin becomes a nationally backed currency that is just a backbone for other smaller systems and is (for most people) completely independent from their regular everyday transactions -- there's no advantage to creating that world, that is the world we already have. The only difference is that a few people on Reddit haven't gotten rich off of the world we have. The fact that the majority of the market is still standardized on Bitcoin despite a plurality of clearly better coins drives home to me that the discussion about Bitcoin has nothing to do with practical merits of the system, and everything to do with a bunch of people trying to extract as much money as possible before tragedy of the commons sets in. We can make centralized banks without bitcoin. If that's the end goal, then we should absolutely get rid of the blockchain because blockchain is not necessary for a centralized bank exchange with a small number of government-level actors. I'm surrounded by people who tell me that Bitcoin is a giant innovation, but who are then openly hostile to any kind of improvement to the platform and who are continually dismissing valid criticisms of its technology and governance model as irrelevant because those criticisms don't directly impact Bitcoin's value as a purely speculative currency. What you're describing when you propose a single, centralized exchange is, "we want to make banks a second time the same way, except less efficiently with fundamentally outdated technology, because we want some of the pie this time." Which, great, but as a non-speculator, why on earth should I support that or care about it?

freeone3000 6y ago
The problem it solves is that currently, it's not possible for any single central entity to prove anything about ownership changes directly. Now, you can simply trace every on-chain transaction on the chain -- it's as if there were a universal log of every SWIFT transaction, available to the public. It's incredibly useful for forensics! And we can leverage the huge amount of compute power directed here to do useful work as a side effect, by putting in identity stakes and layer2'ing things like proof-of-identity or proof-of-ownership.
- danShumway 6y ago
  But no, it doesn't solve those problems. Because you're talking about setting up a central exchange and layering separate currencies on top of it. You're talking about the majority of settlements and transactions taking place off-chain. So when you think about tracking on-chain transactions, what you're really talking about is tracking government-level, giant transactions that are largely divorced from the kind of detailed forensics that people would want to do. Which... there are better ways to audit giant government-level agencies than a blockchain. Similarly, leveraging the blockchain to handle things like proof-of-identity doesn't work if the transaction speed for ordinary people can't keep up. If you want to use Bitcoin for proof of identity transactions, you need ordinary people interacting with the network, not a central exchange. Because again, if you have a few central exchanges that everyone is interacting with, then it's almost strictly better to just let them handle proof of identity and proof of ownership in shared centralized databases. The only reason Bitcoin could matter is if it actually did scale enough that it was feasible for ordinary people to use it for micro-transactions and as a performant, robust API. But the problem is that Bitcoin as a technology is poorly suited for that use case, and none of the people hyping are interesting in solving those problems, evolving the technology, or moving to other coins that would be better suited. In a world with centralized exchanges and secondary layers on top of bitcoin that consolidate and batch transactions, all of the problems you're describing end up being easier and better to solve by just having the centralized exchanges coordinate with each other, the same way that banks already do. And to the extent that banks don't coordinate with each other right now, it's unrealistic to assume that the blockchain is going to suddenly change their incentives or force them to do so.