14 ms·

Bitcoin Is Worse Is Better (2011)

mimixco 6y ago
Let it be said that this author certainly puts a lot of journalistic (and typesetting, and annotating, and linking) effort into the work -- something that I love to see and we don't see often enough. Not surprisingly, the author is also a Wikipedia admin and I see the page uses a lot of wiki-style formatting tricks. Quite cool.
- centimeter 6y ago
  Gwern is great. One of a small number of people I support on patreon. Really high quality authorship on a huge range of topics, from drugs to cartoons to AI research.
- jron 6y ago
  gwern stands out by having both a curious mind and the dedication to actually research and document the struggle for answers. I wish our interests could have continued down the same path because for me, distraction is the real mind killer.
- simonebrunozzi 6y ago
  Gwern is a gem. I generally agree with most of what he writes, but even if I didn't, I would still take his opinion into serious account.
jron 6y ago
Nick Szabo's counterargument: http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-ye-so-long.html http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-y...
- chillacy 6y ago
  > (2) Hardly anybody actually understands money. Money just doesn't work like that, I was told fervently and often. Gold couldn't work as money until it was already shiny or useful for electronics or something else besides money, they told me. .... Even though I had rebutted these arguments in my study of the origins of money, which I humbly suggest should be should be required reading for anybody debating the economics of Bitcoin. Curiously, still continues to this day.
- jgrant27 6y ago
  Flimsy counter-argument.
Synaesthesia 6y ago
I still think Bitcoin is very much flawed. As far as I can tell, it's basically a bubble-like commodity which people buy to enrich themselves through speculation right now. That's not really sustainable. It probably will continue to climb for a good while, since there are still many people who haven't heard of it. But then what? Another question arises: what is it good for? It certainly isn't empancipating or empowering ordinary people.
- cyberlurker 6y ago
  A hedge against instability of local currencies. (E.g. Venezuela) But really only if it would be difficult to obtain and safely keep USD.
  - iso1631 6y ago
    Wouldn't a basked of currencies like XDR be more sensible than something as instable as bitcoin? If you don't like USD, then say a mix of CHF, EUR, GBP, USD, Yen and Yuan
    - cwkoss 6y ago
      It may be a better unit, but I'd imagine most Venezuelan bitcoin users would have trouble obtaining XDR and/or transferring that ownership stake across borders. I would also worry that FX accounts could be subject to government seizure.
    - noch 6y ago
      > something as instable as bitcoin? Bitcoin isn't unstable. It has a fixed supply of 21M. It is the other currencies to which it is compared that are unstable. Bitcoin allows you to measure fiat currency instability.
      - rspeele 6y ago
        It's astounding how these nocoiners refuse to understand Bitcoin is the ONLY asset that is always worth exactly 1 BTC. The rest of the world's unstable goods like gold, fiat currency, real estate, stocks, cars, and even groceries are always fluctuating in BTC value but BTC stays perfectly level.
nonameiguess 6y ago
The whole Unix "worse is better" thing seems to me like a specific instance of a more general principle. You see it in network effects and first mover advantage in business, but I saw it in other industries I worked in as well. When I was a military officer, it was drilled into us to move as soon as we developed 80% of a plan, in part because you can make up the rest as you're going but also because just striking first is itself a tremendous advantage. Being faster than the enemy is often better than being better than the enemy. In finance, we were pushed to trade on imperfect strategies because any edge whatsoever disappears almost instantly as soon as you use it and you have to assume someone else is going to figure out whatever you figured out. I don't think you can generalize to just first mover always win, especially since Unix wasn't the first mover. More that any plan, scheme, product, whatever that can actually work needs to be put into operation as soon as it can work. It's no guarantee you won't lose anyway, but you can win for a very long time until you don't. Unix may be supplanted at some point and Bitcoin too, but Tom from MySpace at least made a few hundred million when he likely makes nothing if he launches after Facebook.
- chriswarbo 6y ago
  I wouldn't use "Worse is Better" as a stand-in for first-mover advantage, since (as you say) there are times when the benefit of speed more than pays for the increase risk of unknowns. I'd reserve Worse is Better for cases where (a) that speed advantage was gained by specifically choosing to ignore/hack-around a known problem, and (b) that problem/hack becomes worse due to the inertia of this approach. The classic example is C, which has spread far and wide, as a foundation for almost all of the modern computing house-of-cards. Yet this adoption has come with memory management problems (and their associated security exploits), a foot-gun approach to macros, etc. when such issues are literally non-existent in contemporary languages like Lisp, Scheme, ML, Prolog, etc. A military example might be the trench warfare of WW1: a quick way to avoid machine gun fire, which froze armies in place for years. A financial example might be loan sharks. In Bitcoin's case, the hack of trusting the longest chain and incentivising hashcash to reduce spam/overtaking has resulted in today's energy-hungry monstrosity.
- ska 6y ago
  > The whole Unix "worse is better" thing seems to me like a specific instance of a more general principle. That was the contention of the original article, if I recall it correctly.
stevebmark 6y ago
The great irony is that the main interest in cryptocurrency is increasing fiat currency. There's some mildly interesting ideas for cryptocurrency other than a commodity, but none of them have shown any real public interest. There has yet to be a useful ICO and the majority of them are scams. Smart contracts are a hilariously bad idea. NFTs are a gold rush for fiat and memes. If cryptocurrency had any potential as a currency, bitcoin cash would have already won. Another irony is the fundamentally terrible design of cryptocurrency seems to be why it's a gold rush to increase fiat. Generating random numbers until you find the right one as a means of verifying transactions is almost as a bad idea as a smart contract, and yet! This profound waste and inefficiency is precisely why the fiat price is going up, increasing interest, not at all increasing the desire for use.
- yellowapple 6y ago
  This is a big reason why I think Dogecoin, of all cryptocurrencies, is one of the better candidates for a cryptocurrency that's actually potentially useful as a currency. Since there's no hard cap on the money supply, said supply has at least some chance of scaling with the global economy in the long term, and you won't see nearly as many crazy surges in value. For being meme money, it seems to do a better job of being actual money than more serious contenders.
  - jpadkins 6y ago
    > nearly as many crazy surges in value. This is hard to explain, like explaining air to animals or water to fish. Deflationary currencies aren't surging in value. Fiat currencies are dropping in value. Your frame of reference is a $ is a fixed unit of measurement, like a cm or gram. This is wrong. $ value is not fixed, and intentionally designed to decrease in value at fixed rate (but in practice does not decrease in value uniformly across all parts of the economy). What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s. Credit based inflationary fiat currencies have a lot of really bad properties. But it's very hard to see those effects, because it surrounds us (like air or water for a fish) and is often confused as the measuring stick of value. If you are still skeptical, maybe another example: Do you think gold is really 100x more valuable now than it was in 1971? Or do you think a change in ratio of $ : gold available is what causes the 'crazy surge in value'.
what_the_drew 6y ago
GPU go Brrrrr

Let it be said that this author certainly puts a lot of journalistic (and typesetting, and annotating, and linking) effort into the work -- something that I love to see and we don't see often enough. Not surprisingly, the author is also a Wikipedia admin and I see the page uses a lot of wiki-style formatting tricks. Quite cool.

centimeter 6y ago
Gwern is great. One of a small number of people I support on patreon. Really high quality authorship on a huge range of topics, from drugs to cartoons to AI research.
jron 6y ago
gwern stands out by having both a curious mind and the dedication to actually research and document the struggle for answers. I wish our interests could have continued down the same path because for me, distraction is the real mind killer.
simonebrunozzi 6y ago
Gwern is a gem. I generally agree with most of what he writes, but even if I didn't, I would still take his opinion into serious account.

jron 6y ago

Nick Szabo's counterargument: http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-ye-so-long.html http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-y...

chillacy 6y ago
> (2) Hardly anybody actually understands money. Money just doesn't work like that, I was told fervently and often. Gold couldn't work as money until it was already shiny or useful for electronics or something else besides money, they told me. .... Even though I had rebutted these arguments in my study of the origins of money, which I humbly suggest should be should be required reading for anybody debating the economics of Bitcoin. Curiously, still continues to this day.
jgrant27 6y ago
Flimsy counter-argument.

Synaesthesia 6y ago

I still think Bitcoin is very much flawed. As far as I can tell, it's basically a bubble-like commodity which people buy to enrich themselves through speculation right now. That's not really sustainable. It probably will continue to climb for a good while, since there are still many people who haven't heard of it. But then what? Another question arises: what is it good for? It certainly isn't empancipating or empowering ordinary people.

cyberlurker 6y ago
A hedge against instability of local currencies. (E.g. Venezuela) But really only if it would be difficult to obtain and safely keep USD.
- iso1631 6y ago
  Wouldn't a basked of currencies like XDR be more sensible than something as instable as bitcoin? If you don't like USD, then say a mix of CHF, EUR, GBP, USD, Yen and Yuan
  - cwkoss 6y ago
    It may be a better unit, but I'd imagine most Venezuelan bitcoin users would have trouble obtaining XDR and/or transferring that ownership stake across borders. I would also worry that FX accounts could be subject to government seizure.
  - noch 6y ago
    > something as instable as bitcoin? Bitcoin isn't unstable. It has a fixed supply of 21M. It is the other currencies to which it is compared that are unstable. Bitcoin allows you to measure fiat currency instability.
    - rspeele 6y ago
      It's astounding how these nocoiners refuse to understand Bitcoin is the ONLY asset that is always worth exactly 1 BTC. The rest of the world's unstable goods like gold, fiat currency, real estate, stocks, cars, and even groceries are always fluctuating in BTC value but BTC stays perfectly level.

nonameiguess 6y ago

The whole Unix "worse is better" thing seems to me like a specific instance of a more general principle. You see it in network effects and first mover advantage in business, but I saw it in other industries I worked in as well. When I was a military officer, it was drilled into us to move as soon as we developed 80% of a plan, in part because you can make up the rest as you're going but also because just striking first is itself a tremendous advantage. Being faster than the enemy is often better than being better than the enemy. In finance, we were pushed to trade on imperfect strategies because any edge whatsoever disappears almost instantly as soon as you use it and you have to assume someone else is going to figure out whatever you figured out. I don't think you can generalize to just first mover always win, especially since Unix wasn't the first mover. More that any plan, scheme, product, whatever that can actually work needs to be put into operation as soon as it can work. It's no guarantee you won't lose anyway, but you can win for a very long time until you don't. Unix may be supplanted at some point and Bitcoin too, but Tom from MySpace at least made a few hundred million when he likely makes nothing if he launches after Facebook.

chriswarbo 6y ago
I wouldn't use "Worse is Better" as a stand-in for first-mover advantage, since (as you say) there are times when the benefit of speed more than pays for the increase risk of unknowns. I'd reserve Worse is Better for cases where (a) that speed advantage was gained by specifically choosing to ignore/hack-around a known problem, and (b) that problem/hack becomes worse due to the inertia of this approach. The classic example is C, which has spread far and wide, as a foundation for almost all of the modern computing house-of-cards. Yet this adoption has come with memory management problems (and their associated security exploits), a foot-gun approach to macros, etc. when such issues are literally non-existent in contemporary languages like Lisp, Scheme, ML, Prolog, etc. A military example might be the trench warfare of WW1: a quick way to avoid machine gun fire, which froze armies in place for years. A financial example might be loan sharks. In Bitcoin's case, the hack of trusting the longest chain and incentivising hashcash to reduce spam/overtaking has resulted in today's energy-hungry monstrosity.
ska 6y ago
> The whole Unix "worse is better" thing seems to me like a specific instance of a more general principle. That was the contention of the original article, if I recall it correctly.

stevebmark 6y ago

The great irony is that the main interest in cryptocurrency is increasing fiat currency. There's some mildly interesting ideas for cryptocurrency other than a commodity, but none of them have shown any real public interest. There has yet to be a useful ICO and the majority of them are scams. Smart contracts are a hilariously bad idea. NFTs are a gold rush for fiat and memes. If cryptocurrency had any potential as a currency, bitcoin cash would have already won. Another irony is the fundamentally terrible design of cryptocurrency seems to be why it's a gold rush to increase fiat. Generating random numbers until you find the right one as a means of verifying transactions is almost as a bad idea as a smart contract, and yet! This profound waste and inefficiency is precisely why the fiat price is going up, increasing interest, not at all increasing the desire for use.

yellowapple 6y ago
This is a big reason why I think Dogecoin, of all cryptocurrencies, is one of the better candidates for a cryptocurrency that's actually potentially useful as a currency. Since there's no hard cap on the money supply, said supply has at least some chance of scaling with the global economy in the long term, and you won't see nearly as many crazy surges in value. For being meme money, it seems to do a better job of being actual money than more serious contenders.
- jpadkins 6y ago
  > nearly as many crazy surges in value. This is hard to explain, like explaining air to animals or water to fish. Deflationary currencies aren't surging in value. Fiat currencies are dropping in value. Your frame of reference is a $ is a fixed unit of measurement, like a cm or gram. This is wrong. $ value is not fixed, and intentionally designed to decrease in value at fixed rate (but in practice does not decrease in value uniformly across all parts of the economy). What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s. Credit based inflationary fiat currencies have a lot of really bad properties. But it's very hard to see those effects, because it surrounds us (like air or water for a fish) and is often confused as the measuring stick of value. If you are still skeptical, maybe another example: Do you think gold is really 100x more valuable now than it was in 1971? Or do you think a change in ratio of $ : gold available is what causes the 'crazy surge in value'.

what_the_drew 6y ago

GPU go Brrrrr