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Nobody has been able to explain this to me WRT cryptocurrencies and their "digital scarcity" quality: If people are free to create new chains out of thin air an

Nobody has been able to explain this to me WRT cryptocurrencies and their "digital scarcity" quality: If people are free to create new chains out of thin air and build networks around it, how is anything digital "scarce"? Like, bitcoin set out to be deflationary, a "limited" amount of bitcoins till the end of eternity. ...except for the fact that I can create a new blockchain independent of bitcoin and it is the SAME thing, breaking the inflation proof quality of it. The new chain has a new "name", a new "brand" but that is just a conceptual difference, not a practical one. All the cryptocurrencies created after bitcoin creates "inflation" for bitcoin. If bitcoin was the only possible cryptocurrency but the hype around cryptocurrencies was the same, a bitcoin would cost substantially more today. If people are not happy with the "xcoin" billionaires at some time in the future, they can create just another currency to inflate the cryptocoin space (I'm saying "in the future" but that is what is happening since the beginning of this story). In that sense, they all are practically infinitely issuable. Different chains are just technically different, not practically. All are different forks of the same "cryptocurrency-token" of humankind, with no protection against additional and additional forks (new cryptocurrencies). So while this enormous efforts about the fork protections on a single chain is a fantastic academic and intellectual exercise... in the end one can create a new "cryptocurrency", a new network to create more "money" - that is the ultimate fork that can't be prevented by any on-chain methods. It is all futile in the end.

chrisco255 5y ago
Have you ever seen or heard of anyone pay $1M or $100K for a .com address? Why do they do that when there's like 256 TLDs? Why does anyone pay $20M to live in a box in Manhattan when they could buy a huge ranch in Montana and live like a king? Some blockchains are more valuable than others. And their blockspace is limited, just like Manhattan real estate. The reasons for this are numerous, but a big part of it comes down to security and liquidity. If you are going to create a digital agreement, you want a blockchain with a high degree of security and predictability. You also want composability with other applications so you can have access to an ecosystem and other financial services.
- dkarras 5y ago
  the space of .com addresses are physically limited. the space in manhattan is physically limited. creation of a new cryptocurrency does not have such limits. like everything else digital. it is the same difference between physical goods, and software. software costs zero to copy. physical goods are physically limited. so, with the topic of this post's link - even if someone somewhere perfects the security scheme of a blockchain, in the end it all is futile - because it can be copied. If there is enormous pressure by some powerful entities to an on-chain fork, but it is not feasible because of all the built-in security of the blockchain system and protocol, they can still have enough influence to create a new coin, undermining the "limited" property of the first coin. It is a new brand of coin, operated, mined, minted by mostly different people. The coin has the same features, same security - but liquidity is directly stolen from other coins because we have finite amount of people. Through exchanges, you can exchange them. In the end, when you remove the "get rich quick" scheme, they are all the same, and can be issued infinitely, albeit on different "names". Don't get too hung up on names. You can't tell me "the network is too valuable, it is impossible create additional coins" either because that is what has been happening from the beginning. All those coins, with slightly different features - in the end perhaps one will have it all, but what is the ultimate purpose? Given enough pressure, it can be copied, new "money" can still come into circulation to be used by people that accept it. It is not impossible, it is happening, has always happened since bitcoin. Each dogecoin minted today, affects the value of bitcoin tomorrow.
  - qecez 5y ago
    > Each dogecoin minted today, affects the value of bitcoin tomorrow. Dude, same with Montenegro real estate affecting the value of your apartment in Manhattan. > If bitcoin was the only possible cryptocurrency but the hype around cryptocurrencies was the same, a bitcoin would cost substantially more today. Just like if the rest of the land didn't exist, your Manhattan apartment would cost substantially more today.
    - dkarras 5y ago
      I responded to this above but again just for you: land is ALREADY physically limited. the whole /point/ of cryptocurrencies was to provide the same type of scarcity artificially for the digital realm. my point is, the fact that you can create additional coins and split the liquidity between the two means that the task has failed. my further claim is that the even the attempt is futile. academically interesting, practically (for this given purpose) futile.
foerbert 5y ago
Not a big crypto person, but my understanding is that a part of the "digital scarcity" problem is addressed by the consensus mechanism. You can go create a fork, but (without sufficient processing power) that fork won't be able to be the longest chain, and the consensus mechanism is that the longest chain is the _real_ chain.
- rcxdude 5y ago
  Two point: the consensus is that the 'most difficult' (not longest) chain which follows the agreed consensus rules is the 'real chain'. This is not necessarily the one with the most computing power associated with it, especially in the case of a fork, where two different sets of consensus rules diverge. The main issue with being the smaller side of the fork is that if you are still using the same proof of work mechanism then you are vulnerable to 51% attacks from the larger fork, which tends to lower prices and so discourage mining which makes the situation worse (and this has happened to multiple bitcoin forks, including 51% attacks). This may in principle be less of a concern with PoS, because the 'mining resource' also splits with the fork and stakers can continue to stake both sides, reducing the strength of the positive feedback loop (though not completely, since the less popular and lower priced coin is more vulnerable to someone trying to buy enough of it to execute a 51% stake attack).
- dkarras 5y ago
  Yes, my point is, that applies for a single coin. The conceptual shift I'm talking about here is that (my definition of fork here is) /another/ coin. Another coin (like ethereum, doge, whatever) is just another "fork" of "cryptocoin-coin". People in need of cryptocoins, if only one existed, would acquire, buy, mine that one. But now that they have multiple options, it is split between all, to varying degrees. As long as they are interchangeable, they are the same thing pretty much. In a fully cryptocoin future world, when a dogecoin is minted, it affects the value of bitcoin. So any x-coin does not live in a vacuum, and can only be scarce in its own network.
  - graerg 5y ago
    > As long as they are interchangeable, they are the same thing pretty much You keep asserting this as true but I think you are just confused.
rezendi 5y ago
This is basically why bitcoin maximalists are bitcoin maximalists.
lgrapenthin 5y ago
You can't inflate a coin by creating another coin. The markets for each coin aren't going to be identical, as each coin attracts a different set of buyers. In other words, there might be people who would buy ETH, but never BTC and the other way around.
- dkarras 5y ago
  ...and there are others that would buy BTC if it was the only option but would be happy with ETH given that it exists. With those people buying / minting X instead of Y (but would use Y if X didn't exist), the amount of digital coins increased out of thin air just like that! Without any control mechanism from the bitcoin protocol (an unsolved / unsolvable(?) problem). So the fact that the people like you say exists does not prevent the existence of the people that I am talking about. And if the secure, easy to use, non-wasteful, programmable and distributed ledger problem is solved once then ALL coins after that become the same. In that environment "people who would buy ETH, but never BTC" will not make any sense.
  - graerg 5y ago
    You're effectively saying that once someone decides to grow potatoes, apples are no longer scarce, because people might instead grow potatoes and trade them for apples. The secure, easy to use, non-wasteful, distributed calorie problem can only be solved _once_, so ALL potatoes are apples.
    - CRConrad 5y ago
      If only apples existed and suddenly potatoes were invented, then plant-based carbohydrates just became less scarce. If only British pounds existed and suddenly the Australian dollar was invented, you could suddenly do business in another currency.
- CRConrad 5y ago
  Exactly. Just like Swiss francs and Euros and US dollars are different things and will never be measured against or valued in terms of each other. Q.E.D.
aww_dang 5y ago
Proponents of cryptocurrency will claim that the network effects of a given currency add to the perceived value. There are also differences in implementations between the cryptocurrencies where each has differing properties. Critics claim that cryptocurrencies are valued under the greater fool paradigm. A speculator buys a cryptocurrency with the intention of selling it on to the 'greater fool'. There are regulatory barriers erected around traditional payment processing to consider. As not all cryptocurrency transactions are subject to these regulations, they offer a discount. Cryptocurrencies offer a medium for those unable to transact by other means.
AlexCoventry 5y ago
> If people are free to create new chains out of thin air and build networks around it, how is anything digital "scarce"? Say I just created HNCoin, a copy of bitcoin, and offered you one HNCoin for 0.001BTC. Would you take the deal?
- dkarras 5y ago
  If I were part of the clique that were unhappy with how bitcoin operated and who holds wealth and power in the world without the means of attacking bitcoin itself because of its built-in security features, yes, I'd start supporting it along with my comrades. This is not a theoretical thing either, happened thousands of times and it keeps happening as we are in the Cambrian period of this concept so lots of new things are being tried under different "brands". In the end, if the problem is solvable, a simple to use, not wasteful, programmable etc. secure distributed ledger will emerge. Then what? A group can't take over the existing one but if the needs emerge, they can create a brand new one and influence people (off silicon) to use it. Again, that is what has been happening since the beginning. Take the ponzi / get rich quick / I have no other hope mentality away and it will all be the same in the end - if they are used functionally that is.
young_unixer 5y ago
> If people are free to create new chains out of thin air and build networks around it, how is anything digital "scarce"? For the same reason we speak mostly English, Spanish, Chinese and Hindi, even though there are infinite possible languages.
- peoplefromibiza 5y ago
  The language metaphor is interesting, but IMO it proves the point. Learning a new language takes time, a lot of time. We speak mostly Spanish, Chinese and Hindi because the majority was born with them and spent years learning them to communicate with other people who already speak them. English spoken by non English native speakers is what many people learned to communicate with people speaking other languages than their native tongue. But most of them never reached (or will reach) native speakers' fluency. So in a way it can be seen as an inferior product with many flaws (like my English for example). If switching languages was as easy as copying software, we would probably speak infinite languages. But in reality the amount of languages one can learn during a life time is very much finite (and the incentive and opportunity are very limited in general) So, yes, bitcoin is the most powerful brand right now but there is nothing inherently peculiar about it, if another digital coin offers the same features people will use it, regardless of the brand. Learning German if you are Japanese, live in Japan and communicate with Japanese people, on the other hand, it's a big investment with no real obvious gain beyond intellectual fulfilment. anyway, there are ~7,000 living languages used around the World right now, there's no reason to believe that at least the same number of digital coins won't be in use once digital coins will become an everyday tool.
dEnigma 5y ago
Same as you can print your own Dkarras Dollars and issue a new currency. Then see how much that affects the value of the USD.

chrisco255 5y ago

Have you ever seen or heard of anyone pay $1M or $100K for a .com address? Why do they do that when there's like 256 TLDs? Why does anyone pay $20M to live in a box in Manhattan when they could buy a huge ranch in Montana and live like a king? Some blockchains are more valuable than others. And their blockspace is limited, just like Manhattan real estate. The reasons for this are numerous, but a big part of it comes down to security and liquidity. If you are going to create a digital agreement, you want a blockchain with a high degree of security and predictability. You also want composability with other applications so you can have access to an ecosystem and other financial services.

dkarras 5y ago
the space of .com addresses are physically limited. the space in manhattan is physically limited. creation of a new cryptocurrency does not have such limits. like everything else digital. it is the same difference between physical goods, and software. software costs zero to copy. physical goods are physically limited. so, with the topic of this post's link - even if someone somewhere perfects the security scheme of a blockchain, in the end it all is futile - because it can be copied. If there is enormous pressure by some powerful entities to an on-chain fork, but it is not feasible because of all the built-in security of the blockchain system and protocol, they can still have enough influence to create a new coin, undermining the "limited" property of the first coin. It is a new brand of coin, operated, mined, minted by mostly different people. The coin has the same features, same security - but liquidity is directly stolen from other coins because we have finite amount of people. Through exchanges, you can exchange them. In the end, when you remove the "get rich quick" scheme, they are all the same, and can be issued infinitely, albeit on different "names". Don't get too hung up on names. You can't tell me "the network is too valuable, it is impossible create additional coins" either because that is what has been happening from the beginning. All those coins, with slightly different features - in the end perhaps one will have it all, but what is the ultimate purpose? Given enough pressure, it can be copied, new "money" can still come into circulation to be used by people that accept it. It is not impossible, it is happening, has always happened since bitcoin. Each dogecoin minted today, affects the value of bitcoin tomorrow.
- qecez 5y ago
  > Each dogecoin minted today, affects the value of bitcoin tomorrow. Dude, same with Montenegro real estate affecting the value of your apartment in Manhattan. > If bitcoin was the only possible cryptocurrency but the hype around cryptocurrencies was the same, a bitcoin would cost substantially more today. Just like if the rest of the land didn't exist, your Manhattan apartment would cost substantially more today.
  - dkarras 5y ago
    I responded to this above but again just for you: land is ALREADY physically limited. the whole /point/ of cryptocurrencies was to provide the same type of scarcity artificially for the digital realm. my point is, the fact that you can create additional coins and split the liquidity between the two means that the task has failed. my further claim is that the even the attempt is futile. academically interesting, practically (for this given purpose) futile.

foerbert 5y ago

Not a big crypto person, but my understanding is that a part of the "digital scarcity" problem is addressed by the consensus mechanism. You can go create a fork, but (without sufficient processing power) that fork won't be able to be the longest chain, and the consensus mechanism is that the longest chain is the _real_ chain.

rcxdude 5y ago
Two point: the consensus is that the 'most difficult' (not longest) chain which follows the agreed consensus rules is the 'real chain'. This is not necessarily the one with the most computing power associated with it, especially in the case of a fork, where two different sets of consensus rules diverge. The main issue with being the smaller side of the fork is that if you are still using the same proof of work mechanism then you are vulnerable to 51% attacks from the larger fork, which tends to lower prices and so discourage mining which makes the situation worse (and this has happened to multiple bitcoin forks, including 51% attacks). This may in principle be less of a concern with PoS, because the 'mining resource' also splits with the fork and stakers can continue to stake both sides, reducing the strength of the positive feedback loop (though not completely, since the less popular and lower priced coin is more vulnerable to someone trying to buy enough of it to execute a 51% stake attack).
dkarras 5y ago
Yes, my point is, that applies for a single coin. The conceptual shift I'm talking about here is that (my definition of fork here is) /another/ coin. Another coin (like ethereum, doge, whatever) is just another "fork" of "cryptocoin-coin". People in need of cryptocoins, if only one existed, would acquire, buy, mine that one. But now that they have multiple options, it is split between all, to varying degrees. As long as they are interchangeable, they are the same thing pretty much. In a fully cryptocoin future world, when a dogecoin is minted, it affects the value of bitcoin. So any x-coin does not live in a vacuum, and can only be scarce in its own network.
- graerg 5y ago
  > As long as they are interchangeable, they are the same thing pretty much You keep asserting this as true but I think you are just confused.

rezendi 5y ago

This is basically why bitcoin maximalists are bitcoin maximalists.

lgrapenthin 5y ago

You can't inflate a coin by creating another coin. The markets for each coin aren't going to be identical, as each coin attracts a different set of buyers. In other words, there might be people who would buy ETH, but never BTC and the other way around.

dkarras 5y ago
...and there are others that would buy BTC if it was the only option but would be happy with ETH given that it exists. With those people buying / minting X instead of Y (but would use Y if X didn't exist), the amount of digital coins increased out of thin air just like that! Without any control mechanism from the bitcoin protocol (an unsolved / unsolvable(?) problem). So the fact that the people like you say exists does not prevent the existence of the people that I am talking about. And if the secure, easy to use, non-wasteful, programmable and distributed ledger problem is solved once then ALL coins after that become the same. In that environment "people who would buy ETH, but never BTC" will not make any sense.
- graerg 5y ago
  You're effectively saying that once someone decides to grow potatoes, apples are no longer scarce, because people might instead grow potatoes and trade them for apples. The secure, easy to use, non-wasteful, distributed calorie problem can only be solved _once_, so ALL potatoes are apples.
  - CRConrad 5y ago
    If only apples existed and suddenly potatoes were invented, then plant-based carbohydrates just became less scarce. If only British pounds existed and suddenly the Australian dollar was invented, you could suddenly do business in another currency.
CRConrad 5y ago
Exactly. Just like Swiss francs and Euros and US dollars are different things and will never be measured against or valued in terms of each other. Q.E.D.

aww_dang 5y ago

Proponents of cryptocurrency will claim that the network effects of a given currency add to the perceived value. There are also differences in implementations between the cryptocurrencies where each has differing properties. Critics claim that cryptocurrencies are valued under the greater fool paradigm. A speculator buys a cryptocurrency with the intention of selling it on to the 'greater fool'. There are regulatory barriers erected around traditional payment processing to consider. As not all cryptocurrency transactions are subject to these regulations, they offer a discount. Cryptocurrencies offer a medium for those unable to transact by other means.

AlexCoventry 5y ago

> If people are free to create new chains out of thin air and build networks around it, how is anything digital "scarce"? Say I just created HNCoin, a copy of bitcoin, and offered you one HNCoin for 0.001BTC. Would you take the deal?

dkarras 5y ago
If I were part of the clique that were unhappy with how bitcoin operated and who holds wealth and power in the world without the means of attacking bitcoin itself because of its built-in security features, yes, I'd start supporting it along with my comrades. This is not a theoretical thing either, happened thousands of times and it keeps happening as we are in the Cambrian period of this concept so lots of new things are being tried under different "brands". In the end, if the problem is solvable, a simple to use, not wasteful, programmable etc. secure distributed ledger will emerge. Then what? A group can't take over the existing one but if the needs emerge, they can create a brand new one and influence people (off silicon) to use it. Again, that is what has been happening since the beginning. Take the ponzi / get rich quick / I have no other hope mentality away and it will all be the same in the end - if they are used functionally that is.

young_unixer 5y ago

> If people are free to create new chains out of thin air and build networks around it, how is anything digital "scarce"? For the same reason we speak mostly English, Spanish, Chinese and Hindi, even though there are infinite possible languages.

peoplefromibiza 5y ago
The language metaphor is interesting, but IMO it proves the point. Learning a new language takes time, a lot of time. We speak mostly Spanish, Chinese and Hindi because the majority was born with them and spent years learning them to communicate with other people who already speak them. English spoken by non English native speakers is what many people learned to communicate with people speaking other languages than their native tongue. But most of them never reached (or will reach) native speakers' fluency. So in a way it can be seen as an inferior product with many flaws (like my English for example). If switching languages was as easy as copying software, we would probably speak infinite languages. But in reality the amount of languages one can learn during a life time is very much finite (and the incentive and opportunity are very limited in general) So, yes, bitcoin is the most powerful brand right now but there is nothing inherently peculiar about it, if another digital coin offers the same features people will use it, regardless of the brand. Learning German if you are Japanese, live in Japan and communicate with Japanese people, on the other hand, it's a big investment with no real obvious gain beyond intellectual fulfilment. anyway, there are ~7,000 living languages used around the World right now, there's no reason to believe that at least the same number of digital coins won't be in use once digital coins will become an everyday tool.

dEnigma 5y ago

Same as you can print your own Dkarras Dollars and issue a new currency. Then see how much that affects the value of the USD.