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Corrupt states have a monopoly on violence. There is no such similar force ensuring people have to use the crypto made available to them. The Bitcoin network op
by jimmydorry 5y ago
Corrupt states have a monopoly on violence. There is no such similar force ensuring people have to use the crypto made available to them. The Bitcoin network operates by balancing the economic incentives of each party, and at any point, any party is free to walk away.
__Developers:__
* Profit motive: Paid salaries / bounties / donations by users, business that build off the Blockchain, miners, and appreciation from their BTC holdings
* The consequence of all the core developers going rogue would be the price of BTC collapsing, salaries or donations no longer getting paid by either or all of the above groups
__Miners:__
* Profit motive: Appreciation of BTC holdings, income derrived from doing their job by validating transactions and appending them to the blockchain for the block reward and transaction fees
* Rogue miners can't exert much force on the system until they get close to 50% of the hashing power.
* A collective of miners (e.g. a mining pool) can negatively impact the ecosystem by buying developers, or messing with transactions. This would result in a large cost by way of their holdings losing value and no longer being able to derrive as much income from mining.
__Users:__
* Profit motive: Transacting and speculating with BTC gives it value. If a significant group of users dislike a developer's proposed changes or feels they are corrupt, they can make their voice heard which can force the miners and other developers to weigh in resolve the issue. If this does not happen, then the loss of confidence in Bitcoin can result in a fork (the troublemakers leaving the chain, or the majority / active users moving to a new coin and leaving the troublemakers behind).
No one party in the above can force any issue on the other two stakeholders, and doing so against all economic incentives will typically cause enough damage that none of the other actors would likely go along with such an act.
For example, the main active developers could get bought off and push out a client with 10GB transaction blocks. Assuming the miners also get bought off, the users can choose not to use such cyrpto and sell their coins while they can still get a decent value for them. The miners and developers would be king of their fiefdom, which means very little. This is only possible though if you treat the miners and developers each as a single entity. This is far from the case though.
- EdwardDiego 5y ago> Corrupt states have a monopoly on violence Do you believe all states to be corrupt?
- jimmydorry 5y agoNo? Using the same terms as GP.
- postalrat 5y agoThree groups all seeking profits, but where do the profits come from? Tether?
- jimmydorry 5y agoUsers: Profit through deflationary design (demand higher than supply). Most currencies are inflationary by nature, while Bitcoin is designed to be the opposite (the first phase aimed for growth is inflationary, but this pressure decreases substantially every halving). Developers: Profit from being a user, as well as from the power to drive additional demand by improving the ecosystem (make it easier to use, more powerful or more efficient), and lastly by way of bounty/salary/donation based on how well they are achieving #2. Miners: Arbitrage between cost of electricity and price of crypto, transaction fees mined, block reward, and finally from being a user. The funny money some exchanges offer to make moving fiat easier or faster between other exchanges is pretty irrelevant. As long as tether is not committing massive fraud by minting billions to buy crypto on a fraudulent basis, it doesn’t matter what token people use to move their fiat. Tether could explode tomorrow or in decades from now, but I don’t see them bringing down crypto longterm, just like I don’t see an Elon tweet having the potential for long term impact. I would certainly never touch Tether, and anyone who does is taking a not insignificant risk of getting burnt if there is no-one willing to buy their tether when they want to sell (Tethers are not and have not been redeemable for dollars from Tether corp for a long time).