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> I wonder what would happen if crypto somehow managed to replace central banks and how the world would change My personal guess is that we would recreate most

by ketzu 5y ago

> I wonder what would happen if crypto somehow managed to replace central banks and how the world would change My personal guess is that we would recreate most of the infrastructure on top, but with monetary policy now in the hand of a select few individuals instead of governments. The consequences for the world at large would be interesting to explore.

sparkie 5y ago
> but with monetary policy now in the hand of a select few individuals instead of governments Bitcoin's monetary policy is fixed. It is in nobody's hand, but everybody who decides to run a validating node. Monetary policy is controlled by central banks, which are privately owned. On paper, they're regulated by government, but in practice, politicians are easily bought, bribed or have their hands tied. The monetary policy is not decided by the people you elect into government.
- grumple 5y ago
  > It is in nobody's hand, but everybody who decides to run a validating node. Those nodes are literally owned by people. The wealthier the person, the more nodes they can run. Which is exactly how crypto took off; drug cartels mined it, dealt with it, making money both on selling the coins to buyers for cash and on selling the product to the buyers. Large organizations and wealthy people, criminal or not, can and do control all proof of work (by controlling more workers) and proof of stake (by mining, purchasing, and holding more crypto). And because of the secrecy, we don't know who in many cases (ok... the various intelligence agencies might), and they aren't effectively regulated in any way. All crypto has done is make it so the only requirement to gain wealth is to already be wealthy. This is far more direct of a relationship with crypto than with real currency, where you at least have to do actual work of some sort to make money.
  - sparkie 5y ago
    Miners are not able to adjust the monetary policy of bitcoin, because attempting to do so causes a hard-fork, which would have them mining a chain which has no economic use in the real world. The chain which everybody is using in the real world is the only one that matters. Miners are forced to mine blocks which adhere to the consensus of economic users. If some people run a million "Sybil" nodes, it makes no difference, because those sybils do not have any economic use, they're effectively ignored. Bitcoin is not a democracy. There is a network effect which is now far too large and diverse for any small group to sway, and with time, the protocol will become further ossified to the point where it will literally be impossible to enforce changes, because there is no way to coordinate them globally to so many users. The only control a majority of miners can have is that they can withhold transactions from the chain by orphaning any block they don't want to include. That is, they can cause denial-of-service for as long as they hold the majority of hash-power, but in doing so, they withhold revenue from themselves by failing to include paying transactions into blocks.
- ketzu 5y ago
  > Bitcoin's monetary policy is fixed. It is in nobody's hand, but everybody who decides to run a validating node. My understanding is that bitcoins monetary policy can be changed through code, something a very small group is allowed to do in practice, even though theoretically it could be forked easily. Previous attempts at democratication of decisions have been prevented by various questionable tactics and by measures of share of computer power, something also held by very few people. Maybe this changed since I stopped paying attention to it, though. > which are privately owned Again, my understanding is that the reserve banks are some form of private entities but essentially owned by their governments (e.g., profits are transfered to them). Sites like the faq of the fed (https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm) and information about the german central bank seem to confirm that view so far.
  - sparkie 5y ago
    > My understanding is that bitcoins monetary policy can be changed through code, something a very small group is allowed to do in practice, even though theoretically it could be forked easily. Previous attempts at democratication of decisions have been prevented by various questionable tactics and by measures of share of computer power, something also held by very few people. Maybe this changed since I stopped paying attention to it, though. The monetary policy cannot be changed by modifying the code. If you modify the code of your own node, you simply create a different set of rules to the network, which might lead you to eventually end up on a forked chain which has no economic use. The monetary policy is not only in the code, but it is in the network. Every user who validates blocks enforces the monetary policy. No miners are able to dive into another user's machine and update the code which their nodes are running. Bitcoin is not a democracy. It isn't most-votes-wins. If somebody were to propose adjusting the monetary policy, they need overwhelming consensus of all bitcoin users. Something which will get increasingly more difficult with passing time and adoption growth. Changing the code to adjust the bitcoin issuance rate is effectively creating a shitcoin which integrates bitcoin's historical ledger into it. That's simple to do. Now you have the insurmountable task of convincing all bitcoin users to switch away from using the bitcoin they know and love to using your new shitcoin. This has been attempted and failed (Bitcoin Cash).

by ketzu 5y ago

sparkie 5y ago

> but with monetary policy now in the hand of a select few individuals instead of governments Bitcoin's monetary policy is fixed. It is in nobody's hand, but everybody who decides to run a validating node. Monetary policy is controlled by central banks, which are privately owned. On paper, they're regulated by government, but in practice, politicians are easily bought, bribed or have their hands tied. The monetary policy is not decided by the people you elect into government.

grumple 5y ago
> It is in nobody's hand, but everybody who decides to run a validating node. Those nodes are literally owned by people. The wealthier the person, the more nodes they can run. Which is exactly how crypto took off; drug cartels mined it, dealt with it, making money both on selling the coins to buyers for cash and on selling the product to the buyers. Large organizations and wealthy people, criminal or not, can and do control all proof of work (by controlling more workers) and proof of stake (by mining, purchasing, and holding more crypto). And because of the secrecy, we don't know who in many cases (ok... the various intelligence agencies might), and they aren't effectively regulated in any way. All crypto has done is make it so the only requirement to gain wealth is to already be wealthy. This is far more direct of a relationship with crypto than with real currency, where you at least have to do actual work of some sort to make money.
- sparkie 5y ago
  Miners are not able to adjust the monetary policy of bitcoin, because attempting to do so causes a hard-fork, which would have them mining a chain which has no economic use in the real world. The chain which everybody is using in the real world is the only one that matters. Miners are forced to mine blocks which adhere to the consensus of economic users. If some people run a million "Sybil" nodes, it makes no difference, because those sybils do not have any economic use, they're effectively ignored. Bitcoin is not a democracy. There is a network effect which is now far too large and diverse for any small group to sway, and with time, the protocol will become further ossified to the point where it will literally be impossible to enforce changes, because there is no way to coordinate them globally to so many users. The only control a majority of miners can have is that they can withhold transactions from the chain by orphaning any block they don't want to include. That is, they can cause denial-of-service for as long as they hold the majority of hash-power, but in doing so, they withhold revenue from themselves by failing to include paying transactions into blocks.
ketzu 5y ago
> Bitcoin's monetary policy is fixed. It is in nobody's hand, but everybody who decides to run a validating node. My understanding is that bitcoins monetary policy can be changed through code, something a very small group is allowed to do in practice, even though theoretically it could be forked easily. Previous attempts at democratication of decisions have been prevented by various questionable tactics and by measures of share of computer power, something also held by very few people. Maybe this changed since I stopped paying attention to it, though. > which are privately owned Again, my understanding is that the reserve banks are some form of private entities but essentially owned by their governments (e.g., profits are transfered to them). Sites like the faq of the fed (https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm) and information about the german central bank seem to confirm that view so far.
- sparkie 5y ago
  > My understanding is that bitcoins monetary policy can be changed through code, something a very small group is allowed to do in practice, even though theoretically it could be forked easily. Previous attempts at democratication of decisions have been prevented by various questionable tactics and by measures of share of computer power, something also held by very few people. Maybe this changed since I stopped paying attention to it, though. The monetary policy cannot be changed by modifying the code. If you modify the code of your own node, you simply create a different set of rules to the network, which might lead you to eventually end up on a forked chain which has no economic use. The monetary policy is not only in the code, but it is in the network. Every user who validates blocks enforces the monetary policy. No miners are able to dive into another user's machine and update the code which their nodes are running. Bitcoin is not a democracy. It isn't most-votes-wins. If somebody were to propose adjusting the monetary policy, they need overwhelming consensus of all bitcoin users. Something which will get increasingly more difficult with passing time and adoption growth. Changing the code to adjust the bitcoin issuance rate is effectively creating a shitcoin which integrates bitcoin's historical ledger into it. That's simple to do. Now you have the insurmountable task of convincing all bitcoin users to switch away from using the bitcoin they know and love to using your new shitcoin. This has been attempted and failed (Bitcoin Cash).