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Completely agree. It's impossible to inspect any aspect of Bitcoin's design without considering its incentive structures. They are the innovation in my mind.

Completely agree. It's impossible to inspect any aspect of Bitcoin's design without considering its incentive structures. They are the innovation in my mind. Every blockchain/crypto/Dao/<insert buzz word> forgoes one of Bitcoin's perfectly balanced incentive structures in favor of some "innovation" (speed, programability, founder/VC enrichment) which always inevitably leads to centralization and exploitable risk somewhere in the system. Every time it happens it hardens my opinion that a L1 should be like the foundation of a building - it should have one job (be hard money), it should be simply and elegantly designed, it shouldn't have any cracks (a.k.a misaligned incentive structures), it should evolve very slowly if at all, and it should be designed to be built on top of. L1 exists to anchor L1+N to the real world and that's it.

tromp 4y ago
> simply and elegantly designed I don't think Bitcoin qualifies as such. Sure, projects like Ethereum are far more complex, but there are projects that significantly improve on Bitcoin in simplicity and elegance. Bitcoin script in particular is not that simple and full of warts.
- jrm4 4y ago
  I think by definition it does, which is to say, its popularity proves it. I just think there's a hindsight thing going on. I liken Bitcoin to e.g. the Model T or the first grey brick cellphones. It changes everything forever because it works very well, but also is quickly improved upon and thus eventually won't be that popular.
  - djschnei 4y ago
    No other system/project anchors a digital currency to the physical world as effectively as Bitcoin. But I do agree, eventually L2+ will be much more popular, in so far as much more people will interact with them. That's kind of the idea. L2s will still always rely on L1 for its anchor to the physical world (and thus physics).
    - jrm4 4y ago
      I'm unfamiliar with L1 and L2 as presented here. Do these both refer to the Bitcoin blockchain? If so, no. I strongly predict Bitcoin, both the blockchain and the currency will nearly, if not fully, "die," as the Model T and grey phone have. Ethereum is already much better at it's core, and it's not hard to think even Ethereum will be improved upon. In the long run, literally all bitcoin has is history and name recognition. Like the Model T, you will see it revered like something in a museum, and also just about nobody will actually use it.
      - tomputer 4y ago
        > Ethereum is already much better at it's core What you and many others seem to overlook is first mover advantage, network effects and most important: trust. Bitcoin is not Yahoo or Facebook, it is not a company product which has to improve and break things all the time. In the long run Bitcoin is a store of value. That requires trust, which takes time. To gain trust over time it has to move slow and steady because there can be no mistakes. When it comes to money and trust it is almost impossible to get a second chance (see Terra UST). Just one mistake could result in everyone distrusting Bitcoin.
        jrm4 4y ago
        What I think others overlook is that in practice (and despite what the retconners are trying to say about bitcoin is gold or some nonsense) -- is that Bitcoin was NOT designed to be a blockchain platform. It was designed to be fungible currency. And it's an excellent proof-of-concept...but with severe flaws that will kill it, especially in light of the fact that we're talking about *open source software, which begs to be forked, and effectively has been. Your argument strikes me as very odd -- you seem to suggest that nothing can beat Bitcoin in theory, but Ethereum is already beating it in practice.
        tomputer 4y ago
        > Your argument strikes me as very odd -- you seem to suggest that nothing can beat Bitcoin in theory, but Ethereum is already beating it in practice. In theory everything is possible. I do not follow the beating really. They can both exist with different use cases. Bitcoin wants to be digital gold (and money) and Ethereum wants to be a smart contract world computer running dapps. They solve different problems.
- djschnei 4y ago
  Which projects are simply designed to be hard money?
  - tromp 4y ago
    That depends on what do you mean by hard money. A capped supply?
    - djschnei 4y ago
      well, there are multiple factors, supply cap is one. Unchangeable issuance schedule (i.e. unchangeable monetary policy) is another gigantic aspect. No other project can guarantee the same immutability because no other network is defended by the bitcoin mining network. Bitcoin is the only commodity on the planet who's supply is completely unaffected by demand.
      - tromp 4y ago
        I already see discussion on the bitcoin dev mailing list about how to deal "with block rewards being too low to maintain acceptable security" in the distant future [1]. We can expect more of such discussion as the block subsidy keeps halving while still dominating the tx fees [1]. An emission like 1 per second forever is much more immutable due to guaranteed miner incentives and lack of arbitrariness. And thus a better basis for hard money [2]. [1] https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-June/020588.html https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022... [2] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
        djschnei 4y ago
        lol, new here? That discussion has been going on for YEARS. Discussion doesn't negate anything I said.
simiones 4y ago
Bitcoin is a terrible foundation to build transaction processing on, since it is extraordinarily slow - it would fail to handle the needs of even a small village. The "solution" of slapping something like LN on top of it is "let's completely forgo all of Bitcoin's guarantees and build something else; while still being hurt by Bitcoin's cripplingly slow speed when creating our network". Also, the incentive structures being discussed are only meaningful as long as the miners believe that Bitcoin will keep increasing in value. If it looks like BTC is dying, they have every reason to try to squeeze the last few drops of value from it by running an attack on it and running away with what real money they can extract.
- louloulou 4y ago
  Fedwire is a terrible foundation to build transaction processing on, since it is extraordinarily slow - it would fail to handle the needs of even a small village. The "solution" of slapping something like banks on top of it is "let's completely forgo all of the Fed's guarantees and build something else; while still being hurt by Fedwire's cripplingly slow speed when creating our network". Also, the incentive structures being discussed are only meaningful as long as the Banks believe that the Fed will keep increasing the money supply. If it looks like USD is dying, they have every reason to try to squeeze the last few drops of value from it by running an attack on it and running away with what real money they can extract.
- djschnei 4y ago
  > completely forgo all of Bitcoin's guarantees ah, he doesn't understand at all how lightning works. He's just repeating sound bites.
  - simiones 4y ago
    It's the other way around: I took a look how Lightning works, and understood that, unless you open and close channels constantly, you don't interact with Bitcoin at all. Repeating soundbites you've just heard without understanding the system would be saying "LN fixes Bitcoin's speed problem". While a channel is still open, transactions happening on the channel aren't in any way protected by Bitcoin's guarantees (they get LN's guarantees, which are different). And those are the only transactions that have any speed boost.

tromp 4y ago

> simply and elegantly designed I don't think Bitcoin qualifies as such. Sure, projects like Ethereum are far more complex, but there are projects that significantly improve on Bitcoin in simplicity and elegance. Bitcoin script in particular is not that simple and full of warts.

jrm4 4y ago
I think by definition it does, which is to say, its popularity proves it. I just think there's a hindsight thing going on. I liken Bitcoin to e.g. the Model T or the first grey brick cellphones. It changes everything forever because it works very well, but also is quickly improved upon and thus eventually won't be that popular.
- djschnei 4y ago
  No other system/project anchors a digital currency to the physical world as effectively as Bitcoin. But I do agree, eventually L2+ will be much more popular, in so far as much more people will interact with them. That's kind of the idea. L2s will still always rely on L1 for its anchor to the physical world (and thus physics).
  - jrm4 4y ago
    I'm unfamiliar with L1 and L2 as presented here. Do these both refer to the Bitcoin blockchain? If so, no. I strongly predict Bitcoin, both the blockchain and the currency will nearly, if not fully, "die," as the Model T and grey phone have. Ethereum is already much better at it's core, and it's not hard to think even Ethereum will be improved upon. In the long run, literally all bitcoin has is history and name recognition. Like the Model T, you will see it revered like something in a museum, and also just about nobody will actually use it.
    - tomputer 4y ago
      > Ethereum is already much better at it's core What you and many others seem to overlook is first mover advantage, network effects and most important: trust. Bitcoin is not Yahoo or Facebook, it is not a company product which has to improve and break things all the time. In the long run Bitcoin is a store of value. That requires trust, which takes time. To gain trust over time it has to move slow and steady because there can be no mistakes. When it comes to money and trust it is almost impossible to get a second chance (see Terra UST). Just one mistake could result in everyone distrusting Bitcoin.
      - jrm4 4y ago
        What I think others overlook is that in practice (and despite what the retconners are trying to say about bitcoin is gold or some nonsense) -- is that Bitcoin was NOT designed to be a blockchain platform. It was designed to be fungible currency. And it's an excellent proof-of-concept...but with severe flaws that will kill it, especially in light of the fact that we're talking about *open source software, which begs to be forked, and effectively has been. Your argument strikes me as very odd -- you seem to suggest that nothing can beat Bitcoin in theory, but Ethereum is already beating it in practice.
        tomputer 4y ago
        > Your argument strikes me as very odd -- you seem to suggest that nothing can beat Bitcoin in theory, but Ethereum is already beating it in practice. In theory everything is possible. I do not follow the beating really. They can both exist with different use cases. Bitcoin wants to be digital gold (and money) and Ethereum wants to be a smart contract world computer running dapps. They solve different problems.
djschnei 4y ago
Which projects are simply designed to be hard money?
- tromp 4y ago
  That depends on what do you mean by hard money. A capped supply?
  - djschnei 4y ago
    well, there are multiple factors, supply cap is one. Unchangeable issuance schedule (i.e. unchangeable monetary policy) is another gigantic aspect. No other project can guarantee the same immutability because no other network is defended by the bitcoin mining network. Bitcoin is the only commodity on the planet who's supply is completely unaffected by demand.
    - tromp 4y ago
      I already see discussion on the bitcoin dev mailing list about how to deal "with block rewards being too low to maintain acceptable security" in the distant future [1]. We can expect more of such discussion as the block subsidy keeps halving while still dominating the tx fees [1]. An emission like 1 per second forever is much more immutable due to guaranteed miner incentives and lack of arbitrariness. And thus a better basis for hard money [2]. [1] https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-June/020588.html https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022... [2] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
      - djschnei 4y ago
        lol, new here? That discussion has been going on for YEARS. Discussion doesn't negate anything I said.

simiones 4y ago

Bitcoin is a terrible foundation to build transaction processing on, since it is extraordinarily slow - it would fail to handle the needs of even a small village. The "solution" of slapping something like LN on top of it is "let's completely forgo all of Bitcoin's guarantees and build something else; while still being hurt by Bitcoin's cripplingly slow speed when creating our network". Also, the incentive structures being discussed are only meaningful as long as the miners believe that Bitcoin will keep increasing in value. If it looks like BTC is dying, they have every reason to try to squeeze the last few drops of value from it by running an attack on it and running away with what real money they can extract.

louloulou 4y ago
Fedwire is a terrible foundation to build transaction processing on, since it is extraordinarily slow - it would fail to handle the needs of even a small village. The "solution" of slapping something like banks on top of it is "let's completely forgo all of the Fed's guarantees and build something else; while still being hurt by Fedwire's cripplingly slow speed when creating our network". Also, the incentive structures being discussed are only meaningful as long as the Banks believe that the Fed will keep increasing the money supply. If it looks like USD is dying, they have every reason to try to squeeze the last few drops of value from it by running an attack on it and running away with what real money they can extract.
djschnei 4y ago
> completely forgo all of Bitcoin's guarantees ah, he doesn't understand at all how lightning works. He's just repeating sound bites.
- simiones 4y ago
  It's the other way around: I took a look how Lightning works, and understood that, unless you open and close channels constantly, you don't interact with Bitcoin at all. Repeating soundbites you've just heard without understanding the system would be saying "LN fixes Bitcoin's speed problem". While a channel is still open, transactions happening on the channel aren't in any way protected by Bitcoin's guarantees (they get LN's guarantees, which are different). And those are the only transactions that have any speed boost.