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Bitcoin exists to solve the principal-agent problem that comes with delegating control of the money supply to singular institutions. If you look at the history
by david_shi 3y ago
Bitcoin exists to solve the principal-agent problem that comes with delegating control of the money supply to singular institutions.
If you look at the history of empires, from the Romans to the Han, it is littered with instances of societal decline as a direct result of inflation and overspending. This unilateral currency debasement is much harder if the collective (and global) definition of money is determined by distributed networks of computers.
Maybe Bitcoin itself isn't the final form, but the fact that distributed systems and cryptography tech is out there means the cat is out of the bag.
Even if your view on the crypto industry is negative, it's important to take some time to understand why millions of people around the world are involved in it. It's not only because of the appeal of ponzi schemes.
- jtwoodhouse 3y ago"Maybe Bitcoin itself isn't the final form, but the fact that distributed systems and cryptography tech is out there means the cat is out of the bag." The bitcoiner argument would be that only bitcoin has reached a level of decentralization to survive, and the powers that be stand ready to crush any would-be stronger substitutes before they reach critical mass.
- ijustlovemath 3y agoBitcoin is far too slow and far too energy intensive to ever pose a real threat to a centralized system. I do think there is truth in that the future of currency is decentralized though!
- qualifiedai 3y agoMillions are involved precisely because of the appeal of get rich fast and ponzi schemes. Tens of thousands are invoved because of its technological promise and appeal which you've described. This imbalance is the main problem crypto industry needs to solve before it truly reaches its potential.
- david_shi 3y agoThis is definitely true in the West. I said millions because of every day crypto usage in countries like Argentina and Turkey, where inflation makes it challenging to save money, and in countries where there are high remittance rates. More builders are definitely needed to improve the crypto user experience across a range of categories.
- democracy 3y ago...another fairytale about people in poor countries using crypto )))) Nothing beats good old USD or EURO as an asset if you live in a country with hyperinflation.
- toenail 3y agoDid the USD or EURO gain +7000% in the last decade? Didn't think so.
- lottin 3y agoIf it did, your salary must have shrunk by 87.5% (or the company that you work for would have gone out of business).
- toenail 3y agoBecause in reality all salaries went up exactly the right amount to compensate for inflation? Hm, the system doesn't seem to work like that.
- lottin 3y agoIf you think that a business can remain in business after its revenue shrinks by a factor of 8 without wage costs adjusting accordingly, you need a reality check.
- david_shi 3y ago
- marricks 3y ago> societal decline as a direct result of inflation and overspending Really? Direct? Pretty sure the Roman’s had many other things happening upstream of overspending. Many things were going wrong.
- kemotep 3y agoWe have as many reasons to believe that the legacy of the Roman Empire, through the Catholic Church, still exists today and is a billion people strong as we do why it fell at any one particular day for any one particular reason.
- kragen 3y agoi can't parse your comment, but it seems to presuppose that the roman empire fell on one particular day; there seem to be a lot of candidates, though. which one do you mean
- kemotep 3y agoThere are several days that could be candidates for the day Rome fell. There are several reasons we could argue that the Roman Catholic Church is the continuation of Rome and so Rome never truly fell. That is what I was trying to say in the previous comment.
- kragen 3y agoit probably makes more sense to argue that the byzantine empire is the continuation of rome, but in a broader sense, all of human civilization is the continuation of the indus valley civilization
- kemotep 3y agoThe point being there isn’t a single cause to the fall of Rome and there are even a few arguments that Rome continued in various forms, some of which still exist today.
- kibwen 3y ago> If you look at the history of empires, from the Romans to the Han, it is littered with instances of societal decline as a direct result of inflation and overspending. Not only was the decline of the Roman empire too slow and variegated to attribute to a single cause, "inflation and overspending" isn't even on the shortlist. If we're oversimplifying, it was more akin to the opposite of the sentiment that you're shooting for here: the decline of Rome was due to the erosion of centralized authority, which increased factionalism and caused the elites to at best become apathetic to the plight of the empire and at worst actively pursue its destruction for their own gain, leaving Rome ripe for disruption from without. A blockchain wouldn't have saved Rome.
- david_shi 3y agoThe Romans were only able to fund the expansion of the empire by overextending their resources. This meant that the empire became too expensive to maintain without relying on tactics like currency debasement, subsequently triggering many of the other symptoms of decline that you listed. Of course, we aren't living in the Roman Empire today. But what is consistent is that delegating monetary policy to a third party means that they can overspend and inflate the currency base, charitably for reasons of national interest, cynically for their own gain. The rise of cryptocurrencies like Bitcoin is a sign that many people want to reduce their personal exposure to this.
- lmm 3y ago> The Romans were only able to fund the expansion of the empire by overextending their resources. No, they never ran out of the resources needed to expand. It just became more individually profitable to spend those resources on internal competition, and eventually civil war, than on growing the pie. > This meant that the empire became too expensive to maintain without relying on tactics like currency debasement, subsequently triggering many of the other symptoms of decline that you listed. Even if we take this at face value, that doesn't sound like currency debasement causing the collapse - if anything it allowed them to stave it off at least for a time. Businesses renegotiating their loans/bonds is normally a precursor to going bankrupt, but that doesn't mean renegotiating your loans/bonds causes bankruptcy; if you took your loans/bonds in a form where you can't renegotiate them, that only makes you more likely to go bankrupt sooner. (Traditional currencies are in many ways like a slightly odd bond that doesn't pay interest)
- marenkay 3y agoBitcoin just like capitalism is a horrible failure making life worse for humanity and no proof exists it made anything better. Both accelerate the destruction of the planet and humanity. It’s ridiculous to claim any of this is good just because you think you have a chance to get some imaginary part of the big cake.
- a_gnostic 3y agoBitcoin saved my cousin from starvation. Can the same be said for anti-capitalism, eg. Communism? Nope, because Holodomor.
- paulryanrogers 3y agoBitcoin is more like communism than autocratic regimes that starve people through malice or incompetence. The answer to states that cannot manage their own money supply isn't outsourcing to ecologically disastrous shit coins limping along at 7 TPS. All that said, hope your cousin is safe and well fed.
- marenkay 3y agoBecause it puts the power into the hands of a ruling class which takes everything? Yeah, it’s like real communism not like the theories…
- marenkay 3y agoAt the price of putting someone else into starvation which you ignored…
- MacsHeadroom 3y agoMarkets are not zero sum. Value is "created* in a growing market.
- milutinovici 3y ago
- shock-value 3y agoSpeaking of Bitcoin specifically, if this is your view then you should take some time to understand the severe societal and economic problems that come with persistent deflation. And more generally, determining the optimal level of the money supply to match the needs of a dynamic economy is not trivial — there is no simple formula involving straightforwardly measurable variables that I am aware of.
- david_shi 3y agoBitcoin and BFT consensus primarily solve the principal-agent problem, and give us a better means to experiment. Personally, I don't think a deflationary global reserve currency is the precise answer, but I do believe that these experiments in monetary governance (like Ethereum's burn and mint model) will allow us to move closer to it.
- lottin 3y agoBitcoin has no governance mechanism for managing the money supply. If it was adopted as money, governments would have to implement some mechanism to manage the bitcoin supply, just like they did under the gold standard. Therefore it doesn't solve any principal-agent problem.
- Eliezer 3y agoGrow per capita nominal GDP by a 6%/year level target. (NGDPLT.)
- toenail 3y ago> And more generally, determining the optimal level of the money supply to match the needs of a dynamic economy is not trivial No, we don't need some grand wizards in an ivory tower to finely tune the amount of money in the economy, that idea is absurd. The economy has worked fine for thousands of years before they started doing that. In fact, since they started doing it we've seen ever growing boom and bust cycles.
- cortesoft 3y ago
- johnwheeler 3y agoUhhh but what about the Keynesian tools we need to get us out of jams that a fixed money supply doesn’t afford us? They apparently worked great the last two crises. I know, I know… it’s all part of one of Dalio’s big cycles, and I just haven’t seen it play out yet, I’m naive and all that. Bitcoin save us.
- qotgalaxy 3y ago[dead]
- 0raymond0 3y agoWhen I learned about the limited supply of Bitcoin, I thought, "Great, no more rampant currency printing!" But then they developed the fork technology, which can split one Bitcoin into countless pieces. I guess I underestimated the extent of human greed. Thankfully, it's all digital and our math can handle it.
- fearface 3y agoNo, weird that you’re comment is so high up, but shows how little crypto knowledge is around in HN. A Bitcoin is a Bitcoin, but it consists of smaller units called Satoshis. Like Dollar and Cents. Since the beginning of Bitcoin. A fork is a copy of the underlying source code of Bitcoin, which in itself has no value at all. You would also need to find people who run nodes for your fork and start convincing exchanges that your fork should be supported too…so no, this is not splitting Bitcoin
- wesapien 3y agoI thought it was the reverse. Satoshi is the unit at the code level and Bitcoin is just a representation for UX reasons.
- zubairq 3y agoYes this is accurate, satoshi is the unit and Bitcoin is more of a UX thing
- lottin 3y agoIf you fork the bitcoin blockchain you have now two ledgers, each one telling you that a certain number of bitcoins really exist. Who is to say that one is right and the other is wrong? In this scenario, it's debatable how many bitcoins are in existence.
- sowbug 3y agoYou might want to read the Bitcoin whitepaper. There is zero ambiguity in the situation you describe. That is the essence of the proof-of-work (or proof-of-stake, take your pick) solution to the Byzantine generals problem.
- JeffSnazz 3y ago> If you look at the history of empires, from the Romans to the Han, it is littered with instances of societal decline as a direct result of inflation and overspending. There is little evidence to support this. There is an abundance of evidence of empires responding to the crisis of a population overburdened by debt by cancellation, though, if we're going by history to dictate what our current state should do....
- imjonse 3y agoAre you saying all those talented individuals who were crypto experts and became LLM/AI experts overnight and promoted both with the same zeal are actually concerned about societal decline and not just schemers? Faith in humanity restored.
- deleted 3y ago[deleted]