20 ms·

Bitcoin: The Cyberpunk Cryptocurrency

103 points by kyledrake 14y ago

quattrofan 14y ago
82 slides! Has anyone read this and can post the gist?
- mbijon 14y ago
  The first 60'ish slides are evidence supporting why inflation predicates cultural breakdowns, why gold has become a standard, and why a crypto currency offers advantages to gold. For the Bitcoin-related parts of this presentation, jump to slide #66 (or #62 if you don't know the history of Bitcoin, but then why are you on HN).
  - quattrofan 14y ago
    Thanks, yeah I know all about BC, I have a few..
  - djur 14y ago
    The slides present a few well-known cases of hyperinflation accompanying economic and social breakdown, but doesn't demonstrate causation. It then shifts to discussing the inflation trend of the US dollar, even though the USD is not experiencing hyperinflation and never has since the introduction of the Federal Reserve system. Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained. That seems like a grave flaw in the argument. Even if Bitcoin is viable as a non-inflationary currency outside the control of central banks and nation-states (which I don't think is proven), there's still the question of whether either of those qualities are desirable.
    - vbuterin 14y ago
      > even though the USD is not experiencing hyperinflation and never has since the introduction of the Federal Reserve system. The USD stayed long-term stable before 1913. It lost 98% of its value since then. Say what you want about short-term economic shocks in the 19th century or the 98% statistic being a deliberately biased framing of exponential decay, but the idea that the USD has not seen hyperinflation "since" the Federal Reserve is highly misleading. > Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained. "Why historical examples of people not wearing seatbelts dying in car accidents are relevant to my choice of not wearing a seatbelt is never explained." Same argument. Also, saying "this hasn't happened yet so it won't" is a highly specious argument to make. Events that are worse than anything that ever happened before them are actually quite common in history - namely, the 1918 Spanish Flu outbreak, World War I, World War II, the Great Depression, Chernobyl, etc. Given the general trend of an increasingly complex, and hence fragile, society over the past ten thousand years, disasters of increasing and unprecedented scale are the rational thing to expect.
- deleted 14y ago
  [deleted]
brennannovak 14y ago
Really great and easy to understand slideshow about the history of currencies and how they work all in relation to how Bitcoin fits into the worlds current monetary systems / problems!
- scarmig 14y ago
  Might be easy to understand, but it's horrifically wrong, which in my book precludes "really great." Its accounting of the origin of money is totally devoid of historical fact or perspective. That can't be stated strongly enough: people who are interested in empirical findings instead of ideology have looked into the origin of money. This has been an area of research for at least a century, and there's not a bit of evidence that money developed as the slideshow claims.
  - kyledrake 14y ago
    If money does not originate as a decentralized system, then how can we explain the fact that Bitcoin has become so successful? If it works for Bitcoin, why can't it work for gold? My opinions are not ideological: They are based on events that have occurred throughout history, be it in large macroeconomic environments or 50,000 person prison camps, or Bitcoin's rise itself. There is a lot of both current and historical evidence to suggest that currencies can form in a decentralized manner. The fact that there was a long-standing decentralized gold standard in China is highly documented and written about. We can debate about the earliest origins, but that is not my intention. What we arrived at is the system I am describing, which is not a system that is chosen by a government or an ideology, but the one that is chosen organically by freely thinking individuals. There is a nature and a pattern to it, and I am trying to understand and describe that.
    - djur 14y ago
      I don't think it's proven yet that Bitcoin is or will be successful as a currency.
      - redblacktree 14y ago
camus 14y ago
> "Bitcoin: The Cyberpunk Cryptocurrency. Here's why it will replace gold." What kind of title is this kyledrake ? EDIT : title updated , thanks , it really sounded stupid.
bcoates 14y ago
This is a nice summary of what you might call the Bitcoin economic party line, but it's not particularly insightful or rigorous for something so long. I'm by no means an expert on monetary policy, but I can recognize a lot of common errors in this presentation. It opens with a story about how currency came from barter, but barter is a way of exchanging goods with outsiders, which is not the main way of trading in a functioning society. Money didn't arise as a way of making barter systems practical, it arose as a way of memorializing debt obligations that eventually got securitized into something you could exchange for stuff directly. The parts about how the USD works and the suggestion that Demurrage would do anything at all to fix the deflation issue are also particularly weak. It also doesn't do any favors to Bitcoin by suggesting Freicoin alongside it; It's possible to imagine a world where the advantages of Bitcoin economics outweigh the disadvantages, but Freicoin is outright kookery.
- kyledrake 14y ago
  My intention wasn't to suggest people use Freicoin, it was to highlight that there are people experimenting with designing cryptocurrencies, and that Bitcoin isn't necessarily the end-all. Apologies if that wasn't clear! I took a huge topic and reduced it to bite sized pieces, and likely did make a few mistakes in the process. And for those mistakes, I want to apologize, and would love some feedback so I can improve this discussion in the future. But I think it's important to distinguish factual errors from economic opinions. Economics IMHO, like psychology, is fundamentally a behavioral science (there are a lot of people that even disagree on this topic!), so it can be hard to model it. That's one of the reasons why economists (like psychologists) can differ so radically in their views. But feel free to disagree with my opinions of course! Vigorous debate is very important to understanding what's going on here, and I'm very comfortable with changing my mind. My goal is to get people to start thinking about the ideas of economic exchange, so that they can have a framework to truly understand what Bitcoin is trying to accomplish. If you demystify how every other currency in the world works, then you can compare them to how Bitcoin works, and make up your own mind if Bitcoin is a crazy idea, or the real thing.
  - bcoates 14y ago
deleted 14y ago
[deleted]
quasque 14y ago
I don't really understand the Bitcoin hype. Yes it's interesting application of cryptography, but it's not really that useful as a currency. It's online only, and not really accepted anywhere very much, especially because there's too much of a barrier to casual usage. All of the transactions are public, making it a privacy nightmare unless you're careful to completely dissociate your real-life identity from your Bitcoin addresses. I just don't see the point other than as a speculative toy.
- Stealth- 14y ago
  It isn't hard to make yourself anonymous with your spending. Want to buy a gift for your wife? Send BTC to a coin mixer or a new eWallet, then pull it out to a newly created separate, anonymous, address. Use that address to purchase. Use the reverse process for receiving money, if you want to keep your main account private. New addresses can be created on the fly, so it isn't much different of a privacy nightmare than current card transactions.
  - gnaritas 14y ago
    > Send BTC to a coin mixer You mean money launderer?
- betterunix 14y ago
  "Yes it's interesting application of cryptography" Only as a way to illustrate that using cryptographic primitives like hashes and digital signatures does not make a system secure. If Bitcoin were a security system, the effort required to successfully double-spend the currency would be exponential in the effort required to use Bitcoin; as things are, the required effort scales linearly with the number of parties. Bitcoin may utilize secure cryptosystems, but as a cryptosystem Bitcoin is not secure under any accepted notion of "security."
acslater00 14y ago
Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. There are two main goals of "money". To facilitate exchange, and to store value. Bitcoin is moderately good at the first one and atrocious at the second one. It is not designed to be a stable store of value. It is designed to _appreciate_ in value, but this encourages intense speculation that results in wild, sickening swings in the exchange rate. It's at best a goofy but terrible idea, and at worst has all the red flags of an outright pyramid scheme. If you want to read Rothbard and convince yourself that "currency debasement" caused the fall of the Roman empire, that modern monetary policy is going to lead to a Zimbabwean dystopia, and that you can solve all of these problems by dropping us into the hard-money currency policies of the 1800s [that, for the record, didn't actually work all that well], go right ahead. There are subreddits for this sort of thing. But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit.
- kiba 14y ago
  Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. I agree that we're in a potential bubble, but bitcoin was never ever a pyramid scheme. Bitcoin is a fully transparent cryptocurrency system and investors were never promised anything.
  - wmf 14y ago
    The fixed number of BTC is effectively a "promise" that the value of your holdings will increase if you recruit new people into the Bitcoin ecosystem.
    - mattm 14y ago
      So you would say company stock is a pyramid scheme as well? There is usually a set amount and it benefits you to recruit others to buy the stock.
      - wmf 14y ago
ChuckMcM 14y ago
This presentation confuses money and currency. That is unfortunate because there are principles of monetary policy (like how much currency is in circulation) which are being conflated with currency issues (like how hard it is to counterfeit). Bitcoin is a currency, which through a number of exchanges, can be exchanged for money. Because it is not legal tender for any economy, its economic value is entirely controlled by currency exchange. That will always makes it less stable than currencies that are backed by an economic entity (a nation-state, or perhaps at some point a multi-national corporation). This is important to consider because currencies that are backed by an economic entity are only as strong as that entity is with respect to the global economy. That is why the Italian Lire tended to hyper-inflate but the Euro does not. The difference is that the Eurozone economy is stronger than the Italian economy by itself is. I can whole heartedly recommend that people interested in Bitcoin visit the British Museum's display of the history of currency, and to invest in understanding the reasoning that economists go through in order to make the statements they make. I can recommend this course by Dr. Taylor [1] from The Great Courses catlog, I originally checked it out from the library to listen to on my commute but bought my own copy when they went on sale. [1] http://www.thegreatcourses.com/tgc/courses/course_detail.aspx?cid=550 http://www.thegreatcourses.com/tgc/courses/course_detail.asp... -- "Economics, 3rd Edition" by Tim Taylor.
uvdiv 14y ago
Almost all of the historical currency examples differ from Bitcoin in an essential way: they are valuable commodities independent of their use as money. (Called "commodity currency"). They are either useful commodities (sugar, cigarettes), or psychological commodities valued for aesthetics or status (gold, silver). Bitcoin is not a commodity: aside from its monetary use, it is absolutely worthless. The value of commodity currencies is stabilised and supported by their commodity value. Market forces sustain the value of cigarettes. Bitcoin has nothing like this: it's value is purely psychological and purely speculative.
- tlrobinson 14y ago
  Are gold's industrial uses really worth $1600/oz? I was under the impression that were gold not used as a store of value the price would be much much lower.
beachstartup 14y ago
the bartering origins of trade and money (debt) is a fallacy, according to david graeber, an anthropologist that wrote a book on the history of human economics. it's also what they teach in every econ class so it has widespread status as a myth: http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
deleted 14y ago
[deleted]
Apocryphon 14y ago
What happens in the long run? The parts of the developing world that don't have machines powerful enough to participate in the mining or the exchange are going to be locked out.
- betterunix 14y ago
  In the long run, powerful governments with an interest in disrupting the trust in Bitcoin will amass the computing power needed to attack the system. Bitcoin is a system for which the attacker's effort scales linearly with the work done by honest parties. This is not the kind of security a cryptosystem should provide.

103 points by kyledrake 14y ago

quattrofan 14y ago

82 slides! Has anyone read this and can post the gist?

mbijon 14y ago
The first 60'ish slides are evidence supporting why inflation predicates cultural breakdowns, why gold has become a standard, and why a crypto currency offers advantages to gold. For the Bitcoin-related parts of this presentation, jump to slide #66 (or #62 if you don't know the history of Bitcoin, but then why are you on HN).
- quattrofan 14y ago
  Thanks, yeah I know all about BC, I have a few..
- djur 14y ago
  The slides present a few well-known cases of hyperinflation accompanying economic and social breakdown, but doesn't demonstrate causation. It then shifts to discussing the inflation trend of the US dollar, even though the USD is not experiencing hyperinflation and never has since the introduction of the Federal Reserve system. Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained. That seems like a grave flaw in the argument. Even if Bitcoin is viable as a non-inflationary currency outside the control of central banks and nation-states (which I don't think is proven), there's still the question of whether either of those qualities are desirable.
  - vbuterin 14y ago
    > even though the USD is not experiencing hyperinflation and never has since the introduction of the Federal Reserve system. The USD stayed long-term stable before 1913. It lost 98% of its value since then. Say what you want about short-term economic shocks in the 19th century or the 98% statistic being a deliberately biased framing of exponential decay, but the idea that the USD has not seen hyperinflation "since" the Federal Reserve is highly misleading. > Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained. "Why historical examples of people not wearing seatbelts dying in car accidents are relevant to my choice of not wearing a seatbelt is never explained." Same argument. Also, saying "this hasn't happened yet so it won't" is a highly specious argument to make. Events that are worse than anything that ever happened before them are actually quite common in history - namely, the 1918 Spanish Flu outbreak, World War I, World War II, the Great Depression, Chernobyl, etc. Given the general trend of an increasingly complex, and hence fragile, society over the past ten thousand years, disasters of increasing and unprecedented scale are the rational thing to expect.
deleted 14y ago
[deleted]

brennannovak 14y ago

Really great and easy to understand slideshow about the history of currencies and how they work all in relation to how Bitcoin fits into the worlds current monetary systems / problems!

scarmig 14y ago
Might be easy to understand, but it's horrifically wrong, which in my book precludes "really great." Its accounting of the origin of money is totally devoid of historical fact or perspective. That can't be stated strongly enough: people who are interested in empirical findings instead of ideology have looked into the origin of money. This has been an area of research for at least a century, and there's not a bit of evidence that money developed as the slideshow claims.
- kyledrake 14y ago
  If money does not originate as a decentralized system, then how can we explain the fact that Bitcoin has become so successful? If it works for Bitcoin, why can't it work for gold? My opinions are not ideological: They are based on events that have occurred throughout history, be it in large macroeconomic environments or 50,000 person prison camps, or Bitcoin's rise itself. There is a lot of both current and historical evidence to suggest that currencies can form in a decentralized manner. The fact that there was a long-standing decentralized gold standard in China is highly documented and written about. We can debate about the earliest origins, but that is not my intention. What we arrived at is the system I am describing, which is not a system that is chosen by a government or an ideology, but the one that is chosen organically by freely thinking individuals. There is a nature and a pattern to it, and I am trying to understand and describe that.
  - djur 14y ago
    I don't think it's proven yet that Bitcoin is or will be successful as a currency.
    - redblacktree 14y ago

camus 14y ago

> "Bitcoin: The Cyberpunk Cryptocurrency. Here's why it will replace gold." What kind of title is this kyledrake ? EDIT : title updated , thanks , it really sounded stupid.

bcoates 14y ago

This is a nice summary of what you might call the Bitcoin economic party line, but it's not particularly insightful or rigorous for something so long. I'm by no means an expert on monetary policy, but I can recognize a lot of common errors in this presentation. It opens with a story about how currency came from barter, but barter is a way of exchanging goods with outsiders, which is not the main way of trading in a functioning society. Money didn't arise as a way of making barter systems practical, it arose as a way of memorializing debt obligations that eventually got securitized into something you could exchange for stuff directly. The parts about how the USD works and the suggestion that Demurrage would do anything at all to fix the deflation issue are also particularly weak. It also doesn't do any favors to Bitcoin by suggesting Freicoin alongside it; It's possible to imagine a world where the advantages of Bitcoin economics outweigh the disadvantages, but Freicoin is outright kookery.

kyledrake 14y ago
My intention wasn't to suggest people use Freicoin, it was to highlight that there are people experimenting with designing cryptocurrencies, and that Bitcoin isn't necessarily the end-all. Apologies if that wasn't clear! I took a huge topic and reduced it to bite sized pieces, and likely did make a few mistakes in the process. And for those mistakes, I want to apologize, and would love some feedback so I can improve this discussion in the future. But I think it's important to distinguish factual errors from economic opinions. Economics IMHO, like psychology, is fundamentally a behavioral science (there are a lot of people that even disagree on this topic!), so it can be hard to model it. That's one of the reasons why economists (like psychologists) can differ so radically in their views. But feel free to disagree with my opinions of course! Vigorous debate is very important to understanding what's going on here, and I'm very comfortable with changing my mind. My goal is to get people to start thinking about the ideas of economic exchange, so that they can have a framework to truly understand what Bitcoin is trying to accomplish. If you demystify how every other currency in the world works, then you can compare them to how Bitcoin works, and make up your own mind if Bitcoin is a crazy idea, or the real thing.
- bcoates 14y ago

deleted 14y ago

[deleted]

quasque 14y ago

I don't really understand the Bitcoin hype. Yes it's interesting application of cryptography, but it's not really that useful as a currency. It's online only, and not really accepted anywhere very much, especially because there's too much of a barrier to casual usage. All of the transactions are public, making it a privacy nightmare unless you're careful to completely dissociate your real-life identity from your Bitcoin addresses. I just don't see the point other than as a speculative toy.

Stealth- 14y ago
It isn't hard to make yourself anonymous with your spending. Want to buy a gift for your wife? Send BTC to a coin mixer or a new eWallet, then pull it out to a newly created separate, anonymous, address. Use that address to purchase. Use the reverse process for receiving money, if you want to keep your main account private. New addresses can be created on the fly, so it isn't much different of a privacy nightmare than current card transactions.
- gnaritas 14y ago
  > Send BTC to a coin mixer You mean money launderer?
betterunix 14y ago
"Yes it's interesting application of cryptography" Only as a way to illustrate that using cryptographic primitives like hashes and digital signatures does not make a system secure. If Bitcoin were a security system, the effort required to successfully double-spend the currency would be exponential in the effort required to use Bitcoin; as things are, the required effort scales linearly with the number of parties. Bitcoin may utilize secure cryptosystems, but as a cryptosystem Bitcoin is not secure under any accepted notion of "security."

acslater00 14y ago

Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. There are two main goals of "money". To facilitate exchange, and to store value. Bitcoin is moderately good at the first one and atrocious at the second one. It is not designed to be a stable store of value. It is designed to _appreciate_ in value, but this encourages intense speculation that results in wild, sickening swings in the exchange rate. It's at best a goofy but terrible idea, and at worst has all the red flags of an outright pyramid scheme. If you want to read Rothbard and convince yourself that "currency debasement" caused the fall of the Roman empire, that modern monetary policy is going to lead to a Zimbabwean dystopia, and that you can solve all of these problems by dropping us into the hard-money currency policies of the 1800s [that, for the record, didn't actually work all that well], go right ahead. There are subreddits for this sort of thing. But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit.

kiba 14y ago
Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. I agree that we're in a potential bubble, but bitcoin was never ever a pyramid scheme. Bitcoin is a fully transparent cryptocurrency system and investors were never promised anything.
- wmf 14y ago
  The fixed number of BTC is effectively a "promise" that the value of your holdings will increase if you recruit new people into the Bitcoin ecosystem.
  - mattm 14y ago
    So you would say company stock is a pyramid scheme as well? There is usually a set amount and it benefits you to recruit others to buy the stock.
    - wmf 14y ago

ChuckMcM 14y ago

This presentation confuses money and currency. That is unfortunate because there are principles of monetary policy (like how much currency is in circulation) which are being conflated with currency issues (like how hard it is to counterfeit). Bitcoin is a currency, which through a number of exchanges, can be exchanged for money. Because it is not legal tender for any economy, its economic value is entirely controlled by currency exchange. That will always makes it less stable than currencies that are backed by an economic entity (a nation-state, or perhaps at some point a multi-national corporation). This is important to consider because currencies that are backed by an economic entity are only as strong as that entity is with respect to the global economy. That is why the Italian Lire tended to hyper-inflate but the Euro does not. The difference is that the Eurozone economy is stronger than the Italian economy by itself is. I can whole heartedly recommend that people interested in Bitcoin visit the British Museum's display of the history of currency, and to invest in understanding the reasoning that economists go through in order to make the statements they make. I can recommend this course by Dr. Taylor [1] from The Great Courses catlog, I originally checked it out from the library to listen to on my commute but bought my own copy when they went on sale. [1] http://www.thegreatcourses.com/tgc/courses/course_detail.aspx?cid=550 http://www.thegreatcourses.com/tgc/courses/course_detail.asp... -- "Economics, 3rd Edition" by Tim Taylor.

uvdiv 14y ago

Almost all of the historical currency examples differ from Bitcoin in an essential way: they are valuable commodities independent of their use as money. (Called "commodity currency"). They are either useful commodities (sugar, cigarettes), or psychological commodities valued for aesthetics or status (gold, silver). Bitcoin is not a commodity: aside from its monetary use, it is absolutely worthless. The value of commodity currencies is stabilised and supported by their commodity value. Market forces sustain the value of cigarettes. Bitcoin has nothing like this: it's value is purely psychological and purely speculative.

tlrobinson 14y ago
Are gold's industrial uses really worth $1600/oz? I was under the impression that were gold not used as a store of value the price would be much much lower.

beachstartup 14y ago

the bartering origins of trade and money (debt) is a fallacy, according to david graeber, an anthropologist that wrote a book on the history of human economics. it's also what they teach in every econ class so it has widespread status as a myth: http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

deleted 14y ago

[deleted]

Apocryphon 14y ago

What happens in the long run? The parts of the developing world that don't have machines powerful enough to participate in the mining or the exchange are going to be locked out.

betterunix 14y ago
In the long run, powerful governments with an interest in disrupting the trust in Bitcoin will amass the computing power needed to attack the system. Bitcoin is a system for which the attacker's effort scales linearly with the work done by honest parties. This is not the kind of security a cryptosystem should provide.