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A lot of people ask this question, but forget to look at a very apparent and distinct characteristic of Bitcoin: it's opensource. If another awesome and very us

by snitko 14y ago

A lot of people ask this question, but forget to look at a very apparent and distinct characteristic of Bitcoin: it's opensource. If another awesome and very useful feature appears in Litecoin nothing can prevent Bitcoin maintainers from implementing it too. In fact, there's every incentive for them to do so, because their own reputation and assets in bitcoins are at stake. Thus, while a competitive currency is possible, it may not be needed for Bitcoin to remain a great product. It may well be this mystical natural monopoly in a field economists would hardly predict one to appear.

dualogy 14y ago
Except when the competitor introduces something that goes against the very fundamentals of Bitcoin yet appeals to "the masses". Such as, slightly inflationary instead of intrinsically deflationary. Would make the competitor more of a currency --something that circulates and lubricates commerce-- so medium-of-exchange rather than store-of-value. Now if that took off as the way to pay for Pizza or guns online, what would happen to deflationary "high-value" speculative BTCs, having lost most of their "currency" potential?
- snitko 14y ago
  Tell me more how an inflationary currency would appeal more to the masses. You're being delusional - it appeals to Keynesian economists.
  - kiba 14y ago
    It appeals to those that borrow money because it means their debt is being eroded through inflation.
    - snitko 14y ago
      That only means people will borrow less and the denial of capital some may face will be exactly to the extent to which they profit from deflation and hoarding. Borrowing is not the solution to all of the problems, yet it is pictured to be that precisely because of the perverted inflationary economy we currently have.
    - tlrobinson 14y ago
      Don't interest rates generally factor in inflation? Also, perhaps it would be a good thing for some of us to borrow less money...
  - InclinedPlane 14y ago
    Because inflation discourages hoarding. It encourages people to actually do something with their currency. Use it, generate economic activity, make it grow through investment, etc.
    - snitko 14y ago
      This cannot be further from the truth. Inflation encourages people to spend, that's true. However there's nothing in inflation that encourages the right kind of spending. If I'm not sure what to invest in right now or don't see an opportunity, I may want to hoard for a while. Inflation punishes careful investors, so more stupid and risky projects are funded. Let me give you another example. Let's say I decided to bootstrap my own business using only my savings which I intend to live off for a year or so. Inflation decreases the time I have to bootstrap my business so instead of a year I may only be able to afford 8 months, which in turn decreases my chances for success. Thus, it is precisely the productive entrepreneurs and innovators who are punished.
      - InclinedPlane 14y ago
        You're being silly. Typical rates of inflation tend to be less than 5%, often around 3% or so, per year. That's not enough to cause anyone serious worry about their savings becoming diluted over a period of a year or even a few years. At 3% inflation it would take 7 years of letting your money sit around doing nothing before the savings necessary to survive for a year degraded to only being able to support you for 8 months. I rather think that's more than enough time to figure out how to invest.
        snitko 14y ago
        You're not taking into the account the time it takes to accumulate the necessary savings! For many people who start their businesses it may as well be 5-7 years. You're also not taking into the account such investments as buying a house. In many non-western countries people actually save for that instead of borrowing. It is still an investment that creates jobs and inflation hurts that.
  - brownbat 14y ago
    > You're being delusional... I found this needlessly uncivil, making it more difficult for me to sympathize with your point.
    - snitko 14y ago
      You're right, I apologize. It was an unnecessary statement. I think I tend to be a bit passionate when it comes to certain subjects and it hurts the discussion. I hope the author of the comment I replied to didn't take it personally.
      - brownbat 14y ago
        It's an issue that evokes strong passions, we've all been there. Sorry if I made too big a deal about it. I'd just spent half an hour browsing comments on Reddit, it left me a little hyper-protective and self-righteous about this place.
  - dualogy 14y ago
    Yeah I'm myself anti-"Keynesian" in the "what should be" department. In the "what is" department, I get the impression that, given an official sanctioned and sufficiently convoluted "vehicle", the "masses" don't mind consuming more than they produce for a while, as long the gravy flows. Else, current fiat wouldn't stand a chance with the electorate, even accounting for "propaganda" and legal tender laws etc.
- dualogy 14y ago
  A lot of political-philosophy replies here on the ills of inflation. That's not my main point. My main point is: what if a non-deflationary competitor (so BTC couldn't just "copy" its defining differentiating feature) takes off as the way to pay for Pizza, drugs, eBooks or guns online -- will BTC discover its true "intrinsic value"? Or what will it do? The artificially induced, algorithmically guaranteed scarcity of crypto-bits'n'bytes is hardly worth $100, is it? Isn't 99% of BTC valuations expectations and bets abouts its glorious future as THE currency for digitally lubricated commerce and web-based bartering (or---others betting on others betting so)? What part of BTC "reassures" its users? For USD, people may look for reassurance at the might of the USG and/or FED (and global reserve status / oil settlements). For Gold, people may look for reassurance at the past, many 1000s of years of tradition -- millenia of "giants" / kings / wealthy and powerful people / central banks who will always be interested in your shiny metal to store material excess. For BTC, for reassurance people can only look at the future. Is this the coming digital currency (medium of exchange) par excellence? (And given its built-in deflation -- can it ever be?) That is, ignoring the prevailing BTC2USD price-chasing speculating casino: what is the intrinsic reassurance of BTC that makes people fork over USD for BTC and that will remain a superior criterion even when a more "currency-esque" (not so very deflationary) alternative digital currency (transactional medium of exchange) comes along?
  - dualogy 14y ago
    Well, I guess that's akin to asking "what if aliens invade NYC in September 2014?" -- answer being, we'll find out. ;D
evolve2k 14y ago
I was vaguely aware that bitcoin was open source but not aware the code base was open for change and potential pull requests? Excuse my naivity but wasn't part if the design that the algorithm and everything was locked in upfront and not open to change? How is a new feature approved and merged into master?
- kiba 14y ago
  Changing the code, creating pull request, and doing all of that is easy. The hard part is convincing users and miners to upgrade, especially with something that is protocol breaking.
  - anologwintermut 14y ago
    Effectively the major mining pools control bitcoin since they determine what is likely to get accepted. Note that the devs had to ask the minners to down grade. The funny thing is if several large banks decided they wanted to open minning pools, i'd imagine they could do so and then control all kinds of things. I wonder if this will happen (or if it already has. How many miners operate over Tor? )
    - snitko 14y ago
      Miners do not control the rules, they merely choose to accept or not accept them. That's a very important distinction that is a part of the checks and balances system in Bitcoin.
      - mef 14y ago
        What would happen if all the miners got together and demanded a code change that benefited miners, like perhaps increase the mining reward? Assuming the devs disagreed with the change, would the BTC community have any way to prevent this alliance of miners from updating the code themselves, deploying it everywhere, and using their overwhelming mining power to maintain the longest block chain and thereby making the code change a reality?

by snitko 14y ago

dualogy 14y ago

Except when the competitor introduces something that goes against the very fundamentals of Bitcoin yet appeals to "the masses". Such as, slightly inflationary instead of intrinsically deflationary. Would make the competitor more of a currency --something that circulates and lubricates commerce-- so medium-of-exchange rather than store-of-value. Now if that took off as the way to pay for Pizza or guns online, what would happen to deflationary "high-value" speculative BTCs, having lost most of their "currency" potential?

snitko 14y ago
Tell me more how an inflationary currency would appeal more to the masses. You're being delusional - it appeals to Keynesian economists.
- kiba 14y ago
  It appeals to those that borrow money because it means their debt is being eroded through inflation.
  - snitko 14y ago
    That only means people will borrow less and the denial of capital some may face will be exactly to the extent to which they profit from deflation and hoarding. Borrowing is not the solution to all of the problems, yet it is pictured to be that precisely because of the perverted inflationary economy we currently have.
  - tlrobinson 14y ago
    Don't interest rates generally factor in inflation? Also, perhaps it would be a good thing for some of us to borrow less money...
- InclinedPlane 14y ago
  Because inflation discourages hoarding. It encourages people to actually do something with their currency. Use it, generate economic activity, make it grow through investment, etc.
  - snitko 14y ago
    This cannot be further from the truth. Inflation encourages people to spend, that's true. However there's nothing in inflation that encourages the right kind of spending. If I'm not sure what to invest in right now or don't see an opportunity, I may want to hoard for a while. Inflation punishes careful investors, so more stupid and risky projects are funded. Let me give you another example. Let's say I decided to bootstrap my own business using only my savings which I intend to live off for a year or so. Inflation decreases the time I have to bootstrap my business so instead of a year I may only be able to afford 8 months, which in turn decreases my chances for success. Thus, it is precisely the productive entrepreneurs and innovators who are punished.
    - InclinedPlane 14y ago
      You're being silly. Typical rates of inflation tend to be less than 5%, often around 3% or so, per year. That's not enough to cause anyone serious worry about their savings becoming diluted over a period of a year or even a few years. At 3% inflation it would take 7 years of letting your money sit around doing nothing before the savings necessary to survive for a year degraded to only being able to support you for 8 months. I rather think that's more than enough time to figure out how to invest.
      - snitko 14y ago
        You're not taking into the account the time it takes to accumulate the necessary savings! For many people who start their businesses it may as well be 5-7 years. You're also not taking into the account such investments as buying a house. In many non-western countries people actually save for that instead of borrowing. It is still an investment that creates jobs and inflation hurts that.
- brownbat 14y ago
  > You're being delusional... I found this needlessly uncivil, making it more difficult for me to sympathize with your point.
  - snitko 14y ago
    You're right, I apologize. It was an unnecessary statement. I think I tend to be a bit passionate when it comes to certain subjects and it hurts the discussion. I hope the author of the comment I replied to didn't take it personally.
    - brownbat 14y ago
      It's an issue that evokes strong passions, we've all been there. Sorry if I made too big a deal about it. I'd just spent half an hour browsing comments on Reddit, it left me a little hyper-protective and self-righteous about this place.
- dualogy 14y ago
  Yeah I'm myself anti-"Keynesian" in the "what should be" department. In the "what is" department, I get the impression that, given an official sanctioned and sufficiently convoluted "vehicle", the "masses" don't mind consuming more than they produce for a while, as long the gravy flows. Else, current fiat wouldn't stand a chance with the electorate, even accounting for "propaganda" and legal tender laws etc.
dualogy 14y ago
A lot of political-philosophy replies here on the ills of inflation. That's not my main point. My main point is: what if a non-deflationary competitor (so BTC couldn't just "copy" its defining differentiating feature) takes off as the way to pay for Pizza, drugs, eBooks or guns online -- will BTC discover its true "intrinsic value"? Or what will it do? The artificially induced, algorithmically guaranteed scarcity of crypto-bits'n'bytes is hardly worth $100, is it? Isn't 99% of BTC valuations expectations and bets abouts its glorious future as THE currency for digitally lubricated commerce and web-based bartering (or---others betting on others betting so)? What part of BTC "reassures" its users? For USD, people may look for reassurance at the might of the USG and/or FED (and global reserve status / oil settlements). For Gold, people may look for reassurance at the past, many 1000s of years of tradition -- millenia of "giants" / kings / wealthy and powerful people / central banks who will always be interested in your shiny metal to store material excess. For BTC, for reassurance people can only look at the future. Is this the coming digital currency (medium of exchange) par excellence? (And given its built-in deflation -- can it ever be?) That is, ignoring the prevailing BTC2USD price-chasing speculating casino: what is the intrinsic reassurance of BTC that makes people fork over USD for BTC and that will remain a superior criterion even when a more "currency-esque" (not so very deflationary) alternative digital currency (transactional medium of exchange) comes along?
- dualogy 14y ago
  Well, I guess that's akin to asking "what if aliens invade NYC in September 2014?" -- answer being, we'll find out. ;D

evolve2k 14y ago

I was vaguely aware that bitcoin was open source but not aware the code base was open for change and potential pull requests? Excuse my naivity but wasn't part if the design that the algorithm and everything was locked in upfront and not open to change? How is a new feature approved and merged into master?

kiba 14y ago
Changing the code, creating pull request, and doing all of that is easy. The hard part is convincing users and miners to upgrade, especially with something that is protocol breaking.
- anologwintermut 14y ago
  Effectively the major mining pools control bitcoin since they determine what is likely to get accepted. Note that the devs had to ask the minners to down grade. The funny thing is if several large banks decided they wanted to open minning pools, i'd imagine they could do so and then control all kinds of things. I wonder if this will happen (or if it already has. How many miners operate over Tor? )
  - snitko 14y ago
    Miners do not control the rules, they merely choose to accept or not accept them. That's a very important distinction that is a part of the checks and balances system in Bitcoin.
    - mef 14y ago
      What would happen if all the miners got together and demanded a code change that benefited miners, like perhaps increase the mining reward? Assuming the devs disagreed with the change, would the BTC community have any way to prevent this alliance of miners from updating the code themselves, deploying it everywhere, and using their overwhelming mining power to maintain the longest block chain and thereby making the code change a reality?