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On a related note, ever heard of the bubble theory of money? The theory goes, that good money is essentially a bubble that can't be popped easily. People compar
by jaekwon 13y ago
On a related note, ever heard of the bubble theory of money? The theory goes, that good money is essentially a bubble that can't be popped easily. People compare Bitcoin to the tulip mania, but that is a wrong analogy, given that tulips can be cultivated by anyone to any degree -- whereas Bitcoins are capped by design.
- presidentender 13y agoFurthermore, bitcoins are fungible, while the tulips grown from each bulb had different characteristics.
- betterunix 13y agoWhat stops someone from creating their own Bitcoin alternative? Many such systems exist.
- mateuszf 13y agoThe fact that small number of people use it. They will be not a real alternative unless they have some better features than Bitcoin itself.
- jacoblyles 13y agoPPC has better features than BTC, but people haven't heard of it yet[1]. That said, BTC may win by being "good enough" and having a strong network effect. [1] http://www.ppcoin.org/static/ppcoin-paper.pdf http://www.ppcoin.org/static/ppcoin-paper.pdf
- jaekwon 13y agoI would argue that PPC does not have better features than BTC. But yes, either way, BTC for now is good enough.
- betterunix 13y agoIn other words, there is no particular technical or legal feature of Bitcoin to differentiate it from another system. Bitcoin just happens to be the most popular and receive the most press. If you cannot identify a particular, distinguishing feature of Bitcoin that accounts for its popularity, why should we believe that this is not a bubble?
- ferdo 13y agoBitcoin has a gigantic first mover advantage. The free rider alt coins are all essentially based on Bitcoin's blockchain innovation. Until Bitcoin is broken through advances in computing or a solution better than Bitcoin comes along, Bitcoin is the top of the heap for digital cash.
- yebyen 13y ago> Bitcoin has a gigantic first mover advantage Not only that, but: 1) People with investment in hashing power tend to hash on bitcoin 2) If another coin were to come along (as they do, ask me about Terracoin) the speculators would find it. 3) The coin would be vulnerable to attack from those speculators who control even a tiny fraction of the hashes of Bitcoin. I'm not just talking about double-spend, I mean someone (or several someones) with a large amount of hash power (say, each individually much smaller than 51% of total) coming along to service the network for a short while, driving up the difficulty, and getting away with a lot of coins while actually processing transactions for a comparatively short amount of time. TRC, as a network with usually several terrahashes[2] hashing constantly, had to implement some controls[4] to prevent this kind of attack. When the coin is more profitable to hash, the speculators find out, they bring their hashes, and it drives the difficulty up. When the difficulty goes up, a slog ensues (the per-hash temporary advantage of mining Terracoin dries up) as the speculators take their hashes elsewhere and the remaining sloggers have only to hope that they can provide enough TRC at low cost[3] such that there is never an advantage to speculators, and thus the network can experience organic growth bringing in more permanent hashes from those who support its development. The controls only limit the mobility of the difficulty (it can't shift up by 4x or down to 0.25x of the last retarget) So when the slog is particularly bad (high difficulty), or when the hashing hordes are particularly voracious (low difficulty compared to coin price)... instead, it can increase to 1.25x or decrease to 0.75x -- you have to watch the network pretty close to see when people are getting over on profitability, but when they do you can still feel it for days. The effect of not being the largest network seems to be that your difficulty goes up and down, not always just up up up. It's hard to find long-term difficulty reporting.[1] Of course when bitcoin spenders are willing to wait up to 10 minutes for blocks, and Terracoin targets 2 minute blocks, even "network's running slow" seems pretty fast in relative terms, as long as it's not uncontrolled adjustment. They must be doing something right, they're still/currently the most profitable Alt-SHA256 coin, even if the share prices have taken a serious dump.[5] [1] http://pool.bitcoinreactor.com/pool/statistics/?cur=trc http://pool.bitcoinreactor.com/pool/statistics/?cur=trc [2] http://trc.cryptocoinexplorer.com/ http://trc.cryptocoinexplorer.com/ [3] https://www.cryptsy.com/markets/view/27 https://www.cryptsy.com/markets/view/27 [4] http://terracoin.org/news.html http://terracoin.org/news.html [5] http://www.coinwarz.com/cryptocurrency http://www.coinwarz.com/cryptocurrency
- bmm6o 13y agoI made my own and I was bummed to discover that my BmmCoins are worthless!
- klochner 13y ago. . . but the quantity of all crypto-currencies is unlimited.
- zachlatta 13y agoThere will only ever be 21 million bitcoins. I recommend giving http://en.wikipedia.org/wiki/Bitcoin http://en.wikipedia.org/wiki/Bitcoin a read.
- betterunix 13y agoNothing stops anyone from making their own personal variant of Bitcoin, however. Or 10 of those variants. Or a million. In other words, the limit applies only within a single system, and there is no limit on the number of such systems.
- PilateDeGuerre 13y agoThis comment is a classic type of comment in which the commenter ignores the social context of a technology.
- skriticos2 13y agoPeople care about Bitcoin. They don't care about other variants much. This gives Bitcoin value and not the other variants. In other words, creating another blockchain is easy but convincing enough people that the variant coins are worth something is hard. Very hard.
- betterunix 13y ago"convincing enough people that the variant coins are worth something is hard. Very hard." Somehow, people managed to be convinced that Bitcoin was worth something back in 2009. What makes the current situation different? Whatever convinced people that Bitcoin had any value in the first place might convince people that some new alternative you started this morning has some value.
- crassus 13y agoSee Moldbug's excellent essay "Bitcoin is money, Bitcoin is a bubble" [1] [1] http://unqualified-reservations.blogspot.com/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.com/2013/04/bitcoin...
- simplemath 13y agoTulips and gold also don't have built in rock solid transaction protocols
- betterunix 13y agoRock solid? A system that requires vast and increasing amounts of the world's energy to be devoted to it just to achieve a vague notion of security? A system that can be attacked in polynomial time (but let's just say that is not a problem; after all, we never defined security in a way to preclude such things!)? That is your definition of "rock solid?"
- simplemath 13y agoIt presents significantly fewer attack vectors than any other payment system that I'm aware of.
- jafaku 13y agoIf it's not solid you are free to attack it. You keep dismissing the incentives that Bitcoin gives, which should also be considering part of its security. The only rational attacker that could have an interest and resources to stop Bitcoin is a nation-state. But even then, another nation-state could jump in and protect it. We can't know what will happen until it happens. The field that you want to use to model everything is too narrow for Bitcoin.
- betterunix 13y ago"You keep dismissing the incentives that Bitcoin gives, which should also be considering part of its security" We do not speak of "incentives" in other contexts. When we talk about encryption, we do not spend our time pondering the "incentives" for not attacking our cryptosystems -- we create encryption systems that cannot be feasibly attacked regardless of what motivates the attacker. When we talk about secure multiparty computation, we do not talk about what might motivate the attacker, we only talk about how to prevent attacks. There are historical counterexamples to the idea that we can analyze a cryptosystem's security in terms of the attacker's "incentives." A famous and well-known example is the German Enigma cipher from WWII. After the war, German cryptographers were captured and interrogated (the TICOM operation), and one of the things they revealed was that they knew that Enigma could be attacked, but did not believe that it would be worth the effort. Even the assumption that the attacker will act rationally is bad -- we should be secure against irrational attackers too. "We can't know what will happen until it happens" We can, however, design systems that maintain their security properties regardless of what happens (at least under standard cryptographic hardness assumptions, though sometimes we can even get information theoretic security). ElGamal encryption is secure against any polynomial-time chosen-plaintext attack -- provably so. The GMR signature system is secure against any polynomial-time adaptive chosen-message attack. For a very strange construction that illustrates how we can defend against attack strategies we cannot even imagine, consider this work on non-malleable commitments (the construction is on page 13; it is very strange, but the strangeness is key to the security proof, or in other words there are possible attack methods that nobody is aware of that the construction prevents): http://eprint.iacr.org/2010/483.pdf http://eprint.iacr.org/2010/483.pdf "The field that you want to use to model everything is too narrow for Bitcoin." Yes, things are very easy when you have no clearly-specified goals, requirements, or constraints. How can there be any technical criticism of Bitcoin if this sort of response is considered valid? Anything anyone says is wrong with Bitcoin could always be dismissed as being "too narrow."
- anonymoushn 13y agoTulip mania involved surprisingly few tulips! The primary instrument being traded was what we would now call a tulip futures contract. It seems like a silly thing, but we currently favor units of sovereign debt (or, if you prefer, units of the future ability of the government to tax its citizens).