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This currently isn't "news," as the paper hasn't been published yet, and none of the disclosed findings are too damning or conclusive. That being said, it's im
by spenvo 13y ago
This currently isn't "news," as the paper hasn't been published yet, and none of the disclosed findings are too damning or conclusive.
That being said, it's important for two reasons:
1.) the paper gets published tomorrow, which will lead to a round of negative press, regardless of the claims' merit.
2.) More significant: it highlights what I see as an existential threat to the Bitcoin experiment: a.) the poor distribution of early wealth and b.) the possibility that a great percentage of all Bitcoins are currently held by bad actors (criminals, anarchists, use your imagination).
A few things to consider:
1. A list of richest Bitcoin addresses is not a good representation of the concentration of wealth. A single person can have x wallets, just like this Ulbricht character.
2. Bitcoin wealth is often used to reinvest in mining equipment, which furthers one's wealth to a greater extent. Rinse/repeat.
Several of the oldest wallets have been dormant for years, which means that this is not hypothetical -- that wealth has not circulated.
edit made to be clear about "bad actors":
"Bad actors" meaning: unpredictable and possibly having malicious intent.
If Bitcoin becomes a more important part of our daily lives, handling commerce ubiquitously, etc.--a single individual with ~10+% of said Bitcoin has enormous disruptive potential. I'm not referring to what said person could purchase with that wealth, but one's ability to manipulate markets.
This has never been a big issue, as far as the growth in value of the currency. However, I think this kind of uncertainty could freak out potential institutional investors.
Altcoins like Litecoin, PPC, Namecoin, etc - do not suffer as much from this issue because their exposure was far greater than Bitcoin ca. 2009, and the mining competition was greater on the respective debut-dates by several orders of magnitude.
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- ronaldx 13y agoAn uneven distribution of early wealth describes almost every organisation in society (including society itself): as long as later participants perceive they are gaining value for themselves, they will allow this to continue. Part (b) is more interesting - the danger as I see it is that Bitcoin is entering legal-issues territory. For example, a legal crackdown on ownership of Bitcoin identified with illegal activity would likely provide an economic shock to the whole network.
- gnerd 13y ago> a.) the lack of even distribution of early wealth Like an IPO? [1] > b.) the possibility that a great percentage of Bitcoin are currently held by bad actors (criminals, anarchists, use your imagination). I know you are probably using the term anarchist in the colloquial sense (meaning those black bloc anarchists who smash things and want revolution) conjuring images of a Mad Max like dystopia, but would you consider Noam Chomsky a bad actor? People of that ilk just consider a different structure to organizing society, or as he puts it "a kind of voluntary socialism, that is, as libertarian socialist or anarcho-syndicalist or communist anarchist, in the tradition of, say, Bakunin and Kropotkin and others."[1] Sometimes its tempting to paint pictures with broad strokes but as someone who can appreciate many different political viewpoints (as long as they are peaceful and productive), it doesn't seem to make your image any more accurate. bitcoin.it has a page on some myths you should read.[3] [1] https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly_rewarded https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly... [2] https://en.wikipedia.org/wiki/Noam_Chomsky%27s_political_views#Views_on_anarchism https://en.wikipedia.org/wiki/Noam_Chomsky%27s_political_vie... [3] https://en.bitcoin.it/wiki/Myths#The_Bitcoin_community_consists_of_anarchist.2Fconspiracy_theorist.2Fgold_standard_.27weenies.27 https://en.bitcoin.it/wiki/Myths#The_Bitcoin_community_consi...
- atmosx 13y agoWell, early adopters do have an unfair advantage no matter how you links try to justify it.
- gnerd 13y agoYeah, like every other economic system. That's life, that's nature. If you dumped 10% of your savings into BitCoin in 2010, you took a great risk and this is the reward. Had you been the angel investor dumping $100000 into Google when there was no business plan, the same applies or what about people who bought domain names for common words or phrases or < 3 letter domains in the early 90s, if that was you, you would have made a mint. The early bird catches the worm. That's the game, and you and I didn't win this round.
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- etherael 13y agoAnarchists are not necessarily "bad actors". What is it you are afraid they will do with their btc wealth?
- deleted 13y ago[deleted]
- deelowe 13y agoI think he probably was alluding to destabilization of major markets, which can lead to market crashes, inflation, deflation, etc... Fairly bad things in the short term.
- stfu 13y agothe lack of even distribution of early wealth Totally! All we need is an "affordable bitcoin act" and the problem is solved. Without being snarky: I just dislike when people tie political ideology into their evaluation of new technology.
- ISL 13y agoGP may not have had ideology in mind. Bitcoin is probably worth more when everyone has some.
- thrill 13y agoBC is worth more when everyone wants more than they have.
- thesimpsons1022 13y agoi don't think you understand what he was saying. You are just being overly defensive against any liberal ideology. He was saying that if it isn't that evenly distributed then one actor, or maybe a few, could have large control over the markets. That is a different problem than distribution of wealth in the sense that the poor are disadvantaged. This argument is purely from a stability concern, not a concern of societal well being.
- hristov 13y agoI do not know about ideology but there is definately a political angle to all of this. Bitcoin is only worth anything as long as people are willing to give things or services of value in exchange of bitcoins. For now people have because bitcoin has generated a lot of excitement and there have been relatively few bitcoins available for purchase. But if one of the early adopters busts out a billion dollars worth of bitcoins and demands massive amounts of real world wealth in exchange, people may just decide he does not deserve it and stop buying bitcoins. Then the bitcoin will be worth nothing again.
- gnerd 13y agoNobody deserves a billion dollars and if someone was to become a billionaire I feel it is more likely the people holding BitCoin would be more concerned with their own value appreciation than all cooperating to devalue a single entities value. You also have to consider that wide adoption of BTC would mean a diverse set of people with a diverse set of values. I've often read that in the US (as an example, but I'm sure it applies elsewhere) poorer people are likely to vote against their best interest because they have a belief that one day they will be rich. That sort of scenario makes more sense to me, people will just worry about themselves than burning their own value for some collective 'good'.
- mindcrime 13y agoheld by bad actors (criminals, anarchists, use your imagination). Where do you get off calling anarchists "bad actors"??? Personally I find this highly offensive and insulting. Just because I believe people should be free, and not subjects of some "state", I am the "bad actor"? F@%@ that...
- dobbsbob 13y agoThere's no way in hell Satoshi is anywhere connected to "DPR". Look at the OPSEC between the two. Satoshi carefully concealed his identity even in the early crypto mailing list days of Bitcoin. Ross Ulbricht failed at this completely throughout his underground career. Satoshi was a pretty good developer, Ulbricht posted to Stackexchange the most basic of php questions. Satoshi seemed to be very aware of the power of gov agencies both in UK and US and the risks he was taking creating Bitcoin, a good example was his response to people back in 2010 who were calling for Wikileaks to accept Bitcoin donations. Ulbricht on the other hand foolishly underestimated them and would've cheered Wikileaks adoption. I don't recall Satoshi ever granting interviews and was hesitant to even reply to PMs on bitcointalk. He also didn't discuss politics, though you could infer from his hatred of central banking what his politics were he never spelled them out like Ulbricht did on a regular basis. Not the same people
- josephagoss 13y agoThose points are the first things that come to my mind. DPR just does not fit the Satoshi profile in anyway. Satoshi was very humble even, DPR has never shown humility and his journal showed evidence he was power obsessed.
- dllthomas 13y agoSince when does "person X is connected to person Y" mean "person X is person Y"? They're "obviously"[1] not the same people. That by no means shows there is no connection. [1]: Which isn't to say "definitely" but it'd be quite a lot of misleading going on to no obvious end - better covering up "created something fascinating" than "sold drugs and hired hitmen"?
- hayksaakian 13y agoX is connected to Y is the sneaky way that headlines say "X is Y" without technically saying X is Y This way if X actually is Y they can say they called it, but if X is not Y, then they weren't incorrect
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- topynate 13y agoThe Coase theorem says that the initial allocation doesn't matter if transaction costs are low enough. Transaction costs are exceptionally low in the case of bitcoin.
- dllthomas 13y agoAnd Ronald Coase says the Coase theorem doesn't represent reality. Bitcoin dramatically decreases some parts of the costs of transactions, but the cost of buying a loaf of bread isn't only the credit card fee - it's also the trip to the store, time considering other things you could have bought, &c. Transaction costs are merely lower. Which does say this should help the Coase theorem better apply, but we don't really know how much better.
- topynate 13y agoYes, good points. I was thinking of Bitcoin as an asset and not the numéraire, which to my mind changes the situation a bit - the problem suggested is that some 'undesirable' people will end up with too many Bitcoins and use them to manipulate the market. The Coase theorem points to this being as unlikely as it is for any other asset class. The bad actors will eventually get bought out if the putative damage they're doing is great enough - and, compared to the size of transaction implied, the costs will be small.
- dllthomas 13y agoI think a part of what you're missing is that (says my understanding, which could certainly be flawed...) transaction costs in Coase's model include the costs of enforcing whatever contract is used to prevent whatever badness.
- sliverstorm 13y agoIt highlights what I see as an existential threat to the Bitcoin experiment: a.) the poor distribution of early wealth and b.) the possibility that a great percentage of all Bitcoins are currently held by bad actors I share your concerns, and thank you as I've never been able to sum it up as well as you.
- gizmo686 13y agoNow that I think about it, it seems like Bitcoin was designed to create this problem. The protocol produces blocks at an (on average) constant rate, but the value of finding a block decreases exponentially. This gives a significant advantage to the initial investor. I understand that the point of this exponential decay was to that, after the currency was bootstrapped, there would be a constant supply. However, couldn't this be accomplished with a constant, or increasing, rate of production in the beginning, then let the rate decline at the end?
- rheide 13y agoI agree with you completely. But in the meantime, mainstream media have started picking the story (omg shocking), which will surely have an effect on the price of Bitcoins. I wonder if the authors are planning to take advantage of this.
- itchitawa 13y agoSpend a $1 billion of your early bitcoins disrupting Bitcoin or spend $1 billion to buy bitcoins today and disrupt it. Either way costs the same doesn't it?