12 ms·

Why Bitcoin is a significant breakthrough, but perhaps not as a currency

106 points by dpkendal 13y ago

aaron-lebo 13y ago
I think this article is on to something really important. It is way too easy currently to get caught up in the frenzy over the specuation surrounding Bitcoin. This idea of the Bitcoin protocol as a decentralized, secure, and transparent storage system has all kinds of applications, whether Namecoin, smart property or something else. I played around with using Namecoin as a more consumer-friendly form of drm. https://github.com/aaron-lebo/dissent https://github.com/aaron-lebo/dissent
- wmf 13y ago
  Check out this article on software licenses as securities: http://jordanpollack.com/softwaremarket/ http://jordanpollack.com/softwaremarket/ Ultimately I think this level of efficiency would probably destroy most developers who used it (especially games).
fragsworth 13y ago
I think we almost all agree that cryptocurrency is a revolutionary thing. It's difficult to see how revolutionary, because we are only beginning to understand what can be made possible by it. I often see it compared to the advent of the early Internet in the 1980s, when nobody really knew how big it would get, just that it was "revolutionary" and would become huge. This may be an overestimation caused in part by bitcoin stakeholders trying to promote the idea. But a very similar thing happened in the 90s when everyone was buying tech stocks.
- BlackDeath3 13y ago
  The difference between the 1980s and now is that people now can use the Internet to learn about Bitcoin for themselves, from the source, instead of basing all they know on hype. It's a shame that so many people seem to love to talk more than they learn.
  - fragsworth 13y ago
    Yeah, that difference definitely exists now, and accelerates the learning process quite a bit. I think most people don't generally go to the source when learning about something, though, even today when it's easily possible. Usually what people do is learn what is fed to them from whatever outlets they prefer (TV, news websites, reddit, etc.) and hear about stuff in passing.
    - BlackDeath3 13y ago
      Well, while we're on the subject, for anybody who is interested in going to the Bitcoin source: www.bitcoin.org/bitcoin.pdf
- bachback 13y ago
  I very much like this line of reasoning, because its only this comparison which points to the magnitude of the potential impact. We don't have even HTTP style protocols used yet, and very little understanding. I have 5 new ideas everyday, and find 5 new projects I find interesting. Not necessarily for what they are, but for what can be.
- swalsh 13y ago
  I don't like bitcoin, I hate that it has a fixed supply. I think in a good economy prices should fluctuate based on the supply and demand for the product (not the currency). Bitcoin as it is today doesn't really account for that. That said, I owned some, and I recently sold some. Going through bitstamp (in slovania) was a pain. Getting the coins in was a breeze. However the international wire transfer took days, and cost about $60. Global transactions using bitcoin seem very lucrative here. Credit cards are another way, but they're expensive to the merchant. Bitcoin makes commerce on the web pretty nice in a lot of ways.
  - Aqwis 13y ago
    Why did you use Bitstamp when you were not in Europe? For me, in Europe, transferring money to Bitstamp was free. It took a couple of days, but that's fine. I'm assuming there are exchanges in your region that are cheaper to transfer to than a European exchange.
    - swalsh 13y ago
      I'm not aware of any alternatives where I can get USD out. I suppose coinbase maybe, but bitstamp was recommended by someone here.
      - TwoFactor 13y ago
        Coinbase uses Bitstamp pricing +1%, so depending on how much you're transferring it could be worth it. Bitstamp, and BTC-e are really the only two options for US customers that want any decent order book depth.
T-A 13y ago
Naive question from total outsider to both contexts, popped up while reading this: has there been any speculation that Aaron Swartz = Satoshi Nakamoto, or are there good reasons to exclude it?
- gojomo 13y ago
  Vanishingly unlikely. Very different politics and economics. (Swartz: very Krugmanesque in views.) Even considering the referenced Swartz write-up after thinking about Bitcoin... http://www.aaronsw.com/weblog/squarezooko http://www.aaronsw.com/weblog/squarezooko ...you can see his thoughts were more focused on censorship-resistance (a major interest of Swartz) than on stateless money.
- SwellJoe 13y ago
  It's not a theory I have ever heard, and I think there's sufficient reason to rule it out. Swartz never really professed an interest in currency or monetary policy, etc. that I am aware of. He was an extremely prolific individual who worked on many very public projects. Transparency was clearly one of his core values, and never exhibited more than passing general nerd interest in cryptography, anonymity, or the technolibertarian ideal that seems to have been a driving force for Satoshi. Also, he was already pretty damned busy in 2008-2009. I doubt he would have had time to do the huge amount of design work that went into Bitcoin without somebody noticing what he was working on. So, Aaron was a brilliant dude, who did a lot of cool stuff. I just don't think the personality matches up, at all, with whoever created Bitcoin. If Swartz created a cryptocurrency, which I don't think he would have, I doubt it would look like Bitcoin. (There's also several people much higher on the list of "might be Satoshi".)
  - bachback 13y ago
    Who are on your list? Nick Szabo. Mike Hearn. Hal Finney. Wei Dai.
    - SwellJoe 13y ago
      Yes.
wildbunny 13y ago
This article misses the true breakthrough which bitcoin represents which is a trustless, decentralised store and exchange of value.
- julespitt 13y ago
  I'd say "less trusting" than "trust less." You still have to trust SHA-256 and that no one can afford to do a 51% attack, for instance.
- praxeologist 13y ago
  On that note, I want to point people to Protoshares and the concept of DACs (Decentralized Autonomous Corporations): http://protoshares.com/ http://protoshares.com/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-robotics/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob... http://letstalkbitcoin.com/dacs-that-spawn-dacs/ http://letstalkbitcoin.com/dacs-that-spawn-dacs/ The use of the word "corporation" is kind of wonky to me and the whole concept took me a little time to wrap my head around it, but these are the types of things we can expect to see with blockchain technology and hopefully IMO eventually the abolition of states worldwide.
  - fragsworth 13y ago
    > hopefully IMO eventually the abolition of states worldwide. These kinds of comments do nothing to help promote bitcoin as a legitimate technology and only increase the risk that cryptocurrencies become generally illegal to use. I'm really disappointed with the anti-government garbage spouted by so many people in the community.
    - smokeyj 13y ago
      Can you voice your disagreement without getting angry? Everyone has an opinion. Being passionate about yours doesn't make theirs wrong.
    - praxeologist 13y ago
      Bitcoin is inherently libertarian: http://rudd-o.com/archives/bitcoin-without-the-politics http://rudd-o.com/archives/bitcoin-without-the-politics If all the libertarians who are into bitcoin suddenly cut down the rhetoric, you think that this will "make bitcoin legitimate technology"? What does that even mean? You mean that governments are going to suddenly be more friendly to bitcoin users? That seems like an incredibly naive belief, sorry. In general, it is disappointing that people still hold to backwards and primitive beliefs such as democracy and state worship. Statism is institutionalized violence and injustice writ large. I totally understand how your perspective on this can be different, but please understand that what you are calling garbage I see as a call for justice.
andrewla 13y ago
I don't think the author realizes how uninteresting a decentralized transaction store is without the currency element. The trick was to line up economic incentives so that securing the network and accepting transaction fees are the same thing. The fact that bitcoin serves as a centralized document store is one of the biggest defects in bitcoin as it stands now, and when bitcoin does fall, it will fall to a system that treats the transfer of currency units as a first-class citizen rather than a side effect of a script.
- fragsworth 13y ago
  The currency aspect has to remain, because mining would not exist without it. The devs know this, so they'll do their best to preserve this aspect. However, having the protocol support documents as well is pretty amazing: Suppose it's 15 years from now. Many cars can drive themselves. Suppose someone designs a mechanism that allows you to control your vehicle (remotely) only if you own a specific "ownership item" (colored coin, whatever people are calling it) on the bitcoin network. You prove this to the vehicle, and it goes to wherever you tell it to. The item on the bitcoin network means you "own" the vehicle. Now you can tell your vehicle to go to a public place where someone might inspect it with the intent of purchasing it. That person tells you "OK, I'll buy it for 0.1BTC" and you perform an exchange of your ownership document for 0.1BTC over the bitcoin network. You don't have to trust anyone with anything. The exchange happens atomically. You don't even have to go anywhere to perform the exchange.
  - maxerickson 13y ago
    The buyer has to trust that the mechanism is sufficiently tamper proof. (and once you have that, escrow service anyway becomes cheap)
- bachback 13y ago
  I strongly believe you vastly underestimate the power that lies in this system. Scripts are in fact one of the most exciting features, although some things have to be figured out yet. How are transactions not "first-class citizens"? That statement makes no sense. In fact the opposite is true. Currently everything is about 1:1 transactions, because higher order protocols have not been build out.
deleted 13y ago
[deleted]
lifeformed 13y ago
Sorry to be a bit off-topic, but is anyone else's browser having difficulty rendering the text on this page? http://i.snag.gy/SK7NX.jpg http://i.snag.gy/SK7NX.jpg I've noticed this on a few sites, and I'm wondering if the problem is on my end, or if it's a problem with the website.
- coderzach 13y ago
  You're probably on chrome for windows, which does a really poor job of rendering webfonts. https://code.google.com/p/chromium/issues/detail?id=137692 https://code.google.com/p/chromium/issues/detail?id=137692
  - Joona 13y ago
    Do people not test their sites on the most popular browsers? (I have the same problem with Opera 12.16.)
    - coderzach 13y ago
      I think the issue is that most front-end developers test on chrome for Mac first, and then assume that it works the same on windows.
rthomas6 13y ago
I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value. When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and more available. This would stop some of the volatility in BTC prices. You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. A currency with a known long term future value is obviously very useful, and a stable value is also more useful. I can't think of a decentralized way to measure demand, though, so maybe this is not possible.
- jv22222 13y ago
  I was thinking exactly the same thing.
- hershel 13y ago
  The closest i found to a solution to bitcoin stability is here: https://bitcointalk.org/index.php?topic=171539.msg1862790#msg1862790 https://bitcointalk.org/index.php?topic=171539.msg1862790#ms... Although at the beginning it should not be stable , but rising to get people involved with the coin., and at some pre defined point become stable.
- bachback 13y ago
  This is impossible. The network can never put a limit to its own value. The valuation must come from outside. How should a network possible describe what its worth? The money network should not predict demand. One could in theory have predictors of demand, but that would be an algorithm for pricing a set of cryptocoins.
  - swalsh 13y ago
    pretty easily actually. The block chain gives us a pretty reasonable way to estimate the supply of currency, the velocity of it, and we can kind of estimate price. That's enough. I think if we modified the protocol a bit we could make it even more accurate too.
jere 13y ago
>This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem. Why oh why must every mention of Nakamoto imbue him/them with certain politics? We're led to believe Nakamoto is a subversive anarcho-capitalist libertarian who wants to overthrow governments. There are certainly hackers driven by ideals and politics (e.g. rms), but there are plenty more who solve a problem just because they can. The Morris worm wasn't published in order to promote anarchy. Quicksort wasn't invented as a metaphor for classism. http://dl.acm.org/citation.cfm?id=358561 http://dl.acm.org/citation.cfm?id=358561 It seems far more likely that Nakamoto saw an existing problem, solved it in a clever fashion, and published the result.
- richcollins 13y ago
  Pretty sure Satoshi had political motivations: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block
  - jere 13y ago
    Perhaps, but that's kind of thin: >This was probably intended as proof that the block was created on or after January 3rd, 2009, as well as a comment on the instability caused by fractional-reserve banking.
gwern 13y ago
> This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem. He was well aware: he posted a short essay to bitcoin.org explaining how Bitcoin is a general solution to the Byzantine Generals problem, and if you read his early cryptography/p2presearch ML threads, he specifically says that digital money is but the earliest and most obvious application, and that far more could be built on top of it, and he hoped there would be, and included the dangerously-complex scripting language specifically to support more complex functionality than simply a global ledger. It's not his fault if everyone else was more interested in applying Bitcoin to financial transactions than exploring approaches like Namecoin.
bachback 13y ago
Anyone interested should study the script system and Namecoin. "Restricting transactions to such a simple form would restrict Bitcoin to exactly the possibilities traditional currencies had (though decentralized). However, Satoshi saw the potential to allow it to do more, and introduced a script system. He wasn't around anymore to bring it to practice, but Mike Hearn wrote down some of the things Satoshi had in mind on the Contracts page of the Bitcoin wiki."
api 13y ago
A bit reason I think Bitcoin is a fundamental innovation is that nobody quite seems to know what it is. It's clear to me that it is not a currency in the classical sense in that it does things that no classical currency does, but it's also not just a payment mechanism or a wire service or anything else simple and easy to define.
- chipsy 13y ago
  I agree; the narratives surrounding Bitcoin examine small facets and magnify their importance. It is like the "blind men and the elephant" parable.
ggchappell 13y ago
So, BTC might fail as a currency, but succeed as -- say -- a basis for the kind of persistent URN scheme that the W3C & others have been mumbling about for a couple of decades. An interesting thought.
gremlinsinc 13y ago
One of the biggest problems with bitcoin as a currency that i see, is that everyone still deals in usd amounts and comparison when offering products, when webhosting is a flat btc price regardless of market fluctuations and when people buy and sell items based on their btc price without first translating it into a fiat currency equivalent, that is when bitcoin will truly be mainstream.
emin-gun-sirer 13y ago
Let me use this opportunity to point out http://virtual-notary.org http://virtual-notary.org, an online witness to facts that can be checked online, where these facts are recorded in the Bitcoin blockchain. These go beyond the types of document proof of existence cited in the article, and can cover facts such as exchange rates, DNS address ownership, WHOIS info, weather conditions, housing prices, employment status, etc. This article describes the usage scenarios in detail: http://hackingdistributed.com/2013/06/20/virtual-notary-intro/ http://hackingdistributed.com/2013/06/20/virtual-notary-intr...

106 points by dpkendal 13y ago

I think this article is on to something really important. It is way too easy currently to get caught up in the frenzy over the specuation surrounding Bitcoin. This idea of the Bitcoin protocol as a decentralized, secure, and transparent storage system has all kinds of applications, whether Namecoin, smart property or something else. I played around with using Namecoin as a more consumer-friendly form of drm. https://github.com/aaron-lebo/dissent https://github.com/aaron-lebo/dissent

wmf 13y ago
Check out this article on software licenses as securities: http://jordanpollack.com/softwaremarket/ http://jordanpollack.com/softwaremarket/ Ultimately I think this level of efficiency would probably destroy most developers who used it (especially games).

fragsworth 13y ago

I think we almost all agree that cryptocurrency is a revolutionary thing. It's difficult to see how revolutionary, because we are only beginning to understand what can be made possible by it. I often see it compared to the advent of the early Internet in the 1980s, when nobody really knew how big it would get, just that it was "revolutionary" and would become huge. This may be an overestimation caused in part by bitcoin stakeholders trying to promote the idea. But a very similar thing happened in the 90s when everyone was buying tech stocks.

BlackDeath3 13y ago
The difference between the 1980s and now is that people now can use the Internet to learn about Bitcoin for themselves, from the source, instead of basing all they know on hype. It's a shame that so many people seem to love to talk more than they learn.
- fragsworth 13y ago
  Yeah, that difference definitely exists now, and accelerates the learning process quite a bit. I think most people don't generally go to the source when learning about something, though, even today when it's easily possible. Usually what people do is learn what is fed to them from whatever outlets they prefer (TV, news websites, reddit, etc.) and hear about stuff in passing.
  - BlackDeath3 13y ago
    Well, while we're on the subject, for anybody who is interested in going to the Bitcoin source: www.bitcoin.org/bitcoin.pdf
bachback 13y ago
I very much like this line of reasoning, because its only this comparison which points to the magnitude of the potential impact. We don't have even HTTP style protocols used yet, and very little understanding. I have 5 new ideas everyday, and find 5 new projects I find interesting. Not necessarily for what they are, but for what can be.
swalsh 13y ago
I don't like bitcoin, I hate that it has a fixed supply. I think in a good economy prices should fluctuate based on the supply and demand for the product (not the currency). Bitcoin as it is today doesn't really account for that. That said, I owned some, and I recently sold some. Going through bitstamp (in slovania) was a pain. Getting the coins in was a breeze. However the international wire transfer took days, and cost about $60. Global transactions using bitcoin seem very lucrative here. Credit cards are another way, but they're expensive to the merchant. Bitcoin makes commerce on the web pretty nice in a lot of ways.
- Aqwis 13y ago
  Why did you use Bitstamp when you were not in Europe? For me, in Europe, transferring money to Bitstamp was free. It took a couple of days, but that's fine. I'm assuming there are exchanges in your region that are cheaper to transfer to than a European exchange.
  - swalsh 13y ago
    I'm not aware of any alternatives where I can get USD out. I suppose coinbase maybe, but bitstamp was recommended by someone here.
    - TwoFactor 13y ago
      Coinbase uses Bitstamp pricing +1%, so depending on how much you're transferring it could be worth it. Bitstamp, and BTC-e are really the only two options for US customers that want any decent order book depth.

T-A 13y ago

Naive question from total outsider to both contexts, popped up while reading this: has there been any speculation that Aaron Swartz = Satoshi Nakamoto, or are there good reasons to exclude it?

gojomo 13y ago
Vanishingly unlikely. Very different politics and economics. (Swartz: very Krugmanesque in views.) Even considering the referenced Swartz write-up after thinking about Bitcoin... http://www.aaronsw.com/weblog/squarezooko http://www.aaronsw.com/weblog/squarezooko ...you can see his thoughts were more focused on censorship-resistance (a major interest of Swartz) than on stateless money.
SwellJoe 13y ago
It's not a theory I have ever heard, and I think there's sufficient reason to rule it out. Swartz never really professed an interest in currency or monetary policy, etc. that I am aware of. He was an extremely prolific individual who worked on many very public projects. Transparency was clearly one of his core values, and never exhibited more than passing general nerd interest in cryptography, anonymity, or the technolibertarian ideal that seems to have been a driving force for Satoshi. Also, he was already pretty damned busy in 2008-2009. I doubt he would have had time to do the huge amount of design work that went into Bitcoin without somebody noticing what he was working on. So, Aaron was a brilliant dude, who did a lot of cool stuff. I just don't think the personality matches up, at all, with whoever created Bitcoin. If Swartz created a cryptocurrency, which I don't think he would have, I doubt it would look like Bitcoin. (There's also several people much higher on the list of "might be Satoshi".)
- bachback 13y ago
  Who are on your list? Nick Szabo. Mike Hearn. Hal Finney. Wei Dai.
  - SwellJoe 13y ago
    Yes.

wildbunny 13y ago

This article misses the true breakthrough which bitcoin represents which is a trustless, decentralised store and exchange of value.

julespitt 13y ago
I'd say "less trusting" than "trust less." You still have to trust SHA-256 and that no one can afford to do a 51% attack, for instance.
praxeologist 13y ago
On that note, I want to point people to Protoshares and the concept of DACs (Decentralized Autonomous Corporations): http://protoshares.com/ http://protoshares.com/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-robotics/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob... http://letstalkbitcoin.com/dacs-that-spawn-dacs/ http://letstalkbitcoin.com/dacs-that-spawn-dacs/ The use of the word "corporation" is kind of wonky to me and the whole concept took me a little time to wrap my head around it, but these are the types of things we can expect to see with blockchain technology and hopefully IMO eventually the abolition of states worldwide.
- fragsworth 13y ago
  > hopefully IMO eventually the abolition of states worldwide. These kinds of comments do nothing to help promote bitcoin as a legitimate technology and only increase the risk that cryptocurrencies become generally illegal to use. I'm really disappointed with the anti-government garbage spouted by so many people in the community.
  - smokeyj 13y ago
    Can you voice your disagreement without getting angry? Everyone has an opinion. Being passionate about yours doesn't make theirs wrong.
  - praxeologist 13y ago
    Bitcoin is inherently libertarian: http://rudd-o.com/archives/bitcoin-without-the-politics http://rudd-o.com/archives/bitcoin-without-the-politics If all the libertarians who are into bitcoin suddenly cut down the rhetoric, you think that this will "make bitcoin legitimate technology"? What does that even mean? You mean that governments are going to suddenly be more friendly to bitcoin users? That seems like an incredibly naive belief, sorry. In general, it is disappointing that people still hold to backwards and primitive beliefs such as democracy and state worship. Statism is institutionalized violence and injustice writ large. I totally understand how your perspective on this can be different, but please understand that what you are calling garbage I see as a call for justice.

andrewla 13y ago

I don't think the author realizes how uninteresting a decentralized transaction store is without the currency element. The trick was to line up economic incentives so that securing the network and accepting transaction fees are the same thing. The fact that bitcoin serves as a centralized document store is one of the biggest defects in bitcoin as it stands now, and when bitcoin does fall, it will fall to a system that treats the transfer of currency units as a first-class citizen rather than a side effect of a script.

fragsworth 13y ago
The currency aspect has to remain, because mining would not exist without it. The devs know this, so they'll do their best to preserve this aspect. However, having the protocol support documents as well is pretty amazing: Suppose it's 15 years from now. Many cars can drive themselves. Suppose someone designs a mechanism that allows you to control your vehicle (remotely) only if you own a specific "ownership item" (colored coin, whatever people are calling it) on the bitcoin network. You prove this to the vehicle, and it goes to wherever you tell it to. The item on the bitcoin network means you "own" the vehicle. Now you can tell your vehicle to go to a public place where someone might inspect it with the intent of purchasing it. That person tells you "OK, I'll buy it for 0.1BTC" and you perform an exchange of your ownership document for 0.1BTC over the bitcoin network. You don't have to trust anyone with anything. The exchange happens atomically. You don't even have to go anywhere to perform the exchange.
- maxerickson 13y ago
  The buyer has to trust that the mechanism is sufficiently tamper proof. (and once you have that, escrow service anyway becomes cheap)
bachback 13y ago
I strongly believe you vastly underestimate the power that lies in this system. Scripts are in fact one of the most exciting features, although some things have to be figured out yet. How are transactions not "first-class citizens"? That statement makes no sense. In fact the opposite is true. Currently everything is about 1:1 transactions, because higher order protocols have not been build out.

deleted 13y ago

[deleted]

lifeformed 13y ago

Sorry to be a bit off-topic, but is anyone else's browser having difficulty rendering the text on this page? http://i.snag.gy/SK7NX.jpg http://i.snag.gy/SK7NX.jpg I've noticed this on a few sites, and I'm wondering if the problem is on my end, or if it's a problem with the website.

coderzach 13y ago
You're probably on chrome for windows, which does a really poor job of rendering webfonts. https://code.google.com/p/chromium/issues/detail?id=137692 https://code.google.com/p/chromium/issues/detail?id=137692
- Joona 13y ago
  Do people not test their sites on the most popular browsers? (I have the same problem with Opera 12.16.)
  - coderzach 13y ago
    I think the issue is that most front-end developers test on chrome for Mac first, and then assume that it works the same on windows.

rthomas6 13y ago

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value. When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and more available. This would stop some of the volatility in BTC prices. You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. A currency with a known long term future value is obviously very useful, and a stable value is also more useful. I can't think of a decentralized way to measure demand, though, so maybe this is not possible.

jv22222 13y ago
I was thinking exactly the same thing.
hershel 13y ago
The closest i found to a solution to bitcoin stability is here: https://bitcointalk.org/index.php?topic=171539.msg1862790#msg1862790 https://bitcointalk.org/index.php?topic=171539.msg1862790#ms... Although at the beginning it should not be stable , but rising to get people involved with the coin., and at some pre defined point become stable.
bachback 13y ago
This is impossible. The network can never put a limit to its own value. The valuation must come from outside. How should a network possible describe what its worth? The money network should not predict demand. One could in theory have predictors of demand, but that would be an algorithm for pricing a set of cryptocoins.
- swalsh 13y ago
  pretty easily actually. The block chain gives us a pretty reasonable way to estimate the supply of currency, the velocity of it, and we can kind of estimate price. That's enough. I think if we modified the protocol a bit we could make it even more accurate too.

jere 13y ago

>This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem. Why oh why must every mention of Nakamoto imbue him/them with certain politics? We're led to believe Nakamoto is a subversive anarcho-capitalist libertarian who wants to overthrow governments. There are certainly hackers driven by ideals and politics (e.g. rms), but there are plenty more who solve a problem just because they can. The Morris worm wasn't published in order to promote anarchy. Quicksort wasn't invented as a metaphor for classism. http://dl.acm.org/citation.cfm?id=358561 http://dl.acm.org/citation.cfm?id=358561 It seems far more likely that Nakamoto saw an existing problem, solved it in a clever fashion, and published the result.

richcollins 13y ago
Pretty sure Satoshi had political motivations: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block
- jere 13y ago
  Perhaps, but that's kind of thin: >This was probably intended as proof that the block was created on or after January 3rd, 2009, as well as a comment on the instability caused by fractional-reserve banking.

gwern 13y ago

> This realization raises interesting questions about the political motivations of Satoshi Nakamoto in presenting their creation as a digital currency when they must have known that they had solved this far more important general problem. He was well aware: he posted a short essay to bitcoin.org explaining how Bitcoin is a general solution to the Byzantine Generals problem, and if you read his early cryptography/p2presearch ML threads, he specifically says that digital money is but the earliest and most obvious application, and that far more could be built on top of it, and he hoped there would be, and included the dangerously-complex scripting language specifically to support more complex functionality than simply a global ledger. It's not his fault if everyone else was more interested in applying Bitcoin to financial transactions than exploring approaches like Namecoin.

bachback 13y ago

Anyone interested should study the script system and Namecoin. "Restricting transactions to such a simple form would restrict Bitcoin to exactly the possibilities traditional currencies had (though decentralized). However, Satoshi saw the potential to allow it to do more, and introduced a script system. He wasn't around anymore to bring it to practice, but Mike Hearn wrote down some of the things Satoshi had in mind on the Contracts page of the Bitcoin wiki."

api 13y ago

A bit reason I think Bitcoin is a fundamental innovation is that nobody quite seems to know what it is. It's clear to me that it is not a currency in the classical sense in that it does things that no classical currency does, but it's also not just a payment mechanism or a wire service or anything else simple and easy to define.

chipsy 13y ago
I agree; the narratives surrounding Bitcoin examine small facets and magnify their importance. It is like the "blind men and the elephant" parable.

ggchappell 13y ago

So, BTC might fail as a currency, but succeed as -- say -- a basis for the kind of persistent URN scheme that the W3C & others have been mumbling about for a couple of decades. An interesting thought.

gremlinsinc 13y ago

One of the biggest problems with bitcoin as a currency that i see, is that everyone still deals in usd amounts and comparison when offering products, when webhosting is a flat btc price regardless of market fluctuations and when people buy and sell items based on their btc price without first translating it into a fiat currency equivalent, that is when bitcoin will truly be mainstream.

emin-gun-sirer 13y ago

Let me use this opportunity to point out http://virtual-notary.org http://virtual-notary.org, an online witness to facts that can be checked online, where these facts are recorded in the Bitcoin blockchain. These go beyond the types of document proof of existence cited in the article, and can cover facts such as exchange rates, DNS address ownership, WHOIS info, weather conditions, housing prices, employment status, etc. This article describes the usage scenarios in detail: http://hackingdistributed.com/2013/06/20/virtual-notary-intro/ http://hackingdistributed.com/2013/06/20/virtual-notary-intr...