12 ms·

That which does not kill Bitcoin makes Bitcoin stronger

130 points by tlrobinson 13y ago

paulbaumgart 13y ago
Ethereum has a lot of potential. Here's a more digestible summary of the whitepaper linked in the blog post, by a member of the founding team: http://bitcoinmagazine.com/9671/ethereum-next-generation-cryptocurrency-decentralized-application-platform/ http://bitcoinmagazine.com/9671/ethereum-next-generation-cry...
- nullc 13y ago
  I'm quite skeptical of Ethereum's ability to meaningfully contribute to these matters. An enormous amount of trustlessness is already possible in Bitcoin, but people just do not bother using it: They believe they can trust their counterparties (or they wouldn't transact!) and implementing trustless systems is substantially harder to do and harder to monetize (no central point to seek rents from). Witness Ethereum itself: Instead of targeted improvements to Bitcoin it's proposed as a whole new currency to be funded by eager speculators before it even exists. It is my experience that the limitations of trustlessness in the Bitcoin ecosystem have arisen almost exclusively from a lack of interest or knoweldge and not from any missing technological capability.
  - paulbaumgart 13y ago
    That's an interesting point. I suspect the main reason people aren't using those capabilities of Bitcoin more frequently is that no one has spent the time to make the UX good. Unfortunately, that's also basically true of every consumer-oriented open source project ever. I'm not sure why it's the case, but it does seem that good UX requires a profit motive.
    - nullc 13y ago
      You can't really solve it with "UX" as a blanket thing. To build trustless service you must design cryptographic protocols that use the bitcoin "script" expression language— it's form of programming. Don't hold your breath for a good UI there. :) Once you've done that, you can slap a nice UI on it to make it available to mortals. An example: https://bitrated.com/ https://bitrated.com/
  - drcode 13y ago
    Exactly, ethereum is "pushing the borders" on a "border" of bitcoin that noone seems to be running into yet, or caring about, anyway. Once multisig is used more heavily in the bitcoin world then maybe a better case can be made for ethereum becoming a success (though I nonetheless find ethereum tremendously exciting, from a pure technology standpoint)
    - nullc 13y ago
      > ethereum tremendously exciting, from a pure technology standpoint I don't. I think it's the wrong model and it's only interesting when you don't have a very complete model of what computation is doing inside a consensus system. What script is actually doing in Bitcoin is not "running code"— running identical code with identical on hundreds of thousands of nodes just for it own sake would be stupid and wasteful. What happens is that users of the network run the code themselves and their scriptSig is a proof that they ran the code correctly (and that the code accepted their inputs). The simplest way to do this is to replay the execution, but now it makes sense: The network runs the code to verify you ran it right, and by doing so the contract embedded in the script is made trustless. Running the code in the network has a lot of downsides, however. It completely lacks privacy (except to the extent that we have an opcode that implements a zero knoweldge proof of knoweldge of the discrete log of an EC point), and there is tremendous pressure on the computational complexity, implementation complexity risk, and size of these scripts because of the cost of verify them. Script execution is a pure externality that we only safely know how to cope with by making sure that it is very very cheap (we do this in Bitcoin by making sure that trivial static analysis can determine the execution cost (measure the size), and then bounding that cost). But actually executing the script isn't the only way to verify computation was performed correctly. Using cryptography it's possible to have constant size and complexity proofs, independent of the program size. This lets you cook up stuff like: https://bitcointalk.org/index.php?topic=277389.0 https://bitcointalk.org/index.php?topic=277389.0 and I find that a lot more exciting. Especially since these kinds of enhancements don't demand the risky tradeoffs that making script more expensive demands. I'm also excited about distributed oracles— programs that sign transactions conditional on user specified code, including— potentially— external inputs. The ability to have external inputs (trusted by the oracle) greatly increases the expressive power beyond what any in-consensus system could have, and using multisignatures with multiple oracles you can achieve good security though not trustlessness. E.g. "This tx pays to bob if bob.com is on the first page of google, otherwise after april 1st it can be redeemed by greg". I would expect to see any attempt at more powerful script first implemented via multisignature oracles before even considering making it trustless by merging it into the network.
zeckalpha 13y ago
I'm still not sure why Mt. Gox existed in the first place. Isn't the whole point of bitcoin that it is decentralized? The failure of Mt. Gox could be viewed as a market reset.
- muyuu 13y ago
  Exchanges exist because BTC doesn't ban anything. As long as people want to use exchanges there might be exchanges. It's an easy concept really.
  - deleted 13y ago
    [deleted]
- diego 13y ago
  Cash is decentralized. That doesn't mean you can obtain it out of thin air. You need to exchange something of value (your work, assets, whatever) for cash. Mt. Gox and other exchanges fulfill that role. No idea what you mean by a "market reset."
  - BallinBige 13y ago
    well said. cash is insanely decentralized.
- dragonwriter 13y ago
  > I'm still not sure why Mt. Gox existed in the first place. Isn't the whole point of bitcoin that it is decentralized? Insofar as the second sentence is true at all, it is in that the issuance and transaction verification of bitcoin and bitcoin transactions is decentralized. That has nothing to do with the role of a centralized exchange in facilitating markets for people exchanging bitcoin for other commodities, like USD.
- dcc1 13y ago
  Mtgox existed because Only ways to get bitcoin: 1. Mine them (very very hard and getting harder) 2. Get paid in bitcoin for product/service 3. Buy them on an exchange for fiat 4. Be given bitcoin by early adopters Until its possible to get paid (salaries), pay suppliers, pay taxes etc the exchanges are needed to convert traditional currency to bitcoin and vice versa. Anyways the writing was on the wall for a long time, i stopped using them over a year ago, bitstamp are professional while mtgox were amateur cowboys with no support.
MaxReilly 13y ago
I see digital currency getting stronger as an evolutionary process. Bitcoin will likely die off from something, if not this then something else, however, the next iteration of online currency will take it's place. The expression "that which does not kill you makes you stronger" should be applied to virtual, decentralized currencies as a whole and not to bitcoin.
nullc 13y ago
> The main issue with this is that services may be reluctant to give out this information if they consider it useful to competitors. Well, if thats the issue it's possible to use more complex cryptographic techniques to make the entire process completely zero-knowledge. The idea is that you basically take the protocol I described but then execute it in an environment for zero-knowledge proof of general computation (e.g. http://www.scipr-lab.org/ http://www.scipr-lab.org/). You'd make a number of different performance tradeoffs to optimize for that environment, but thats basically the idea. There would need to be some development needed to turn that into a production system, but if the improved privacy is the _only_ holdup, it can certainly be fixed.
- tlrobinson 13y ago
  Are there other holdups you foresee?
hanswesterbeek 13y ago
It seems the author thinks Bitcoin is like your average software-project, where you fix a bug and just move on. The naive view of a libertarian dreamer.
- paulbaumgart 13y ago
  Please elaborate your argument instead of using opaque ad-hominem shorthands.
  - hanswesterbeek 13y ago
    I don't think it's ad-hominem, but alas. I don't feel the need to provide the list of arguments that I'm sure critics of Bitcoin have provided on this forum lots of times and I am confident you are already familiar with. Don't mean to waste your time. I /did/ want to respond to this article because the original author symptoms of blind faith in Bitcoin, where even when something disastrous happens to it, is portrayed as beneficial. I'm sure you'll agree that this is a bit of a stretch.
    - cobrausn 13y ago
      Since you probably know, why do liberals / progressives / whatever seem to hate on what essentially amounts to an opt-in currency that is not legally backed and regulated? Is it only because people propose that it replace legal tender? Does opposition decrease when you view it only as an alternative? Is it because you associate it with libertarians, who tend to rustle jimmies on the internet? I'm genuinely curious, as I fail to see anything wrong with keeping the big social experiment running. Disclaimer: I own zero bitcoins, and have no dog in this fight. Not even a doge.
      - jbooth 13y ago
        Personally, I just get annoyed at the libertarian dreamers. It's not that I hate bitcoin or even that I want it to fail. On balance, I'm probably in favor of it succeeding. But it's really hard to keep wanting that after hearing all the ideological claptrap.. I find myself hoping it'll crash just to shut these people up. A movement that started as a reaction to the failures of communism has become just as ideological and unrealistic. "The whole world would have peace and prosperity if only people acted the way we think they should." That's aside from the libertarians who are basically just garden-variety tribal Republicans but want to be hip. I'd also note that, for the purpose of this discussion, "liberals/progressives/moderates/whatevers" basically includes everyone who's not a true libertarian believer.
atmosx 13y ago
I guess this is paraphrasing Friedrich Nietzsche. I remember quoting this on a discussion with my mother, about 5 years ago. She replied: "So you're saying that if a kid gets bullied every time he steps out the door, will turn up stronger or afraid?". At the beginning I thought she just didn't get it but after elaborating the phrase more and more I came to the conclusion that either it's awfully incomplete (there should be a second part missing somewhere) or it's just plain wrong. Related to bitcoin, of course if Russia, EU, JP, China, US, AU, Brazil and Turkey decide that it's illegal and should be stopped for the greater good, bitcoin with it's current form will either die or lose a huge % of it's current value. I understand that it's good (and to me a little bit suspicious) to come clean and totally intact out of DPR bust and SK downfall, survive MtGox's failure, but ultimately if beaten too hard it's going to die not become stronger.
- cobbal 13y ago
  Another fun thing to do with that phrase is consider its contrapositive: That which doesn't make you stronger, kills you. Which is equivalent, but more obviously absurd.
  - deleted 13y ago
    [deleted]
  - chrismonsanto 13y ago
    Sorry to be pedantic, but I think it's implied that the universe of discourse is "all things that are attempting to kill you." The contrapositive under that assumption isn't absurd.
    - the_af 13y ago
      Sorry to be even more pedantic, but even with your correction, the phrase still doesn't make sense. Maybe something that was attempting to kill you but fails makes you weaker, so that the next threat kills you more easily. If a car runs me over and breaks something in my body, but I manage to survive, it doesn't make me stronger or car-crash resistant.
dnautics 13y ago
there is a much simpler reason why this is the case: "But in a rational world this incident (might take a bit of time for the market to realize this) should actually INCREASE confidence in BTC, since a large, irresponsible player was knocked out, and the rest of the players on the field have a net higher level of responsibility (for now)." (https://news.ycombinator.com/item?id=7295430 https://news.ycombinator.com/item?id=7295430) I predicted that the BTC price would bounce back quickly, but I had no idea just how quickly (just wished my paycheck came in faster; I'd have bought in at 450 instead of 600).
- JamisonM 13y ago
  Does the elimination of a large irresponsible player actually offer any new information about how irresponsible the other actors in the market are? I don't think there is any particular reason why that would be the case, I am interested to know how.
  - MarkPNeyer 13y ago
    All of the irresponsible actors involved in the 2008 financial crisis were left intact. They have no incentive not to try this again. The fall of mtgox shows that in the bitcoin world, failure will lead to death.
    - dublinben 13y ago
      >failure will lead to death But not before you've made millions, and walked away with no repercussions.
  - dnautics 13y ago
    It does not directly, but that's not important in markets, what matters is what people believe and how much the believe it. It also helps that it's most likely true anyways.
    - JamisonM 13y ago
      This seems to contradict the assertion that this would be true in "rational" markets in the original quote.
deleted 13y ago
[deleted]
zeteo 13y ago
>Some people are pointing to Gox’s failure as a reason Bitcoin needs more governmental regulation, but I believe cryptography and peer-to-peer consensus protocols can eventually replace the need for certain types of regulation entirely. Frankly I don't see how that's possible. There are two sides to a transaction: the transfer of money in one direction and the transfer of goods or services in the other. Making one side very secure (or free from government intervention etc.) while neglecting the other is like building a bridge with one pillar made of tungsten and the other of adobe bricks. It'd only be as usable as its weaker side. The existing financial system is perhaps suboptimal in terms of transferring money, but it has pretty good tools of ensuring the expected goods and services flow back to the buyer: chargebacks, courts of law etc. The Bitcoin "economy" has nothing comparable except a vague spirit of community that fails more often than not (see e.g. the pathetic appeals of Silk Road 2 or Mt. Gox depositors). So when a fraudulent transaction occurs, the best hope of the victim lies, ironically, with the much maligned government institutions that they were trying to avoid in the first place. (Incidentally, this is also why it's perfectly reasonable for countries to outlaw Bitcoin transactions and have a good expectation of enforcing it.) There's no way cryptography and peer-to-peer consensus protocols will provide verification for goods and services. It's a hard problem, and Bitcoiners ignoring it will not make it go away anytime soon. Until it's solved, have fun driving 18-wheelers across continually crumbling bridge pillars.
- belorn 13y ago
  > Existing financial system is perhaps suboptimal in terms of transferring money, but it has pretty good tools of ensuring the expected goods and services flow back In what way is physical money different from bitcoint in this aspect? Is there an implied statement here than for all the ages where we did not have electronic banking, money was inherently insecure and built on crumbling bride pillars? Treat bitcoin like physical money, and most issues goes away. I don't post thousands of money to a strange in a different country to hold them for me, nor do I give physical money to a store before I have the product in my hand.
- MarkPNeyer 13y ago
  > There's no way cryptography and peer-to-peer consensus protocols will provide verification for goods and services. Why wouldn't reputation help with this problem? users will have to start small to develop their reputation, but doing so will allow users more trust. There are ways of doing things that don't involve guns - and that's ultimately what government relies on.
GFK_of_xmaspast 13y ago
If I see a major financial institution fail and lots and lots of depositors/customers lose money, I'm going to maybe reconsider my strategy of "not stuffing the mattress full of twenty dollar bills."
ForFreedom 13y ago
What theme is the blog?
sentenza 13y ago
Been quite some time since Kaiser Wilhelm was cited on HN.
deleted 13y ago
[deleted]

130 points by tlrobinson 13y ago

Ethereum has a lot of potential. Here's a more digestible summary of the whitepaper linked in the blog post, by a member of the founding team: http://bitcoinmagazine.com/9671/ethereum-next-generation-cryptocurrency-decentralized-application-platform/ http://bitcoinmagazine.com/9671/ethereum-next-generation-cry...

nullc 13y ago
I'm quite skeptical of Ethereum's ability to meaningfully contribute to these matters. An enormous amount of trustlessness is already possible in Bitcoin, but people just do not bother using it: They believe they can trust their counterparties (or they wouldn't transact!) and implementing trustless systems is substantially harder to do and harder to monetize (no central point to seek rents from). Witness Ethereum itself: Instead of targeted improvements to Bitcoin it's proposed as a whole new currency to be funded by eager speculators before it even exists. It is my experience that the limitations of trustlessness in the Bitcoin ecosystem have arisen almost exclusively from a lack of interest or knoweldge and not from any missing technological capability.
- paulbaumgart 13y ago
  That's an interesting point. I suspect the main reason people aren't using those capabilities of Bitcoin more frequently is that no one has spent the time to make the UX good. Unfortunately, that's also basically true of every consumer-oriented open source project ever. I'm not sure why it's the case, but it does seem that good UX requires a profit motive.
  - nullc 13y ago
    You can't really solve it with "UX" as a blanket thing. To build trustless service you must design cryptographic protocols that use the bitcoin "script" expression language— it's form of programming. Don't hold your breath for a good UI there. :) Once you've done that, you can slap a nice UI on it to make it available to mortals. An example: https://bitrated.com/ https://bitrated.com/
- drcode 13y ago
  Exactly, ethereum is "pushing the borders" on a "border" of bitcoin that noone seems to be running into yet, or caring about, anyway. Once multisig is used more heavily in the bitcoin world then maybe a better case can be made for ethereum becoming a success (though I nonetheless find ethereum tremendously exciting, from a pure technology standpoint)
  - nullc 13y ago
    > ethereum tremendously exciting, from a pure technology standpoint I don't. I think it's the wrong model and it's only interesting when you don't have a very complete model of what computation is doing inside a consensus system. What script is actually doing in Bitcoin is not "running code"— running identical code with identical on hundreds of thousands of nodes just for it own sake would be stupid and wasteful. What happens is that users of the network run the code themselves and their scriptSig is a proof that they ran the code correctly (and that the code accepted their inputs). The simplest way to do this is to replay the execution, but now it makes sense: The network runs the code to verify you ran it right, and by doing so the contract embedded in the script is made trustless. Running the code in the network has a lot of downsides, however. It completely lacks privacy (except to the extent that we have an opcode that implements a zero knoweldge proof of knoweldge of the discrete log of an EC point), and there is tremendous pressure on the computational complexity, implementation complexity risk, and size of these scripts because of the cost of verify them. Script execution is a pure externality that we only safely know how to cope with by making sure that it is very very cheap (we do this in Bitcoin by making sure that trivial static analysis can determine the execution cost (measure the size), and then bounding that cost). But actually executing the script isn't the only way to verify computation was performed correctly. Using cryptography it's possible to have constant size and complexity proofs, independent of the program size. This lets you cook up stuff like: https://bitcointalk.org/index.php?topic=277389.0 https://bitcointalk.org/index.php?topic=277389.0 and I find that a lot more exciting. Especially since these kinds of enhancements don't demand the risky tradeoffs that making script more expensive demands. I'm also excited about distributed oracles— programs that sign transactions conditional on user specified code, including— potentially— external inputs. The ability to have external inputs (trusted by the oracle) greatly increases the expressive power beyond what any in-consensus system could have, and using multisignatures with multiple oracles you can achieve good security though not trustlessness. E.g. "This tx pays to bob if bob.com is on the first page of google, otherwise after april 1st it can be redeemed by greg". I would expect to see any attempt at more powerful script first implemented via multisignature oracles before even considering making it trustless by merging it into the network.

zeckalpha 13y ago

I'm still not sure why Mt. Gox existed in the first place. Isn't the whole point of bitcoin that it is decentralized? The failure of Mt. Gox could be viewed as a market reset.

muyuu 13y ago
Exchanges exist because BTC doesn't ban anything. As long as people want to use exchanges there might be exchanges. It's an easy concept really.
- deleted 13y ago
  [deleted]
diego 13y ago
Cash is decentralized. That doesn't mean you can obtain it out of thin air. You need to exchange something of value (your work, assets, whatever) for cash. Mt. Gox and other exchanges fulfill that role. No idea what you mean by a "market reset."
- BallinBige 13y ago
  well said. cash is insanely decentralized.
dragonwriter 13y ago
> I'm still not sure why Mt. Gox existed in the first place. Isn't the whole point of bitcoin that it is decentralized? Insofar as the second sentence is true at all, it is in that the issuance and transaction verification of bitcoin and bitcoin transactions is decentralized. That has nothing to do with the role of a centralized exchange in facilitating markets for people exchanging bitcoin for other commodities, like USD.
dcc1 13y ago
Mtgox existed because Only ways to get bitcoin: 1. Mine them (very very hard and getting harder) 2. Get paid in bitcoin for product/service 3. Buy them on an exchange for fiat 4. Be given bitcoin by early adopters Until its possible to get paid (salaries), pay suppliers, pay taxes etc the exchanges are needed to convert traditional currency to bitcoin and vice versa. Anyways the writing was on the wall for a long time, i stopped using them over a year ago, bitstamp are professional while mtgox were amateur cowboys with no support.

MaxReilly 13y ago

I see digital currency getting stronger as an evolutionary process. Bitcoin will likely die off from something, if not this then something else, however, the next iteration of online currency will take it's place. The expression "that which does not kill you makes you stronger" should be applied to virtual, decentralized currencies as a whole and not to bitcoin.

nullc 13y ago

> The main issue with this is that services may be reluctant to give out this information if they consider it useful to competitors. Well, if thats the issue it's possible to use more complex cryptographic techniques to make the entire process completely zero-knowledge. The idea is that you basically take the protocol I described but then execute it in an environment for zero-knowledge proof of general computation (e.g. http://www.scipr-lab.org/ http://www.scipr-lab.org/). You'd make a number of different performance tradeoffs to optimize for that environment, but thats basically the idea. There would need to be some development needed to turn that into a production system, but if the improved privacy is the _only_ holdup, it can certainly be fixed.

tlrobinson 13y ago
Are there other holdups you foresee?

hanswesterbeek 13y ago

It seems the author thinks Bitcoin is like your average software-project, where you fix a bug and just move on. The naive view of a libertarian dreamer.

paulbaumgart 13y ago
Please elaborate your argument instead of using opaque ad-hominem shorthands.
- hanswesterbeek 13y ago
  I don't think it's ad-hominem, but alas. I don't feel the need to provide the list of arguments that I'm sure critics of Bitcoin have provided on this forum lots of times and I am confident you are already familiar with. Don't mean to waste your time. I /did/ want to respond to this article because the original author symptoms of blind faith in Bitcoin, where even when something disastrous happens to it, is portrayed as beneficial. I'm sure you'll agree that this is a bit of a stretch.
  - cobrausn 13y ago
    Since you probably know, why do liberals / progressives / whatever seem to hate on what essentially amounts to an opt-in currency that is not legally backed and regulated? Is it only because people propose that it replace legal tender? Does opposition decrease when you view it only as an alternative? Is it because you associate it with libertarians, who tend to rustle jimmies on the internet? I'm genuinely curious, as I fail to see anything wrong with keeping the big social experiment running. Disclaimer: I own zero bitcoins, and have no dog in this fight. Not even a doge.
    - jbooth 13y ago
      Personally, I just get annoyed at the libertarian dreamers. It's not that I hate bitcoin or even that I want it to fail. On balance, I'm probably in favor of it succeeding. But it's really hard to keep wanting that after hearing all the ideological claptrap.. I find myself hoping it'll crash just to shut these people up. A movement that started as a reaction to the failures of communism has become just as ideological and unrealistic. "The whole world would have peace and prosperity if only people acted the way we think they should." That's aside from the libertarians who are basically just garden-variety tribal Republicans but want to be hip. I'd also note that, for the purpose of this discussion, "liberals/progressives/moderates/whatevers" basically includes everyone who's not a true libertarian believer.

atmosx 13y ago

I guess this is paraphrasing Friedrich Nietzsche. I remember quoting this on a discussion with my mother, about 5 years ago. She replied: "So you're saying that if a kid gets bullied every time he steps out the door, will turn up stronger or afraid?". At the beginning I thought she just didn't get it but after elaborating the phrase more and more I came to the conclusion that either it's awfully incomplete (there should be a second part missing somewhere) or it's just plain wrong. Related to bitcoin, of course if Russia, EU, JP, China, US, AU, Brazil and Turkey decide that it's illegal and should be stopped for the greater good, bitcoin with it's current form will either die or lose a huge % of it's current value. I understand that it's good (and to me a little bit suspicious) to come clean and totally intact out of DPR bust and SK downfall, survive MtGox's failure, but ultimately if beaten too hard it's going to die not become stronger.

cobbal 13y ago
Another fun thing to do with that phrase is consider its contrapositive: That which doesn't make you stronger, kills you. Which is equivalent, but more obviously absurd.
- deleted 13y ago
  [deleted]
- chrismonsanto 13y ago
  Sorry to be pedantic, but I think it's implied that the universe of discourse is "all things that are attempting to kill you." The contrapositive under that assumption isn't absurd.
  - the_af 13y ago
    Sorry to be even more pedantic, but even with your correction, the phrase still doesn't make sense. Maybe something that was attempting to kill you but fails makes you weaker, so that the next threat kills you more easily. If a car runs me over and breaks something in my body, but I manage to survive, it doesn't make me stronger or car-crash resistant.

dnautics 13y ago

there is a much simpler reason why this is the case: "But in a rational world this incident (might take a bit of time for the market to realize this) should actually INCREASE confidence in BTC, since a large, irresponsible player was knocked out, and the rest of the players on the field have a net higher level of responsibility (for now)." (https://news.ycombinator.com/item?id=7295430 https://news.ycombinator.com/item?id=7295430) I predicted that the BTC price would bounce back quickly, but I had no idea just how quickly (just wished my paycheck came in faster; I'd have bought in at 450 instead of 600).

JamisonM 13y ago
Does the elimination of a large irresponsible player actually offer any new information about how irresponsible the other actors in the market are? I don't think there is any particular reason why that would be the case, I am interested to know how.
- MarkPNeyer 13y ago
  All of the irresponsible actors involved in the 2008 financial crisis were left intact. They have no incentive not to try this again. The fall of mtgox shows that in the bitcoin world, failure will lead to death.
  - dublinben 13y ago
    >failure will lead to death But not before you've made millions, and walked away with no repercussions.
- dnautics 13y ago
  It does not directly, but that's not important in markets, what matters is what people believe and how much the believe it. It also helps that it's most likely true anyways.
  - JamisonM 13y ago
    This seems to contradict the assertion that this would be true in "rational" markets in the original quote.

deleted 13y ago

[deleted]

zeteo 13y ago

>Some people are pointing to Gox’s failure as a reason Bitcoin needs more governmental regulation, but I believe cryptography and peer-to-peer consensus protocols can eventually replace the need for certain types of regulation entirely. Frankly I don't see how that's possible. There are two sides to a transaction: the transfer of money in one direction and the transfer of goods or services in the other. Making one side very secure (or free from government intervention etc.) while neglecting the other is like building a bridge with one pillar made of tungsten and the other of adobe bricks. It'd only be as usable as its weaker side. The existing financial system is perhaps suboptimal in terms of transferring money, but it has pretty good tools of ensuring the expected goods and services flow back to the buyer: chargebacks, courts of law etc. The Bitcoin "economy" has nothing comparable except a vague spirit of community that fails more often than not (see e.g. the pathetic appeals of Silk Road 2 or Mt. Gox depositors). So when a fraudulent transaction occurs, the best hope of the victim lies, ironically, with the much maligned government institutions that they were trying to avoid in the first place. (Incidentally, this is also why it's perfectly reasonable for countries to outlaw Bitcoin transactions and have a good expectation of enforcing it.) There's no way cryptography and peer-to-peer consensus protocols will provide verification for goods and services. It's a hard problem, and Bitcoiners ignoring it will not make it go away anytime soon. Until it's solved, have fun driving 18-wheelers across continually crumbling bridge pillars.

belorn 13y ago
> Existing financial system is perhaps suboptimal in terms of transferring money, but it has pretty good tools of ensuring the expected goods and services flow back In what way is physical money different from bitcoint in this aspect? Is there an implied statement here than for all the ages where we did not have electronic banking, money was inherently insecure and built on crumbling bride pillars? Treat bitcoin like physical money, and most issues goes away. I don't post thousands of money to a strange in a different country to hold them for me, nor do I give physical money to a store before I have the product in my hand.
MarkPNeyer 13y ago
> There's no way cryptography and peer-to-peer consensus protocols will provide verification for goods and services. Why wouldn't reputation help with this problem? users will have to start small to develop their reputation, but doing so will allow users more trust. There are ways of doing things that don't involve guns - and that's ultimately what government relies on.

GFK_of_xmaspast 13y ago

If I see a major financial institution fail and lots and lots of depositors/customers lose money, I'm going to maybe reconsider my strategy of "not stuffing the mattress full of twenty dollar bills."

ForFreedom 13y ago

What theme is the blog?

sentenza 13y ago

Been quite some time since Kaiser Wilhelm was cited on HN.

deleted 13y ago

[deleted]