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Why is it a currency's job to provide consumer protection? That's like saying that it's a kitchen stove's job to tell you what things you can cook with it, or t

Why is it a currency's job to provide consumer protection? That's like saying that it's a kitchen stove's job to tell you what things you can cook with it, or that it's TCP's job to provide built-in encryption and authentication. It's not; it's the job of third-party services built on top. Systems are better when they're modular and distinct components are not arbitrarily bunched together, allowing separate innovation in each one. And the Bitcoin community is developing such third-party services as well; I know of at least three Bitcoin businesses working on providing arbitration services and secure Bitcoin wallets using multisignature transactions.

lingben 13y ago
"Why is it a currency's job to provide consumer protection?" I think you are misunderstanding what I'm saying. It isn't the currency's "job". It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. The mistake that people make with bitcoin is to put the cart before the horse. That is, they think that achieving critical mass [1] means that a currency has 'succeeded'. In fact, you first need to provide a reason for people to trust the currency (central authority) which then leads to critical mass... and then 'success'. The essence of bitcoin is ephemeral with no control, no central authority and no recourse. This stuff is built in. Unlike our current 'old style' currencies, bitcoin prides itself on standing apart this way. When a currency is built in such a way that it EXPLICITLY removes the ability to have such necessary characteristics of a currency, you better believe it matters. [1] http://en.wikipedia.org/wiki/Critical_mass_%28sociodynamics%29 http://en.wikipedia.org/wiki/Critical_mass_%28sociodynamics%...
- lutusp 13y ago
  > It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. Yes, that's a prerequisite for a currency to function as it should, but I think you're suggesting that Bitcoin differs from paper money in that regard. It happens that people trust paper money, but this isn't because paper money has some kind of innate authority beyond public faith and trust. If a particular government chose to manipulate the currency they could destroy it, either quickly or slowly. > The essence of bitcoin is ephemeral with no control, no central authority and no recourse. I think you're exaggerating the role of "central authority". http://w3.newsmax.com/newsletters/uwr/images/transcript-img14.jpg http://w3.newsmax.com/newsletters/uwr/images/transcript-img1... To me, the only difference between Bitcoin and paper money is public familiarity.
  - deleted 13y ago
    [deleted]
- bryanbuckley 13y ago
  > It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. Why? Does it hold true after Bitcoin (rhetorical, we don't know yet)? Certainly before the invention of Bitcoin and the ability to reach consensus in distributed systems, powerful/rich central authorities trigger initial trust and adoption. Hence you can see why previous digital currencies have been none-starters. That you must first have "trust" and then comes a critical mass works for bitcoin, the currency, just fine, imo. I would say in fact that the initial seed has already been planted back in 2011 and we are seeing the growth now. Allow me to just regurgitate some things I know of bitcoin that give it some value/trust/seed for adoption: - completely distributed, no middle-men (and their fees and risks and inefficiencies) except the 51% miners. This is the "reach consensus in distributed systems" which fixes double spending which is arguably the only real innovation of Bitcoin (of course there is more to the story, but this is the real new thing) - used to be the main way to buy illegal drugs safely and conveniently in the U.S. - great way to avoid paying taxes (WARNING: probably illegal where you live!) - great way to do other illegal things online involving money (aka free trade, freedom of speech) - _exceptional_ utility in transporting wealth - _exceptional_ utility in transferring wealth (to someone else). i.e. medium of exchange - _exceptional_ utility in being able to secure - _exceptional_ unit of account because of specific measure, fungible, and divisible - known supply and predictable production rate (automatic, built-in, preset control) - deflationary (can't argue it's good for bootstrapping) - impossible to counterfeit Some drawbacks: - bad measure of value because of exchange volatility - philosophical underpinnings or effects of being anti-state (see above pros) which also may have the effect of losing control of money creation and debt financing? - deflationary and built-in control of supply (This is interesting. As I understand it from talking with a couple economists, the "infinite" divisibility may assuage traditional deflationary woes. Though they still generally have a feeling this is a con.) - very infant, much risk - will debt be possible, practical to build on top? And sure, feel free to swap one or two pros/cons if you have reason. Is there anything in bitcoin's (the "currency") growth to suggest it _won't_ reach a tipping point? I ask because from my perspective it's adoption is ever growing, never stagnant. Maybe we are actually mostly on the same page? I couldn't be sure but replied anyway. Did I miss this point: >such necessary characteristics of a currency
thesimpsons1022 13y ago
I guess we disagree on the definition of a currency then. You are treating currencies like consumer products. Currencies are stores of value that people have to rely on for our market based economy to work on. The dollar is backed by the full faith and credit of the United States government. Bitcoin is backed by the full faith and credit of... satoshi nakamoto? If the dollar wasn't backed by the US government with strong regulations then I wouldn't use it to store my value and target wouldn't accept it. It is unethical to distribute a currency without insurances/regulations controlling it. You are messing with people's life savings and livelihood, its irresponsible to not protect consumers. Furthermore, with your stove example, there are certain regulations that the stove has to meet to be sold. http://www.wsiltv.com/news/local/EPA-Proposes-New-Regulations-on-Wood-Stoves-247343931.html http://www.wsiltv.com/news/local/EPA-Proposes-New-Regulation... This is done to protect consumers and society. You may say its people own faults for not doing proper risk assessment, but not everyone is educated and smart enough to understand this stuff. If you want true mass adoption of bitcoin then it will need regulation and consumer protection.
- lutusp 13y ago
  > The dollar is backed by the full faith and credit of the United States government. It's more accurate to say that the dollar is backed by public familiarity, faith and trust. Some of that trust is in the government backing the currency, but if that were not true, if the government wasn't involved, it's interesting to ask how much of paper money's role and legitimacy could be supported only by public faith and trust in the currency and its connection with the economy. Assuming, that is, that the number of dollars in circulation could somehow be regulated without governmental control (a problem that the Bitcoin system addresses).
  - thesimpsons1022 13y ago
    well in my opinion, central banking is vital in my trust of a currency as well. But others may disagree. Otherwise, you're just dealing with gold, which is a regression.
    - 13y ago

lingben 13y ago

"Why is it a currency's job to provide consumer protection?" I think you are misunderstanding what I'm saying. It isn't the currency's "job". It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. The mistake that people make with bitcoin is to put the cart before the horse. That is, they think that achieving critical mass [1] means that a currency has 'succeeded'. In fact, you first need to provide a reason for people to trust the currency (central authority) which then leads to critical mass... and then 'success'. The essence of bitcoin is ephemeral with no control, no central authority and no recourse. This stuff is built in. Unlike our current 'old style' currencies, bitcoin prides itself on standing apart this way. When a currency is built in such a way that it EXPLICITLY removes the ability to have such necessary characteristics of a currency, you better believe it matters. [1] http://en.wikipedia.org/wiki/Critical_mass_%28sociodynamics%29 http://en.wikipedia.org/wiki/Critical_mass_%28sociodynamics%...

lutusp 13y ago
> It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. Yes, that's a prerequisite for a currency to function as it should, but I think you're suggesting that Bitcoin differs from paper money in that regard. It happens that people trust paper money, but this isn't because paper money has some kind of innate authority beyond public faith and trust. If a particular government chose to manipulate the currency they could destroy it, either quickly or slowly. > The essence of bitcoin is ephemeral with no control, no central authority and no recourse. I think you're exaggerating the role of "central authority". http://w3.newsmax.com/newsletters/uwr/images/transcript-img14.jpg http://w3.newsmax.com/newsletters/uwr/images/transcript-img1... To me, the only difference between Bitcoin and paper money is public familiarity.
- deleted 13y ago
  [deleted]
bryanbuckley 13y ago
> It is a fundamental prerequisite that the currency have a backer for said currency to be used widely. Why? Does it hold true after Bitcoin (rhetorical, we don't know yet)? Certainly before the invention of Bitcoin and the ability to reach consensus in distributed systems, powerful/rich central authorities trigger initial trust and adoption. Hence you can see why previous digital currencies have been none-starters. That you must first have "trust" and then comes a critical mass works for bitcoin, the currency, just fine, imo. I would say in fact that the initial seed has already been planted back in 2011 and we are seeing the growth now. Allow me to just regurgitate some things I know of bitcoin that give it some value/trust/seed for adoption: - completely distributed, no middle-men (and their fees and risks and inefficiencies) except the 51% miners. This is the "reach consensus in distributed systems" which fixes double spending which is arguably the only real innovation of Bitcoin (of course there is more to the story, but this is the real new thing) - used to be the main way to buy illegal drugs safely and conveniently in the U.S. - great way to avoid paying taxes (WARNING: probably illegal where you live!) - great way to do other illegal things online involving money (aka free trade, freedom of speech) - _exceptional_ utility in transporting wealth - _exceptional_ utility in transferring wealth (to someone else). i.e. medium of exchange - _exceptional_ utility in being able to secure - _exceptional_ unit of account because of specific measure, fungible, and divisible - known supply and predictable production rate (automatic, built-in, preset control) - deflationary (can't argue it's good for bootstrapping) - impossible to counterfeit Some drawbacks: - bad measure of value because of exchange volatility - philosophical underpinnings or effects of being anti-state (see above pros) which also may have the effect of losing control of money creation and debt financing? - deflationary and built-in control of supply (This is interesting. As I understand it from talking with a couple economists, the "infinite" divisibility may assuage traditional deflationary woes. Though they still generally have a feeling this is a con.) - very infant, much risk - will debt be possible, practical to build on top? And sure, feel free to swap one or two pros/cons if you have reason. Is there anything in bitcoin's (the "currency") growth to suggest it _won't_ reach a tipping point? I ask because from my perspective it's adoption is ever growing, never stagnant. Maybe we are actually mostly on the same page? I couldn't be sure but replied anyway. Did I miss this point: >such necessary characteristics of a currency

thesimpsons1022 13y ago

I guess we disagree on the definition of a currency then. You are treating currencies like consumer products. Currencies are stores of value that people have to rely on for our market based economy to work on. The dollar is backed by the full faith and credit of the United States government. Bitcoin is backed by the full faith and credit of... satoshi nakamoto? If the dollar wasn't backed by the US government with strong regulations then I wouldn't use it to store my value and target wouldn't accept it. It is unethical to distribute a currency without insurances/regulations controlling it. You are messing with people's life savings and livelihood, its irresponsible to not protect consumers. Furthermore, with your stove example, there are certain regulations that the stove has to meet to be sold. http://www.wsiltv.com/news/local/EPA-Proposes-New-Regulations-on-Wood-Stoves-247343931.html http://www.wsiltv.com/news/local/EPA-Proposes-New-Regulation... This is done to protect consumers and society. You may say its people own faults for not doing proper risk assessment, but not everyone is educated and smart enough to understand this stuff. If you want true mass adoption of bitcoin then it will need regulation and consumer protection.

lutusp 13y ago
> The dollar is backed by the full faith and credit of the United States government. It's more accurate to say that the dollar is backed by public familiarity, faith and trust. Some of that trust is in the government backing the currency, but if that were not true, if the government wasn't involved, it's interesting to ask how much of paper money's role and legitimacy could be supported only by public faith and trust in the currency and its connection with the economy. Assuming, that is, that the number of dollars in circulation could somehow be regulated without governmental control (a problem that the Bitcoin system addresses).
- thesimpsons1022 13y ago
  well in my opinion, central banking is vital in my trust of a currency as well. But others may disagree. Otherwise, you're just dealing with gold, which is a regression.
  - 13y ago