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Argh! It's comments like this that make me wonder if you history buffs out there will ever understand that we're entering a new phase of economic history: a tr

by jnbiche 13y ago

Argh! It's comments like this that make me wonder if you history buffs out there will ever understand that we're entering a new phase of economic history: a trustless one. All of these spectacular exchange failures out there have nothing to do with Bitcoin itself. Go read up on trustless cryptographic systems, and understand that we're entering a different era. The failures that occur around the periphery of Bitcoin are nothing more than a fault line between the old system (trust in failing institutions) to a new one (trustless). Signed, A humanities major back in college (yeah, I studied economic history, too)

eterm 13y ago
"The trustless economy" must be like "the paperless office" because everywhere I look around Bitcoin I see people losing money because they trusted someone.
arethuza 13y ago
"have nothing to do with Bitcoin itself" While that is technically correct, don't you think to most people Bitcoin is rather more than the protocol - it is the entire eco-system of applications and services that have been built over the last few years. If the "fault line" between this "trustless economy" and the vastly larger "normal" economy isn't pretty painless then I can't see much of a future for Bitcoin and exchanges seem to be a pretty important part of that interface.
pron 13y ago
But algorithms don't create an economy – people do (and I actually have a degree in Mathematics). I don't have a problem with Bitcoin being hacked: that can and will be fixed. I do have a problem with the very notion of a "trustless" economy for two reasons: first, there ain't no such thing (it's like a worshipper-free religion). Economy equals trust. An economy needs credit and it needs insurance, and you can't have those without trust (heck, the word "credit" literally means "to believe"). Second, even if you could imagine such a thing, where a robot would compel you to pay up, or an algorithm would make decisions for you, why in god's name would you even want to? Why take away the freedom of people to come together and make collective decisions about the economy (say, like devaluating a currency) for their society's benefit? Why, because some people are crooks? The kind of society you picture is, literally, an autistic one. While you don't want people to think that Bitcoin is failing after ceaseless thefts, you call our institutions "failing" based on what? I don't know about you, but my institutions aren't failing. They just require regular maintenance. Also, if you think Bitcoin is about creating a new kind of trustless economy (in other words, the very same economy that existed prior to the modern one or in lawless frontiers like the Wild West), you are mistaken in believing that most people will follow you. That is precisely the libertarian politics that hangs around Bitcoin's neck, and if anything will choke it, this will be it. Forget about who's right and who's wrong. The reality is that most freedom-loving people aren't libertarian. They like their institutions and want to fix them. They don't want a trustless economy. We may be misguided; we might be wrong; but we're the vast, vast majority. And if you like history, you probably know that people have been warning about the collapse of modern institutions pretty much since their inception. There were always those who wanted to grab their gold and head for the hills because the system is falling apart. And let me tell you that there were times the system was close to crumbling, but today we're not even close to such a big crisis. Nevertheless, the vast majority of people have put their faith in their institutions, and for about 500 years now, they've been right (well, more or less).
- baby 13y ago
  > and I actually have a degree in Mathematics this is getting ridiculous, stating your degree just to tell people your argument is backed by studies that really don't help you that much (if at all) in economics (yes I have a degree in mathematics too).
- lazylizard 13y ago
  my 2 cents..i dont have a degreee in econs...ha! i think the problem is deflation, actually. which leads to 2 practical problems..lack of credit and hoarding. shutting down the ability to spend newly created fiat money i suspect will reduce the amount of credit alot. that probably makes most businesses as we know them now unoperable. hoarding is a social problem i guess. it just increases the wealth gap. not sure if most societies want that.
- leobelle 13y ago
  If you wrote more, probably online somewhere, about bitcoin and the like, I would probably read it because you seem smart and stuff. I really mean it. I hadn't considered the fact you can't loan out bitcoins the way you can regular money.
  - enko 13y ago
    > you can't loan out bitcoins the way you can regular money Why not? I mean sure, it would mean losing the anonymity, but the receiver would owe you the interest-adjusted amount just like someone you lent money to. A loan isn't magical boomerang money, it's a legally encumbered transfer, which can be done with dollars, bitcoins, tractors or anything else. In fact here's bitcoin lender right here: https://www.bitbond.net/ https://www.bitbond.net/
    - saalweachter 13y ago
      We actually have two money systems that are used on a day to day basis, cash and accounts. Bitcoins replace cash, but accounts are where the real magic of the economy happens. Lending -- as an institution, as opposed to as an individual -- is all about fractional reserve banking. The bank pools the money of its depositors and lends it out without restricting the ability of the depositors to access their money. This increases the money supply, and generally works OK because of a combination of (a) most people not needing most of their money most of the time and (b) a lot of transactions happen purely through the bank's internal ledger, without needing cash at all. If Alice writes a check to Bob, who immediately deposits it, the bank just updates their ledger and it doesn't matter whether they have cash on hand to cover it. There's nothing preventing you from operating a traditional fractional reserve bank using Bitcoin instead of cash, and it would work the exact same way as a traditional bank with exactly the same advantages and problems. But if you're writing checks for Bitcoins instead of dollars which end up being processed entirely through a bank's internal ledger instead of through the Bitcoin network's blockchain... why? How is that really Bitcoin?
jhh 13y ago
This comment would be more valuable if it contained any actual argument to support your hypotheses.
pjc50 13y ago
The new "trustless" systems don't seem to have solved the problem of transactions at all: bitcoin may be trustless, but if I'm purchasing something with them (such as USD) I need to have some sort of guarantee that it will arrive. There's an argument that we're entering a "low trust" society, and this is not a good thing: http://fistfulofeuros.net/afoe/high-trust-and-low-trust-societies-banks-and-europe/ http://fistfulofeuros.net/afoe/high-trust-and-low-trust-soci...
rabbyte 13y ago
You speak as though zero-trust crypto currencies have a page in the history book already under proven economic technology. Bitcoin does not exist in a vacuum. It exists as a tangible implementation on top of physical infrastructure and, in the case of Bitcoin, infrastructure failure has many faces. You can balk at that by claiming special foresight or acknowledge that even good ideas take time to mature before they're viable.
fauigerzigerk 13y ago
A trustless economy would be one without credit or debt. Can you explain how a society that doesn't live hand-to-mouth can exist without credit?
- jnbiche 13y ago
  You actually can't imagine this? Even in today's world, there are many cultures where debt is a rare resort for the unfortunate, not an acceptable status quo.
  - pron 13y ago
    Do those cultures have iPads?
  - fauigerzigerk 13y ago
    I imagined it and called it hand-to-mouth. It would be incredibly wasteful not to let others use resources you don't need at the moment in exchange for participating in their future proceeds. A large part of the resources in such a society would lie idle at all times. There would be no insurance either, so everyone would be forced to save tons of money to cover adverse events that don't happen to most of them most of the time. For instance, everyone would have to save up enough to rebuild their home in case it burns down. That amount would be thousands of times what is needed to rebuild the homes that actually do burn down.
    - philbarr 13y ago
      Why would there be no insurance? Surely we would just pool our money together in a big pot for when people have their houses burnt down? Kind of like we do now - except possibly without someone skimming a huge profit off the top.
      - fauigerzigerk 13y ago
        because that takes trust.
    - 13y ago
rayiner 13y ago
There are all sorts of people who have thought they lived at the end of history. To date all have been wrong.
mercer 13y ago
While I do believe increasing reliance on 'trustless economy'-enabling concepts, I can't help but wonder how feasible, and by extent how constructive, the idea of thinking in terms of a big paradigm shift is in this regard. Yes, bitcoin might be a nice pocket of 'trustless economy', but any practical use inevitably requires trust. There's the hardware, the OS/software, the ISP's, the exchanges, etc., that all, to a greater or lesser extend, require trust. Now Snowden clearly exposed that this trust is not deserved, and that's a problem. But while working on increasing this 'trustless economy' is a worthy goal, I can't help but feel that the best approach is to both work at increasing trust where it can't be avoided, and decrease the need for it where possible. But perhaps that's too defeatist. I'm following developments in this area with great interest!

by jnbiche 13y ago

eterm 13y ago

"The trustless economy" must be like "the paperless office" because everywhere I look around Bitcoin I see people losing money because they trusted someone.

arethuza 13y ago

"have nothing to do with Bitcoin itself" While that is technically correct, don't you think to most people Bitcoin is rather more than the protocol - it is the entire eco-system of applications and services that have been built over the last few years. If the "fault line" between this "trustless economy" and the vastly larger "normal" economy isn't pretty painless then I can't see much of a future for Bitcoin and exchanges seem to be a pretty important part of that interface.

pron 13y ago

But algorithms don't create an economy – people do (and I actually have a degree in Mathematics). I don't have a problem with Bitcoin being hacked: that can and will be fixed. I do have a problem with the very notion of a "trustless" economy for two reasons: first, there ain't no such thing (it's like a worshipper-free religion). Economy equals trust. An economy needs credit and it needs insurance, and you can't have those without trust (heck, the word "credit" literally means "to believe"). Second, even if you could imagine such a thing, where a robot would compel you to pay up, or an algorithm would make decisions for you, why in god's name would you even want to? Why take away the freedom of people to come together and make collective decisions about the economy (say, like devaluating a currency) for their society's benefit? Why, because some people are crooks? The kind of society you picture is, literally, an autistic one. While you don't want people to think that Bitcoin is failing after ceaseless thefts, you call our institutions "failing" based on what? I don't know about you, but my institutions aren't failing. They just require regular maintenance. Also, if you think Bitcoin is about creating a new kind of trustless economy (in other words, the very same economy that existed prior to the modern one or in lawless frontiers like the Wild West), you are mistaken in believing that most people will follow you. That is precisely the libertarian politics that hangs around Bitcoin's neck, and if anything will choke it, this will be it. Forget about who's right and who's wrong. The reality is that most freedom-loving people aren't libertarian. They like their institutions and want to fix them. They don't want a trustless economy. We may be misguided; we might be wrong; but we're the vast, vast majority. And if you like history, you probably know that people have been warning about the collapse of modern institutions pretty much since their inception. There were always those who wanted to grab their gold and head for the hills because the system is falling apart. And let me tell you that there were times the system was close to crumbling, but today we're not even close to such a big crisis. Nevertheless, the vast majority of people have put their faith in their institutions, and for about 500 years now, they've been right (well, more or less).

baby 13y ago
> and I actually have a degree in Mathematics this is getting ridiculous, stating your degree just to tell people your argument is backed by studies that really don't help you that much (if at all) in economics (yes I have a degree in mathematics too).
lazylizard 13y ago
my 2 cents..i dont have a degreee in econs...ha! i think the problem is deflation, actually. which leads to 2 practical problems..lack of credit and hoarding. shutting down the ability to spend newly created fiat money i suspect will reduce the amount of credit alot. that probably makes most businesses as we know them now unoperable. hoarding is a social problem i guess. it just increases the wealth gap. not sure if most societies want that.
leobelle 13y ago
If you wrote more, probably online somewhere, about bitcoin and the like, I would probably read it because you seem smart and stuff. I really mean it. I hadn't considered the fact you can't loan out bitcoins the way you can regular money.
- enko 13y ago
  > you can't loan out bitcoins the way you can regular money Why not? I mean sure, it would mean losing the anonymity, but the receiver would owe you the interest-adjusted amount just like someone you lent money to. A loan isn't magical boomerang money, it's a legally encumbered transfer, which can be done with dollars, bitcoins, tractors or anything else. In fact here's bitcoin lender right here: https://www.bitbond.net/ https://www.bitbond.net/
  - saalweachter 13y ago
    We actually have two money systems that are used on a day to day basis, cash and accounts. Bitcoins replace cash, but accounts are where the real magic of the economy happens. Lending -- as an institution, as opposed to as an individual -- is all about fractional reserve banking. The bank pools the money of its depositors and lends it out without restricting the ability of the depositors to access their money. This increases the money supply, and generally works OK because of a combination of (a) most people not needing most of their money most of the time and (b) a lot of transactions happen purely through the bank's internal ledger, without needing cash at all. If Alice writes a check to Bob, who immediately deposits it, the bank just updates their ledger and it doesn't matter whether they have cash on hand to cover it. There's nothing preventing you from operating a traditional fractional reserve bank using Bitcoin instead of cash, and it would work the exact same way as a traditional bank with exactly the same advantages and problems. But if you're writing checks for Bitcoins instead of dollars which end up being processed entirely through a bank's internal ledger instead of through the Bitcoin network's blockchain... why? How is that really Bitcoin?

jhh 13y ago

This comment would be more valuable if it contained any actual argument to support your hypotheses.

pjc50 13y ago

The new "trustless" systems don't seem to have solved the problem of transactions at all: bitcoin may be trustless, but if I'm purchasing something with them (such as USD) I need to have some sort of guarantee that it will arrive. There's an argument that we're entering a "low trust" society, and this is not a good thing: http://fistfulofeuros.net/afoe/high-trust-and-low-trust-societies-banks-and-europe/ http://fistfulofeuros.net/afoe/high-trust-and-low-trust-soci...

rabbyte 13y ago

You speak as though zero-trust crypto currencies have a page in the history book already under proven economic technology. Bitcoin does not exist in a vacuum. It exists as a tangible implementation on top of physical infrastructure and, in the case of Bitcoin, infrastructure failure has many faces. You can balk at that by claiming special foresight or acknowledge that even good ideas take time to mature before they're viable.

fauigerzigerk 13y ago

A trustless economy would be one without credit or debt. Can you explain how a society that doesn't live hand-to-mouth can exist without credit?

jnbiche 13y ago
You actually can't imagine this? Even in today's world, there are many cultures where debt is a rare resort for the unfortunate, not an acceptable status quo.
- pron 13y ago
  Do those cultures have iPads?
- fauigerzigerk 13y ago
  I imagined it and called it hand-to-mouth. It would be incredibly wasteful not to let others use resources you don't need at the moment in exchange for participating in their future proceeds. A large part of the resources in such a society would lie idle at all times. There would be no insurance either, so everyone would be forced to save tons of money to cover adverse events that don't happen to most of them most of the time. For instance, everyone would have to save up enough to rebuild their home in case it burns down. That amount would be thousands of times what is needed to rebuild the homes that actually do burn down.
  - philbarr 13y ago
    Why would there be no insurance? Surely we would just pool our money together in a big pot for when people have their houses burnt down? Kind of like we do now - except possibly without someone skimming a huge profit off the top.
    - fauigerzigerk 13y ago
      because that takes trust.
  - 13y ago

rayiner 13y ago

There are all sorts of people who have thought they lived at the end of history. To date all have been wrong.

mercer 13y ago

While I do believe increasing reliance on 'trustless economy'-enabling concepts, I can't help but wonder how feasible, and by extent how constructive, the idea of thinking in terms of a big paradigm shift is in this regard. Yes, bitcoin might be a nice pocket of 'trustless economy', but any practical use inevitably requires trust. There's the hardware, the OS/software, the ISP's, the exchanges, etc., that all, to a greater or lesser extend, require trust. Now Snowden clearly exposed that this trust is not deserved, and that's a problem. But while working on increasing this 'trustless economy' is a worthy goal, I can't help but feel that the best approach is to both work at increasing trust where it can't be avoided, and decrease the need for it where possible. But perhaps that's too defeatist. I'm following developments in this area with great interest!