6 ms·

Why Bitcoin Is and Isn't Like the Internet

50 points by andrenotgiant 12y ago

vivivi 12y ago
People need to start writing better title.
- ionwake 12y ago
  Poeple need to start writing better comments.
  - freedombeer 12y ago
    People need to check their speling.
    - deleted 12y ago
      [deleted]
    - ant6n 12y ago
      reddit
notahacker 12y ago
It isn't like the internet because electronic ledger technology and instant money transmission services already exist, and indeed are used by basically everyone that BTC is accessible to. If using the conventional banking system occasionally seems like mailing floppy disks to people, the hurdles to effortless universal payments are regulatory rather than technological "Access to news, music and videos in minutes from anywhere in the world with a computer modem" is a much more revolutionary pitch to the consumer than "but see, not only is blockchain technology better than those old mainframes your bank uses... it's decentralised... here's a CATO institute article.... yeah, and you can convert it back to dollars too"
- natrius 12y ago
  You're right in the sense that distributed ledgers are effectively an end run around regulations and trusted parties who we pay for centralized ledgers today. I think you're underestimating how important that is. Transaction fees are going to zero. Markets are moving to blockchains: securities markets, eBay-style markets for goods, Uber-style markets for services. Markets that have been regulated out of existence will now thrive. Drug markets get all the press, but prediction markets will change the world. (http://augur.net/ http://augur.net/) We currently pay banks to keep our money safe and to make it digital so we can swipe a card or enter some numbers to send money. Distributed ledgers combined with current and future software do that for free. Today, everyone's money has to be in a bank, so they get to keep almost all the profit from your money. In the near future, your money will be safe, digital, and controlled by you. When you decide to lend it to other people, you'll get paid more to lend your money out. Most countries have currencies that harm their economies and/or decrease in value rapidly. Distributed ledgers and the financial derivatives that can be built on top of them will give the whole world stable currency. This outcome isn't just an end run around regulations or trusted parties: it's a new thing that just wasn't possible before. We have better technology to build currencies now. It's definitely harder to pitch blockchains to consumers as revolutionary, but if you think about it for a while and still conclude that it's not going to have a huge impact on the world, I think you've missed something.
  - danbruc 12y ago
    Maybe there will be a successful cryptocurrency at some point but chances are (very close to) zero that it will be Bitcoin. Bitcoin is dying. EDIT: Read that [1] for my reasoning instead of blindly down voting opinions you don't like or at least point out where I am wrong. [1] https://news.ycombinator.com/item?id=8905475 https://news.ycombinator.com/item?id=8905475
    - patrickaljord 12y ago
      > Bitcoin is dying. http://bitcoinobituaries.com/ http://bitcoinobituaries.com/
rndn 12y ago
Since when does LinkedIn have articles?
- Animats 12y ago
  They have to have content to which they can attach ads. Apparently not enough people are willing to pay for their rather expensive premium memberships.
- freedombeer 12y ago
  When they realised the one trick pony was growing into a one trick nag complete with tedious and pompous TED-style tones.
- saryant 12y ago
  They bought Pulse a while ago.
etchalon 12y ago
Bitcoin is only like the internet in so far as it is something that can be done on computers.
runeks 12y ago
> The core Bitcoin developers are cypherpunks who do what they do because they don’t trust governments or the global banking system and are trying to build a distributed and autonomous system, one that is impervious to regulation and meddling by anyone at any time. I don't think that's an accurate description the the core Bitcoin developers. I know Gavin Andresen, Gregory Maxwell and Mike Hearn aren't like that, at least. There's really a lot of people in the Bitcoin community who are just interested in the technology.
wsxcde 12y ago
Why do people keep repeating this myth that Bitcoin is "efficient"? It's not, even hardcore bitcoiners like Peter Todd admit this. [1] And the most important point is, it cannot be, this is a mathematical fact underlying trustless systems based on the blockchain. If I give a $100 to you, a centralized entity like my bank just has to subtract 100 from a database which contains my my account balance and 100 to your account balance. And now the transaction is complete. In the case of bitcoin, you still have to do this, but you also need to run a proof-of-work competition among a whole bunch of miners. This proof-of-work competition has to cost significant money in comparison to the amounts being transacted on the network, because if it didn't, a 51% attack would become easy. Suppose for the sake of argument that the cost of a bitcoin transaction, by which I mean the money invested in mining equipment and cost of electricity of the the mining network, is $1. Assume for simplicity that there's only one transaction per block. Now suppose I'm a malicious actor who just paid you $1000 through the bitcoin network and would now like to execute a double-spend attack. Amassing more hashpower than the rest of the network and "overtaking" the longest chain after 6 confirmations is, on average, only going to cost me 7 * $1.01. In other words, this network with a cost per transaction of $1 is insecure for transacting amounts like $1000. The point is, the mining rewards + transaction fees on the btc network, which in turn are equal or slightly greater than the the cost per transaction block, have to be roughly similar to the amounts being transacted on the network for it to be secure. The TLDR is this: for a secure btc-like network, transaction cost ~ O(transaction amount). For a centralized ledger (bank): transaction cost ~ O(1). By no means can you call this "efficient." I'm not saying bitcoin is useless. It is a very clever trustless distributed ledger, but this trustlessness comes at a significant cost. https://twitter.com/petertoddbtc/status/513195104023359488 https://twitter.com/petertoddbtc/status/513195104023359488
- DoctorBit 12y ago
  The organization that administers the centralized ledger could be bribed with a value greater than the transaction amounts. One could say "yes, but regulators..." - then one has to add the cost of the regulators, courts, jails, etc... It would be interesting if it turned out that the technical cost of a safe bitcoin network was the same as the human cost for a centralized network. I'm going to think about this some more.
ArekDymalski 12y ago
"It feels a lot to me like when we were arguing over ethernet and token ring -- for the average user, it doesn’t really matter which we end up with as long as in the end it’s all interoperable. What’s different is that there is more at stake" These big debates seem to be so critically important only from perspective of today. I'm pretty sure that people arguing about technology are always convinced that their discussion and goals are crucial for the future. But from the perspective of time they aren't because the world and technology keep going forward and once strategical debate comes out as just another milestone.
aarondu 12y ago
To date, crypto currency remains a technology topic. If you want to change finance, first understand it. Take your corporate finance, capital market, macro economics classes, and understand government's role in currency and economy. Learn about the history of how commercial banking, investment banking, currency and payment worlds have evolved over the last 100 years. In short, figure out how bank and capital flows work before prescribing any solutions like Bitcoin, otherwise it will just prove the rightful criticism - that crypto may point to the right problem, but it in itself is just a technology looking for a problem to solve, and that even if it eventually finds its purpose, the chance that the problem will be small or a better, simpler solution comes by remains high. Financial system as it's built today is an equally sophisticated system vis-a-vis the digital world. Most of those system designers (from say Banking Act of 1933) have left this world. Tech-hackers are many, finance-hackers are fewer. Even fewer understands both. This is why if you ask the view on crypto, you will have very conflicting views between the tech and the finance worlds. And rest to be sured, we are dealing with a problem that's more finance (including financial regulatory) than tech. Almost anyone on hacker news understands how a full stack software system works. But do you understand how a financial "full stack" works? If you're interested in tackling the problem in a new way, we are hiring and welcome your input. HN sn = Gmail sn

50 points by andrenotgiant 12y ago

vivivi 12y ago

People need to start writing better title.

ionwake 12y ago
Poeple need to start writing better comments.
- freedombeer 12y ago
  People need to check their speling.
  - deleted 12y ago
    [deleted]
  - ant6n 12y ago
    reddit

notahacker 12y ago

It isn't like the internet because electronic ledger technology and instant money transmission services already exist, and indeed are used by basically everyone that BTC is accessible to. If using the conventional banking system occasionally seems like mailing floppy disks to people, the hurdles to effortless universal payments are regulatory rather than technological "Access to news, music and videos in minutes from anywhere in the world with a computer modem" is a much more revolutionary pitch to the consumer than "but see, not only is blockchain technology better than those old mainframes your bank uses... it's decentralised... here's a CATO institute article.... yeah, and you can convert it back to dollars too"

natrius 12y ago
You're right in the sense that distributed ledgers are effectively an end run around regulations and trusted parties who we pay for centralized ledgers today. I think you're underestimating how important that is. Transaction fees are going to zero. Markets are moving to blockchains: securities markets, eBay-style markets for goods, Uber-style markets for services. Markets that have been regulated out of existence will now thrive. Drug markets get all the press, but prediction markets will change the world. (http://augur.net/ http://augur.net/) We currently pay banks to keep our money safe and to make it digital so we can swipe a card or enter some numbers to send money. Distributed ledgers combined with current and future software do that for free. Today, everyone's money has to be in a bank, so they get to keep almost all the profit from your money. In the near future, your money will be safe, digital, and controlled by you. When you decide to lend it to other people, you'll get paid more to lend your money out. Most countries have currencies that harm their economies and/or decrease in value rapidly. Distributed ledgers and the financial derivatives that can be built on top of them will give the whole world stable currency. This outcome isn't just an end run around regulations or trusted parties: it's a new thing that just wasn't possible before. We have better technology to build currencies now. It's definitely harder to pitch blockchains to consumers as revolutionary, but if you think about it for a while and still conclude that it's not going to have a huge impact on the world, I think you've missed something.
- danbruc 12y ago
  Maybe there will be a successful cryptocurrency at some point but chances are (very close to) zero that it will be Bitcoin. Bitcoin is dying. EDIT: Read that [1] for my reasoning instead of blindly down voting opinions you don't like or at least point out where I am wrong. [1] https://news.ycombinator.com/item?id=8905475 https://news.ycombinator.com/item?id=8905475
  - patrickaljord 12y ago
    > Bitcoin is dying. http://bitcoinobituaries.com/ http://bitcoinobituaries.com/

rndn 12y ago

Since when does LinkedIn have articles?

Animats 12y ago
They have to have content to which they can attach ads. Apparently not enough people are willing to pay for their rather expensive premium memberships.
freedombeer 12y ago
When they realised the one trick pony was growing into a one trick nag complete with tedious and pompous TED-style tones.
saryant 12y ago
They bought Pulse a while ago.

etchalon 12y ago

Bitcoin is only like the internet in so far as it is something that can be done on computers.

runeks 12y ago

> The core Bitcoin developers are cypherpunks who do what they do because they don’t trust governments or the global banking system and are trying to build a distributed and autonomous system, one that is impervious to regulation and meddling by anyone at any time. I don't think that's an accurate description the the core Bitcoin developers. I know Gavin Andresen, Gregory Maxwell and Mike Hearn aren't like that, at least. There's really a lot of people in the Bitcoin community who are just interested in the technology.

wsxcde 12y ago

Why do people keep repeating this myth that Bitcoin is "efficient"? It's not, even hardcore bitcoiners like Peter Todd admit this. [1] And the most important point is, it cannot be, this is a mathematical fact underlying trustless systems based on the blockchain. If I give a $100 to you, a centralized entity like my bank just has to subtract 100 from a database which contains my my account balance and 100 to your account balance. And now the transaction is complete. In the case of bitcoin, you still have to do this, but you also need to run a proof-of-work competition among a whole bunch of miners. This proof-of-work competition has to cost significant money in comparison to the amounts being transacted on the network, because if it didn't, a 51% attack would become easy. Suppose for the sake of argument that the cost of a bitcoin transaction, by which I mean the money invested in mining equipment and cost of electricity of the the mining network, is $1. Assume for simplicity that there's only one transaction per block. Now suppose I'm a malicious actor who just paid you $1000 through the bitcoin network and would now like to execute a double-spend attack. Amassing more hashpower than the rest of the network and "overtaking" the longest chain after 6 confirmations is, on average, only going to cost me 7 * $1.01. In other words, this network with a cost per transaction of $1 is insecure for transacting amounts like $1000. The point is, the mining rewards + transaction fees on the btc network, which in turn are equal or slightly greater than the the cost per transaction block, have to be roughly similar to the amounts being transacted on the network for it to be secure. The TLDR is this: for a secure btc-like network, transaction cost ~ O(transaction amount). For a centralized ledger (bank): transaction cost ~ O(1). By no means can you call this "efficient." I'm not saying bitcoin is useless. It is a very clever trustless distributed ledger, but this trustlessness comes at a significant cost. https://twitter.com/petertoddbtc/status/513195104023359488 https://twitter.com/petertoddbtc/status/513195104023359488

DoctorBit 12y ago
The organization that administers the centralized ledger could be bribed with a value greater than the transaction amounts. One could say "yes, but regulators..." - then one has to add the cost of the regulators, courts, jails, etc... It would be interesting if it turned out that the technical cost of a safe bitcoin network was the same as the human cost for a centralized network. I'm going to think about this some more.

ArekDymalski 12y ago

"It feels a lot to me like when we were arguing over ethernet and token ring -- for the average user, it doesn’t really matter which we end up with as long as in the end it’s all interoperable. What’s different is that there is more at stake" These big debates seem to be so critically important only from perspective of today. I'm pretty sure that people arguing about technology are always convinced that their discussion and goals are crucial for the future. But from the perspective of time they aren't because the world and technology keep going forward and once strategical debate comes out as just another milestone.

aarondu 12y ago

To date, crypto currency remains a technology topic. If you want to change finance, first understand it. Take your corporate finance, capital market, macro economics classes, and understand government's role in currency and economy. Learn about the history of how commercial banking, investment banking, currency and payment worlds have evolved over the last 100 years. In short, figure out how bank and capital flows work before prescribing any solutions like Bitcoin, otherwise it will just prove the rightful criticism - that crypto may point to the right problem, but it in itself is just a technology looking for a problem to solve, and that even if it eventually finds its purpose, the chance that the problem will be small or a better, simpler solution comes by remains high. Financial system as it's built today is an equally sophisticated system vis-a-vis the digital world. Most of those system designers (from say Banking Act of 1933) have left this world. Tech-hackers are many, finance-hackers are fewer. Even fewer understands both. This is why if you ask the view on crypto, you will have very conflicting views between the tech and the finance worlds. And rest to be sured, we are dealing with a problem that's more finance (including financial regulatory) than tech. Almost anyone on hacker news understands how a full stack software system works. But do you understand how a financial "full stack" works? If you're interested in tackling the problem in a new way, we are hiring and welcome your input. HN sn = Gmail sn