Honestly, to me, forking over the scaling now wouldn't really be a breaking of immutability, because "limited blocks" is maybe not a clearly defined intend which was obvious to people starting to use bitcoin.  The block size was until recently nothing else but a technicality.  However, from the moment that the finite block size starts to have economic impact, and people start adapting to it (the scarceness of room on the block can be an economic incentive), then of course, this finite block size has become part of the "bitcoin paradigm", and changing it then would mean a break of immutability. 

To me, immutability is not some technicality, but a matter of "respect of the original intend of the contract that underlies the cryptocurrency at hand".  And note that this contract is NOT a smart contract, but one of intend.  This is why "hard forking", which is "breaking the smart contract" of the crypto currency, is NOT a break of immutability if that hard fork only touches upon technical aspects, and doesn't touch the economic paradigm of the crypto.  The block size was long time a technical matter.   When it starts to play an economic role (such as fee market etc...) then the block size becomes part of the paradigm, and modifying it becomes "breaking immutability" (like changing the emission rate of bitcoin would be).


Well, ethereum can be used as a coin exactly as bitcoin is, it is faster, it has not the same block size limitations, AND one can write buggy smart contracts on it  


That framework is not faulty at all.   If *the main* reason to buy bitcoin is because one "expects an exponential rise with greater adoption", meaning, one expects more and more people to buy bitcoin FOR EXACTLY THE SAME REASON, namely, an exponential rise and one calls the influx of all these people expecting that, "greater adoption", then we have the schoolbook illustration of "greater fool theory".

If on the other hand, you expect greater adoption because people are going to USE IT A LOT as a currency, NOT buying it mainly because they expect a price rise, but because of this greater adoption, there is a price rise, then you are right.

However, face it.  Answer honestly for yourself the following question:

What is the main reason for most people buying/holding bitcoin ?

A) they buy/hold it because the want to use it as a currency/store of value, and *they are not motivated by an expectation of rise of price*.

B) most people buying/holding bitcoin buy it/hold it because *they expect a rise of price*.

If the answer is A, you are right, we are NOT in the "greater fool" paradigm ; the price rise is just a reflection of larger adoption.  However, if the answer is B, then we are in exactly the defining property of a "greater fool theory" situation.

If "most people buying/holding bitcoin" are essentially motivated to do so because they expect a rise of the price, and if most "adoption" comes from people motivated by the expectation of a greater price, we are having the schoolbook example of "greater fool theory".  It is only when the MAIN DEMAND, and when the MAIN GROWTH has nothing to do with an expected price rise, that one is NOT in "greater fool theory".

Now, ask yourself honestly, whether that is true.  Ask yourself whether, with bitcoin, MOST new people getting into bitcoin do this for OTHER reasons than an expectation of price rise.  If your answer is that most people get into bitcoin NOT because they expect the price to rise, THEN you are right and this is not "greater fool theory".   Really ?

But, mind you, greater fool theory works extremely well to get rich, as long as there are enough greater fools !  I'm not saying that it is not working !



 This "greater fool theory" thing can work positively for decades.  By the time 3/4 of the world population is gambling on bitcoin, expecting to find another 3/4 of the world population to sell their coins at higher price, several generations of bitcoin holders will have become rich.  It is that last 3/4 - a fraction that will be the last of great fools, and end up being bag holders of something they bought (like everyone else before them) to make a benefit, and see that they are just bag holders.   But this may take decades.  Greater fool theory works, as long as you are not the last (and largest) generation.

I think that the fact that ethereum and monero are/were seen as potential contenders for the crypto stardom, is that both of them address a shortcoming of bitcoin.  Ethereum addresses the limitation in bitcoin's potential to do smart contracts ; and monero addresses the lack of privacy of bitcoin.  Whether exactly these two coins will make it, I don't know, but what is for sure, is that they both address two serious shortcomings of bitcoin itself.  My idea is that sooner or later, these issues will become so important that another system solving them will become dominant.  In my idea, the shortcoming of privacy is more important than the idea of smart contract ; I would even say that smart contracts need even more privacy than a simple currency, and that a "monero" version of ethereum is actually needed.  I think that hawk is such a project.

That said, we are getting carried away here, because we are talking as if crypto was really used a lot.  It is not.  Only a very tiny fraction of bitcoin's market cap comes from actual usage as a currency.  For altcoins it is probably even less.  Of ethereum, I don't really know of any real usage that is not itself related to anything gambling, speculating, or betting like.   Monero recently got some usage on dark markets, but that must be a tiny fraction of the monero market cap.

As all properties of the behaviour of cryptocurrencies only matter for people using them for real, we shouldn't really be surprised that - given the fact that they are not used much - these properties do not matter much.

These are, to me, two aspects of the SAME concept of immutability, indeed.  After all, a hard fork, or the "internal block chain consensus", are almost identical processes.

After all, the "internal consensus" is agreeing which blocks are valid blocks.  This agreement depends just as well on the rules one wants to apply to decide whether they are valid in the first place, as to the application of those rules to the chain and the blocks themselves.   If everybody were to write their own node software, and implement their own vision on their own interpretation of the rules they want to see, we would immediately recognize that the internal and external forking consensus is in fact the same thing.  It is only because we all just use the "dev version" of the software that it seems that the internal consensus is what happens when we run the dev version, and "external consensus" is when we decide to download and install or not, a new version.

Suppose that different miners publish different blocks with different transactions in them.  If I build (or accept) one block over another, I'm applying "internal consensus" according to certain rules ; but according to whether I change these rules or not, I'm applying "external consensus".  If you think about it, this is in fact the same principle.  The best way to see that is if I wouldn't use software, but if I would "check the blocks I prefer" by hand.    Then my preferences, and my way of selecting (and constructing) blocks is MY way, and if I find consensus over that, there is no clear distinction any more between "internal" and "external". (of course this is practically not possible because of the computational load it represents, but as gedanken experiment, you see the point I hope).

Eh, yes, of course, if you understand by "hard forks", hard forks that modify more than just technicalities, but modify the original intend.  That's indeed exactly what I mean. 

For instance, a bitcoin hard fork that changes all integer representations from little-endian to big endian, is a hard fork, but doesn't modify the original intend of the bitcoin protocol.  It is a technical hard fork, but not a modification of immutability.  So that's OK.  But, say, changing the emission rate of bitcoin, is a change in the intend of the bitcoin protocol, and yes, that is a failure of the immutable block chain system.

It is almost tautological: if there is mutability, then logically, the immutable system failed, no ?

I think that the cryptography in zcash is very interesting.  My trouble is with the way the ZCASH team is putting it up.  Maybe ZCASH will be some kind of bytecoin: brilliant crypto but badly put in music, with a too scammy or doubtful way of issuing the coin.  I'm NOT saying that the zcash team are scammers: they are open about their post-premine, and the risky thing of their small-club trusted setup ; they are not lying, they are openly saying it ; also, the "corporate connections" are not what you would expect from an anarchist tool.    But, like with bytecoin, the crypto is probably brilliant.  But badly put into work.
What kills ZCASH to me, is the fact that anonymous transactions are optional.  That's a no-go, a non-sense.
But I'm happy that zcash sees the daylight, as this will allow for real-world testing of ZKp crypto.  I see it as a proof of concept prototype.

I have no idea about the technical part of Gulden.  When I heard of it, it was pretty clear to me that this was a name-trick.  The Gulden was the former fiat money of The Netherlands, and was in general considered a strong currency (like the Deutsch Mark).  It has been replaced by the Euro, and since many years, the Dutch are becoming more and more Euro-critical.  So a "digital version" of their beloved former Gulden may have a nationalistic and nostalgic appeal.

My impression was that this was the main "value proposition" of the Gulden: to seduce nostaligics into it, as there are quite a bit of them.  But it may be that the Gulden has also really something to offer, apart from sentiment ; I don't know.  But I would be seriously wary about the fact that the name has been chosen to play on a sentimental chord.  

   I like that one.


This is in fact not fair as a comment, because the whole idea is that a smart contract doesn't need any legal enforcing, as it enforces it *automatically*.  In fact, what is needed, is a protection AGAINST legal interference.  This is why ethereum has a problem being a transparent block chain, and we have seen that problem before our very eyes with the hard fork: the whole concept of smart contract FAILED there, *because* some self-appointed judges (not even official state affiliated ones) RULED that a smart contract's outcome were not to be.

They could do this, because the block chain is traceable, and one could find the "guilty one" of using the contract according to its terms.  If the ethereum block chain would have been totally obfuscated, then the hard fork wouldn't have been possible and the smart contract would have been unstoppable.

If a smart contract IS unstoppable, and the actions of the contractors are obfuscated, then a smart contract is REALLY a smart contract of which 1) no legal enforcing is needed and 2) no legal undoing is possible.

In that case, and only in that case, we truly have a smart contract over which no discussion, no ruling, no vote can, will or is needed to happen.

I could think of a smart contract like this one: suppose that I want a security audit of my computing system.  I can write out a smart contract that pays anyone who can produce the hash of a document I hide somewhere on my computing system.  If anyone can break into my system and get that document, then that person can get paid.  And not otherwise.

That would be a typical application of a (small) smart contract.  (true, I could do it with bitcoin too, by hiding the secret key of a bitcoin wallet somewhere, so my example is too simple).

No "legal dispute" can happen over that contract.  I cannot "sue" any person that used the contract.  The contractor cannot sue me because I didn't put the file online and just set up a honeypot to find crackers.  The contract is what it is, and the legal system cannot interfere with it, nor to "impose" it, nor to "destroy" it.

The point I wanted to make is that what keeps ETH alive (while it shouldn't), is something bitcoin is also undergoing: it is MAINLY a betting token in a greater fool system.  The things that *should* have made ETH crumble don't count for betting tokens, and that's why it is still there, and what I wanted to outline, is that bitcoin is *also* mainly used as a betting token.
But there are differences between ETH and bitcoin too, and maybe I wasn't clear about that.  I guess that the main difference is that bitcoin is still an immutable block chain in its spirit, while ETH isn't - that should have killed it, except as a betting token.  The "social structure" of bitcoin and of ethereum are different.  They both suffer from imperfections: bitcoin's simple ASIC based mining algorithm makes for mining centralization ; ethereum's initial emission scheme makes for stake holders' centralization with very strong influence by the initial dev team.  It has now turned out that this last aspect is fatal for immutability, while the first aspect hasn't yet shown this problem.  But bitcoin has probably a much larger, and diversified "community" than ethereum, which may be the ultimate protection against mutability.

And although ethereum can do everything bitcoin can, but not the other way around, bitcoin is actually also really used, while I haven't yet seen the slightest real world application of ethereum.   My point was, though, that even this usage of bitcoin is small as compared to the "betting token" aspect of bitcoin.

However, even in the "betting token" sphere, there is probably a difference between ethereum and bitcoin, and that is the time constant of expectation of finding someone who will pay more: that time constant with bitcoin is very long (there are many hodlers) ; I don't know if there are many ethereum hodlers, willing to hold ethereum for years even if the price plummets "temporarily".

And then, bitcoin has something that no altcoin has and never will have: bitcoin was the first.

I wouldn't call it necessarily "manipulation".   This is the behaviour of pure "greater fool" speculation: buying at price X with the hope of finding an imbecile who will buy at price 2X (because he thinks he'll find an ever greater imbecile that will buy at 4X who thinks he'll find ...).  When the belief in 2X stagnates, obviously demand plummets, and the price with it.

But, as you say, this is the big sadness I'm also having about crypto: instead of having a market cap mainly sustained by usage (by the demand to *use* the bloody thing), we have market caps that are mainly sustained by "greater fool" demand.  That is always extremely volatile.  In fact, that demand cannot exist with a stable price and a stable price expectation: there is no hope for a greater fool, and there is no fear (nor of uncertainty and doubt, nor of missing out).  While a stable price is needed for usage.

Of course, when usage increases, price would rise too, that follows from Fisher's formula.  But it would be a solid price increase, sustained by more demand for its *usage*, and hence essentially independent of the beliefs of future price variation (which would be more of an unavoidable nuisance of increased popularity than anything else).

Indeed, I give up.

Even though not explicitly, it is related.  ETH *should have been game over* if it were something that were actually used.  But ETH is not used, it is a betting token.  Like most crypto.  Betting tokens don't need to have much solid properties.  Only the belief that you will find someone wanting to pay more for it, in the illusion that he will find an even greater fool paying still more.  Whether the transactions are reversible or not, whether the block chain functions or not, or whether it even exists, doesn't really matter.  Only the belief that you will find someone more gullible and more greedy than you.  And the world is big.  The belief can be justified.  In that case, you win the bet. 

Anonymity.  Bitcoin is way, way, way too transparent.  Monero, zcash, you name it, but these are better systems in principle, because they allow privacy and sufficient anonymity to make dragnetting difficult.
There are other problems with bitcoin, like the finite money supply, and the bumpy halvings.   And finally, the too simple PoW, which allowed for asics, and brings centralization and with it, the potential loss of immutability. But it was a very good "first go".   It got many things right too ; amazingly many.


This is the other problematic potential failure of bitcoin and crypto in general, in the same way that gold was misused.   As the principal task of governments is to extort value from people, the trick central banks usually play with other monetary assets, especially if they are in short supply, is the following:  "buy high, sell low".  That can sound stupid, but it isn't.  "buy high, sell low" is a bad idea if you cannot print money.  If you can print money, then it doesn't cost you anything to buy high, and to sell low.  What you obtain, is a higher volatility of the asset, and hence a lower useful value as store of value, and as such, a higher rate of adhesion to your fiat, while pumping true value from the people to the financial sector via inflation.  It is a way to pump fiat in the economy, and to render, at the same time, the other store of value volatile.
People have been producing lots of value to obtain gold when it is high, and then turn it in to the central bank because it is buying up gold, pumping its price higher and higher.  When people have stored a lot of value in that gold, then the central banks start selling gold, crashing its price.  People having put aside a lot of value in gold simply lose that value.  It makes gold a less reliable store of value.  Because the state-finance PTB don't want you to have a store of value over which they don't have control.   Bitcoin can undergo exactly the same manipulation.


If you use a monetary system as a currency, there is a natural demand for that currency that develops, and that sets a price.   This is what is given by Fisher's formula.   Whether the monetary asset is used as a short-term currency, or a longer-term store of value, doesn't really matter, but it is true that a longer-term store of value requires (and produces) a higher market cap than a short term currency.  But in these cases, as the demand follows from a rational "competitive edge" of this store of value over another one, one can think that this demand is robust, and can increase when more people adopt it.  

In other words, its market cap will rise because of its increased usage as a store of value, and this is a solid, fundamental market cap.  The only way to make it fall, is if people suddenly don't want to use bitcoin any more as a store of value or currency, because it has lost its competitive edge (a better crypto comes along, fiat improves in quality, ....).

However, if the main demand is because of an expectation of a rise in value and "making benefit", then we are in the school example of "greater fool theory".  Sooner or later, one will run out of greater fools, and the price rise will come to a halt.  At that point, the demand will drop, and hence the market cap will drop.  If people were using bitcoin, not because it had a competitive edge as a store of value, but rather because of "making benefit", then at a certain point, they will realize they won't get any.  At that point, there's no stopping to the decrease in value.  The time scale on which this happens will depend on the time scale over which people were expecting to make benefit.  If they are thinking that it will take 5 years, then it will take a few times 5 years before the price drops after peaking.  If they think that it will take 10 years, then it may take several decades after peaking.

But the conclusion is unavoidable: if the main demand for bitcoin comes from the desire for "making benefit", sooner or later, this thing will come crashing down (although the crash will take several times the "expectation time" after peaking).


Indeed, and this is why it is such a pity that 90% or more of the market cap is made up by speculation.  It would be much better is the market cap of bitcoin were 10 times smaller, and essentially made up of its usage.  It would stay much, much more under the radar than now, it would have a much more robust market cap, much less volatility, waste less on mining, and have a higher competitive edge.


I never said that, at all.  I said that all SOURCE of value is consumption, whether that is material or immaterial (like services).  That means that something can only obtain value if it is directly consumed, or if in one way or another, it improves consumption (and/or production of the consumed goods).   This "indirect" can be very indirect, but it has to lead to improved production and/or consumption.  A monetary system has value if it helps improving production and/or consumption.
For instance, money on the dark net markets improves consumption of illicit goods, and also helps in its distribution and hence in its production.  In as much as fiat is delicate to use there, there is real value if a system can serve as a reliable monetary system that is lacking.  And the consumption of illicit goods brings a lot of satisfaction, and hence has a lot of value: the source of all value in dark net markets.
But transactions with everything legal and all taxes and so on, I have difficulties seeing the value of crypto over credit card systems.   I can just as well buy something with VISA than with bitcoin, and in fact, in most cases, I have more protection.  The fees are negligible compared to most taxes.  So it is difficult to have a competitive edge over something like VISA.  There may be a small one, but it will not be huge.


Well, the use as an immutable ledger represents an infinitesimal part of the market cap of bitcoin.  You can estimate that by the transaction volume of bitcoin that is related to "registering something on the ledger".  That is infinitesimal to the overall bitcoin volume.


Well, if people are willing to pay $600 for it, because they count on selling it for $1200, and if people are willing to pay $1200 for it because they count on selling it for $2400, and so on, sooner or later, there are going to be people that are disappointed.  If the majority of people wanting to pay $600 for it, do this because they want to sell it at $1200, and if the majority of people .... then the majority of people buying bitcoin are going to be immensely disappointed at a certain point in time.  And when people buy something and are disappointed, demand plummets like a stone.  That's the point.

If people are willing to pay $600 for it, because they find it the best store of value they can find, then when they sell it again for $600 7 years from now, they will be satisfied, and demand will be robust.  If people are willing to pay $600 for it because they need bitcoin to buy something tomorrow, then the demand will be solid, and the price robust.

See what I mean ?  The first case (greater fool theory) is not sustainable.  the second all the more.


I think the price can still rise, because there is still a sea of greater fools.  On the other hand, the blocks seem to start to be "full", so the system is near full load ; some pony tricks can give us a small factor, but then it will be full again.  But one day, it will not rise any more.  So much is sure.

I'm not interested in investing.  I'm interested in liberty.  Bitcoin could have helped, but that seems to be more and more remote now.


So if bitcoin is now at $600, it means that one gives it, say, 10% chance to be at $6000, and 90% chance to be at $0 in the future.  Or one gives it 100% chance to remain at $600.  Or one gives it 50% chance to be at $1200, and 50% chance to be at $0.  I'm oversimplifying, because one has to take into account risk aversion, and risk-free interest of course.
But that's the idea.


Ok, fair enough


If they create a lot of utility, they aren't so bad, are they

There is no difference.  Calling things malicious or not is a moral verdict, but doesn't change a thing.  I call the ETH fork malicious, but others will call it "fair play consensus".  It doesn't change the fact that it got implemented.


But that's the whole (sociological/game-theoretical) essence of the block chain invention: that it is SOCIOLOGICALLY and GAME-THEORETICALLY not possible to find a consensus, other than the immutable one.

That was, in my idea, the fundamental assumption of a block chain: that it is sociologically not feasible to find any majority collusion over anything else than the original rules, and the correct history recorded until then ; that the advantages that it can bring by breaking that, would never reach a majority in a very diverse and large set of actors, and that never ever, a majority would find an advantage in doing anything else but keeping with the original rules, and keeping with the correct history (in other words, that no majority can be found that finds an advantage in a *specific* deviation from immutability, although almost every actor would find an advantage in a *different* deviation from immutability).  In other words, that immutability is the least bad solution for the majority.


Game theory assumes of course that every actor optimizes its gains ; the idea is that there is no possibility that every *specific* deviation of immutability would never profit a majority of CPU power more than keeping immutability.


There is no "job" and there is no "community".  There is only a set of people looking for maximal gain.  The idea of a block chain is that those people are constrained, against their own wishes, to keep immutability.  Call immutability a Nash equilibrium of the game-theoretic analysis of a block chain setup.


You could put it that way.  But you could also say that during the period of immutability, people have had the opportunity to use it as an immutable system.  Those that crossed the "border of immutability" had bad luck, like people keeping stock of a bankrupt company.

It is somewhat similar.  The stock of a company reflects normally the diminished cash flow of future dividend.  As long as the company is live, the value of its stock is the market's best projection of its future cash flow.  So if you buy stock, and you sell that stock later, while the company was running all right, you have been using the "stock system" to your likings.  When the company goes broke, the stock drops to 0.  Those holding the stock at that moment, have bad luck.

Same for a block chain of which the immutability is broken.  As long as it wasn't broken, it was running like a company stock, and you could buy it, get dividend, and then sell it again.  Once immutability is broken, it is like a company that went bankrupt.  (with ETH, the funny thing is that people still trade the stock of a bankrupt company as a betting token...).

The idea is that the chain doesn't break, like the idea is that a company doesn't go bankrupt.  But things can fail.


As I told you already, this is my own analysis.  I don't consider Satoshi as the final prophet of truth, although he did bring a lot of good ideas in.  So I would think that in as much as Satoshi understood the system he was building, he had to assume immutability (in INTEND, not in technicalities !).  I'm somehow convinced that he intended that for instance, 21 million bitcoin was to be something immutable.  He talked about irreversible transactions.  For someone assuming mutability, that would be strange statements, no ?
But in as much as he was confused about that (I don't think so), that's no reason to remain confused about it.
Einstein invented General Relativity, but people have improved upon it even if Einstein didn't understand certain aspects of his own theory in the details later scientists understood it. 



Of course it does !  It is the essence !

I do value bitcoin a lot.  I think it is a great invention in the century-long battle for freedom.  It lacks a few properties, but that is understandable as it was the "first go".  

However, I think you *over value* bitcoin too much and (hence my pointing to "religious sensibilities") it seems that you react almost allergically when you think that someone is downtalking bitcoin.  I'm not.  I'm a bitcoin fan.  But I don't like what is happening.  I'm just saying that the immense amount of speculation is KILLING the real value of bitcoin.

In as much as that immense amount of speculation is an unavoidable phenomenon when something like bitcoin sees the daylight, then unfortunately I have to say that this would indicate that, despite its promises, it is a failed project.  But the hope is still that this speculative effect will go away ; although I don't like it at all and I'm starting to fear that it is killing the project all together.

As anything, the value of something is what it brings you in the end, as enjoyment - and economically, that means, as goods and services you can consume.


This is where we fundamentally differ in opinion.  THIS is the only thing that really brings value.  The speculative aspect doesn't bring value, and harms the non-speculative part.  The speculative aspect is NOT the value of it.  The only little bit of value that speculation brings, is fluidity in the market and price information correction ON THE CONDITION that it doesn't dominate the price.  And this is what goes wrong: it does dominate the price.

Each time an asset is dominated by speculation, its real usage suffers, and I think that in the case of bitcoin, that ratio is so unhealthy that it might outright kill it.


The sole source of value of something is the "joy of consumption" it brings to people, and this value, as compared to the value of other things, is what makes the market price, because of the demand that is generated for it and the limited offer that it suffers from.  But the effect can of course be very indirect.  A glass  of champagne has direct value, and hence I'm willing to pay a market price for it, because of the joy it brings me by drinking it, or the joy I can offer someone I like by giving it to him/her.
A hammer has value, because I can use it to make stuff I enjoy.   This is a capital good.  I can make stuff other people enjoy, to trade it for stuff I enjoy.  And so on.  But *in the end* value, and hence market price, comes from the improvement of production of goods and services the thing that has a price allows for.  The source of all value, and hence of market price, comes from production, or improvement of production, or improved consumption of goods and services.  There is no other source of value.

A monetary system has great value, because it brings several improvements in production, and improvements in consumption, to the economy: the indirection allows you to split multi-party trades into 2 by 2 trades, separated in distance and in time.  If I have apples, you have oranges, and Joe has bananas, and I want oranges, you want bananas, and Joe wants apples, then instead of having to come together the 3 of us, at the same moment, to do our trade with 3 parties, we can do this 2 by 2, and at different moments in time.  THIS is the principal value that a monetary system brings us: making multi party instantaneous trading into 2-2 exchanges separated in time and distance.  The essential function of such a system is that it can TRANSPORT market value in time and space.  
It is similar to the transport of goods, in the following sense.  Goods can be made easier at some locations and at certain moments, but they are best consumed at other places and at other times.  As such, storing goods (transport in time) and moving goods (transport in time) improves the quality of production and consumption.  The system that allows for transport in time, and transport in space, brings as a value, the improvement in quality of production and consumption.  

But nobody in his right mind is going to say that the value of a warehouse (the construction) equals the value of the goods stored in it.  Yes, it has some value because production and consumption has improved somewhat, but it is not the TOTAL value of the goods inside.   That's absurd.  In the same way, the value of a truck is there, because the existence and usage of a truck allows for a somewhat better consumption and production.  But the value of the truck is not the TOTAL value of what it transports of course.

And in the same way, the value of a monetary system is NOT equal to the  market value it transports in time, although it does have some value, because it improves consumption and production somewhat.

Ideally, the market value of a transport system (the value that is created by the bringing into existence of the system) is of the order of the INCREASE in value creation in production and consumption it allows to establish.  If similar systems exist, then its market value will reside in the IMPROVEMENT over other systems that it brings to consumption and production.  This is what I called "the competitive edge it brings".

Compare it to transport of goods.  If trains exist, and it costs (in consumed electricity, usage of material, personnel salaries, ....), say, $1000,- to transport goods from the production site to the consumption site with a train, and now a truck exists, which can not only do that for only $700, but also improves the consumption experience with $100, and improves the production by $200, then the VALUE of the "truck system" is $300 + $100 + $200 = $600 in this case: it has consumed less resources ($300 less), has allowed a better consumption ($100 more), and has improved the production ($200 worth).  But if this applies to goods that cost themselves, say, $7000,-, then the value of the truck system is NOT $7000,-  

It HAS some value (here $600, the competitive edge it has allowed), but the value is not equal to what it transports of course.


But I agree with you.  Only, that value creation is not the market cap.  It is much, much less.
But it is not zero.


That is exactly my point.  Bitcoin has *potentially* a huge value, in usage as a currency, and in usage as a longer term store of value.  But *for the moment* that potential is not used much.  If the bitcoin competitive edge over other financial systems is, say, an improvement of 5% (imagine that bitcoin is "free transport of value" and others ask a fee of 5%, then bitcoin brings a competitive edge of 5% of the value it transports), and 10% of its market cap is used that way, as a currency, then the VALUE of the bitcoin system is 0.5% of its market cap.

My point is that this value proposition is HARMED by the dominant speculation, because this brings in volatility (which harms the competitive edge bitcoin can bring over other financial systems), it brings higher mining costs (because the high market cap goes with high mining difficulty).  It might even render bitcoin non-competitive and kill ALL of its competitive edge.

That's my rant about dominant speculation: it KILLS potentially the value of the bitcoin system.


Ok, I hope that with what I said above, you can more clearly see what I mean.   I estimate the current VALUE of the bitcoin system, as the improvement of goods and services it brings to people, as much less than a percent of its market cap, and maybe zero.   I hope I made clear why I think that bitcoin DOES have the potential to have value, and why excessive speculation kills it.


The point is that you have to establish "zero sum" at the end of the game.  In a million years if you wish so.  Sooner or later, bitcoin will be at $0, whether next year, or 7000 years from now.

But you are right that the bitcoin system DOES produce some value during that time (like a company does), but ONLY when it helps improve consumption and production.  Speculation doesn't do that.  Only "transport of value" with a competitive edge over other financial systems helps improve consumption and production.   As I outlined earlier, the value that is actually produced by the bitcoin system (the improvement it brings to consumption and production over what exists already for doing so, like VISA and gold) is very small, and maybe even zero, exactly because of the speculative dominance.

This is why I don't like that speculative dominance.

You mean, don't feed him ? 

Ok, then, there was no misunderstanding on my part, and you *really* are totally confused about these issues.

The "value proposition" of a crypto currency is absolutely NOT that one can check a mathematical triviality on a derived quantity (namely balances), not more so than the value proposition of a ruler is NOT that one can check Pythagoras' theorem with it.

The only thing that needs to be checked for real in a crypto, is the validity of the transaction.  That criterium of validity contains amongst others, that at the same time that new spending rights are granted (the outputs), old spending rights of the same amount are destroyed ; OR new spending rights are created on the basis of an accepted, legit way of coin creation.

We are talking *inside* the transaction here for checking the balance.  On the outside of the transaction, one has to check that the spent spending rights were not double spent on the whole chain.

And this can only be checked once, there is no double check possible.  As well in bitcoin as in monero.  In bitcoin, you make the sum of the inputs by looking up the corresponding outputs and you check it with the sum of the newly created unspend outputs.  You can only do this once ; there is NO OTHER WAY to check this sum.  Even if you make the balance of all "unspend outputs", you are mathematically doing exactly the same.

If you want to check that A + B = C + D, you can check it directly (inside the transaction), or you can check that:

X + Y + Z + A + B = X + Y + Z + C + D when doing your "balance check".  But in the end, you've been using the same data to do that check, so it is not an independent check.

In bitcoin it is checked "naively and explicitly", in monero, it is checked with cryptographic signatures.  The sum is checked (in actual monero, that sum itself is explicitly checked, in CT, it will also be through a cryptographic signature).  And the "no double spend" is checked: in bitcoin, by looking explicitly whether that input occurs somewhere in another transaction, in monero, whether the unique signature has already been used in another transaction.

At no point, you can independently double check this ; if you do so, you are just checking *a theorem*.

In bitcoin, at no point, there is a way to "double check" that either.

If you are given a transaction, and if you check "the sum of all bitcoin before", and the "sum of all bitcoin after" OR you check the balance within the transaction, that is THE SAME OPERATION.

You've only done A+B = C+D versus  X+Y+Z+A+B = X+Y+Z+C+D

It is a mathematical property that both are equivalent.  So you don't check anything "more".  There is simply no way to have a "right" transaction, and have your check not work out, and in your checking, you USE the same numbers, from the same data.  If there is a transaction (spending 5 and spending 6 to output 11), when you check the transaction and you see that 5 + 6 = 11, that's all you can check.  If you do the check of all bitcoin balances, in the end, you will apply a -5 and a -6 to some balances (from the same data, of the same transaction), and you will add 11 somewhere, and Lo and Behold !  It will come out the same.  EVEN if there's a double spend somewhere, I may add.

You haven't checked anything more than by just looking at 5 + 6 = 11.  That 5, that 6 and that 11 come from the same piece of data.

The point is that mathematics works.  The point is that *the same check* of the validity is done by hundreds or thousands of independent nodes. *that* is the real double check.  There is no mistake in the mathematics.  There is no need (and no possibility) for an "independent check", nor in bitcoin, nor in monero.

I can only discuss on the basis of argumentation.  If you just announce that I'm oversimplifying, missing issues and so on, without a logically constructed argument on the basis of mutually accepted starting points, then there's not much to discuss.  I tried to outline all the elements in my argumentation of why "investing" in a crypto currency is nothing else but betting in a zero-sum game, which is different from *using* a crypto currency as a store of value, and which is different from investing in the stock market.

"greater fool theory" applies each time there is a zero-sum game in which people engage so vehemently to "make profit" (sell more expensively than they buy) that the price is determined by the demand by these actors.  From black tulips, to south sea bonds to any other such situation.  In other words, when these conditions are present:

1) there is no value creation as such, or in any case much less than the market price increase
2) the item is a near-collectible

1 + 2 imply essentially a zero-sum game.

3) people mainly demand the asset because they expect it to be sold at a higher price (looking for a greater fool).

we have the essential behaviour that builds up a speculative bubble.

This usually collapses, because when one runs out of sufficient "greater fools", the price does not increase any more.  Contrary to a store of value, people are NOT interested in using the asset as a store of value, but just as a generator of benefit ; if they lose faith in higher price, the demand plummets.   When the demand plummets, two things can happen: people can hold, hoping for a rise again, or people can panic-sell.   If they panic-sell, we have the bubble crashing down.  If they hold, the asset can turn into a store of value, of which, however, the price will slowly deflate, because the overall demand for holding it as a store of value is way lower than the earlier demand for making profits.  



I know that this is an argument by bitcoin proponents, but it is false.  There is no value in "paradigm shift" as such.  The only value comes ultimately from the increase in goods and services produced that comes from it ; so from the competitive edge in the production of goods and services.  In as much as bitcoin would allow for a more fluid production of goods and services, because payments would be better, easier and so on, I agree that the bitcoin system creates value.  But abstract concepts such as "paradigm shift" and "immutable ledger" are of not much value, apart for a few geeks (like myself) enjoying these ideas.  
Value comes from the competitive edge in the production of goods and services, because, as you also point out, in the end, all value comes from the personal enjoyment of the consumption of goods and services.


A zero sum game is a game-theoretic notion, where the sum of the gains by certain actors is equal to the losses of the other actors (so that the total algebraic sum of all gains is zero - hence the name).  The balance has to be made "at the end of the game".

A system that shifts tokens around in return for value (here, measured in $) is obviously a zero-sum game.  Every monetary system is supposed to be a zero sum game.

You have a zero-sum game whenever there is no state in which ALL participants got out more than they started with.  

Exchanging goods is NOT a zero sum game.  If I exchange an apple for an orange, that is because initially I have an apple, and you have an orange, and I value an orange more than an apple, while you value an apple more than an orange.  If we exchange my apple and your orange, we BOTH win in value.  I have something I value more, and you have something you value more.  We are both winners, this is not zero-sum.

Producing goods is not a zero sum game.  If I have flower and an oven, and I bake bread, then I have now a bread, which I value more than the flower, and my free time.  That's why I made the bread in the first place.

However, exchanging tokens for dollars and dollars for tokens, when all is said and done, has ONLY resulted in shifting dollars from one to another.  The total sum of dollars in equals the total sum of dollars out.  If some got more out of it, others must have put in more than they got out.  That's zero sum.  And there is no "I value this dollar more than that dollar".   The day that bitcoin is $0, which is "at the end of the game", all dollars "in" are equal to all dollars "out".   So it is evidently a zero-sum game.



Sure.  What I meant was: contrary to, say, the distribution of physical coins, once it is done, bitcoin needs to spend resources to keep running.  So it is not exactly zero-sum: the total amount of value in is partly spend on mining electricity and hardware and so on.  The "dollars out on electricity for mining" is a net loss of the system.

You are right that it is the "price of having the bitcoin system".  I don't deny this.  But that makes that it is *not even* zero sum.  In as much as it would be value-generating (competitive edge in production of goods and services) this price could be justified.  


You see, here you've lost me.  Of course I adhere to the subjective value theory of the Austrian school.  But this is not in contradiction, or not a proof of "oversimplification" on my part at all.   There is no "subjective value" to "dollars in and dollars out" because dollars are just means to obtain goods and services at market prices.  All dollars are equal and its "usage" is equal (market price).
You cannot convince me that someone who has paid $100 and got out $10, can nevertheless have gained value, as compared to someone who put in $10, and got out $100.  The first one has lost value, and the second one gained value, no matter what.  This is NOT the same as me losing an apple for an orange, and winning subjective value, and you losing an orange for an apple, and ALSO winning subjective value (which is why our trade was not zero-sum but mutual benefit).

There cannot be a net flux of dollars from A to B while being "mutually beneficent".   (except as a gift).


It is quite elementary: the value of the truck is not the value of what it can transport.  


Absolutely not.  This is then, I think, our main point of difference.  The value of a monetary system as system is the value of the truck.  The market cap is what it transports.  These are two totally different notions.

The value of the system itself is the competitive edge in the production of goods and services that the existence of the system provides.



This was just a way to prove that bitcoin, like any monetary system, is obviously a zero sum game.



Sure, but at the expense of the losers at the end.  In the case of a "greater fool" asset, it will come when the thing collapses.  In the other case, it will come from the losses people suffer when the asset slowly depreciates.  It is in the nature of a zero sum game that there is no MUTUAL BENEFIT, but only winners and losers.  That was my whole point.  There is no "mutual benefit" that results in the taking of profits.


I'm not talking about injustice.  But an "investment", like a "trade" is normally meant to bring mutual benefit.  In a zero sum game, there's not such a thing.  There are winners and there are losers, nothing else.  

Telling people they "should invest in crypto" is hoping they will become your losers, not attracting partners for mutual benefit.   Because there's no such thing as mutual benefit in a zero sum game.  If you want to win, you have to find some losers.  Right now, or in the future.



Again, if you are speculating on monetary assets, all you can do is participating in a zero sum game, and hence hope for losers that will finance your benefits.  That's not the case when you invest in production: there, everybody can benefit, and there is mutual benefit and value creation.


You may try to elaborate, because to me it sounds rock-solid.  An asset with no usage value and unrelated to production, grows in "value belief", people give more and more value for it, and in the end, it loses all value again.   The perfect zero-sum game. Tell me how it is NOT so that the gains made in the "rising slope" are compensated by the losses at the falling slope ?  Obviously it is !


Not ALL assets, but *monetary* assets, of which the only value resides in the belief that someone will give value for it.


Of course there is little value to speculation, apart from fluidizing the market, in which case its effect on the price should only be of the order of the volatility.  Speculation on oil is good to fluidize the oil market.  However, if the oil price triples because of speculation, then that's counter productive and renders oil a risky asset.  If the oil price is mainly determined by production and usage, then the oil price is relatively stable and the "right" price for the optimal allocation of resources.  If the oil price is mainly speculative, oil will be too expensive and it will be under-allocated, resulting in a poorer economy performance overall (one will use more expensive substitutes for oil where the usage of oil would have been the right thing to do).
In as much as speculation can diminish the price fluctuations of the oil price, until the volatility is mostly gone apart from totally unknown new information, it contributes to economic well being.  In as much as speculation pumps the price, it makes oil too expensive, and too volatile, harming economic well being.

Bitcoin speculation has driven the price of bitcoin way, way over its economic usage as a store of value system and a payment system ; the only two elements that can bring competitive edge.  This has induced very high mining costs, and has made bitcoin (like oil) way more expensive than necessary for bringing the competitive edge in production it could have brought if it were mainly used as a payment system and a store of value system.  It has also brought higher volatility to bitcoin.

Both the higher mining costs, the higher volatility are HARMING the economic production improvements and the economic well being bitcoin could have brought - in the same way as too high oil prices and price volatility due to excessive speculation on oil harm its economic utility.

Indeed, they should have forked bitcoin, instead of starting a new chain.

Monero is, as far as I understand, not a FORK of bytecoin, but a clone.  Bytecoin was the first implementation of a cryptonote coin ; but the cryptonote developers made a "kit" to invent your own cryptonote coin.  There have been several, of which bytecoin, and monero.

As far as I understand, bytecoin has been involved with some premine scandals, as a few other cryptonote clones are.  Essentially, the claim was that when bytecoin came to be known here, that it was "already used for 2 years on the dark markets", to justify that most of the bytecoin coins had already been mined.  There is serious doubt about these two years of unknown existence "on the dark markets", especially after that there was a bug in the original cryptonote software that allowed for very high initial mining rates.    Monero has been less or not involved in these issues.

That said, the true, original "bitcoin" of cryptonote technology (invented by a certain "Nicolas Van Saberhagen" - the Satoshi of cryptonote) is not monero, but bytecoin.  Monero is just a clone of it, but one that is simply perceived as being less of a premine scam than the original bytecoin one.

At this point, monero has its own history and development, and is not a pure cryptonote clone any more.

At least, that is how I understand the history of this.

Essentially, it is as if one had found out that Satoshi had been a premine scammer, and that he claimed that he invented bitcoin in 2007, that it had been used on the dark markets, and that he now brought it to the rest of the world, after having mined a good deal of all bitcoin, while he essentially had generated a falsely timestamped block chain in 2009.  Then probably litecoin would now be nr 1.

If one talks about "monero" one often means "cryptonote technology", as monero is now its most well known representative.  But historically, it was bytecoin that brought it out.

It now occurs to me that we may be totally talking next to one another.  Maybe the only thing you want is to check whether your wallet software is deriving the right balances from the block chain, and that you are simply afraid of a bug in your wallet not showing you what it should ?

And that you say: "if I could check that number against some public display of it, at least I would know that my wallet is not buggy ?".

I was thinking that you were fighting the principle of an obscured block chain an sich, but maybe your problem is much more down to earth, and you want to double-check what your wallet is showing you ?

Well, that's pretty simple.  Use two different wallet software systems, on two different computers ; say a linux machine and an apple computer.  That's after all, exactly what you do with the web interface: the web server uses another wallet software (if it uses *the same* software, your check is not a check of course) on another computer.

Note that if there were a fundamental bug in the display of balances in bitcoin core, and web servers are based also on bitcoin core, then they would make exactly the same errors.  This has nothing to do with "obscured or open block chains".  This is software double checking.