For every misconception about Bitcoin, there's an altcoin waiting to capitalize on it.

By and large, altcoins are a tax on economic ignorance. A tax on ignorance of the importance of sound money. A tax on ignorance of network effects.

Thanks for this great Austrian-style analysis.

1) Not ad infinitum. Once we reach mainstream adoption growth will slow to roughly the global economic growth rate.

2) All that really needs to happen is exchanges have to make a few infrastructure changes to allow instant hard fork arbitrage. They have to make it so that in the event of a hard fork it will be really easy to trade old BTC for new BTC, and vice versa. To me that's a perfect solution. Hard forks should not be a major issue. If they are, then whatever is making that so is what needs to change. Bitcoin needs to be able to adapt easily, on a dime, as the market sees fit. Note: This doesn't imply changes will be less conservative than they have been; the market price will reflect the valuing of conservatism and the precautionary principle, only favoring changes when absolutely needed, and only favoring sudden radical changes in the event of a dire emergency. It's basically the entire wisdom of the market ready to make the best decision that reflects all the luminaries out there.

You've heard of prediction markets and how amazingly accurate they are? Well with Fork Arbitrage (FA) exchanges function as prediction markets for which fork will succeed. If you have insight, you stand to make a lot of money. If you have no insight, sit tight and whichever fork wins your money is worth the same as it was before. Even in the unlikely event of, say, a 70/30 split between old and new this remains true, because you automatically own an equal share of both ledgers.

As for node incentivization, what do you think of Justus's idea?

Larger blocks (after the limit is raised) kept in check by something I roughly understand to be nodes agreeing to give priority to certain miners for pay.

I read that whole spiel. Totally transparent effort to create a fuss where there is none.

TL;DR: "You actually can do some sort-of-blockchain-like things that are potentially interesting without having a monetary token, if you do it centralized or basically centralized. For actual decentralized applications, well, they can be done but the onus is on YOU to make the impossible possible so I'm just going to handwave that away."

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You can separate "Bitcoin from the blockchain" if you're flexible enough with your definition of the word "blockchain" and you use it build something completely different than Bitcoin without any of the decentralized aspects that make it so special and uniquely useful. But at that point you're more just trying to leverage a buzzword than doing anything that warrants mention alongside Bitcoin.

It's just because the subreddit has been bombarded with arguments debunking the misconception over the past few days. In thread after thread. The crowd there can be slow, but hit them hard enough in a short timespan and it starts to sink in.

On the charts, mining difficulty has topped out while price has bottomed out. Venture capital continues to rise, though:



If venture capital finally quiets down a bit, the cash hose gets directed into the price bucket again.

It's probably important to note why the mining and VC buckets were filling throughout the past year, and the most natural explanation is of course that people saw the price as overinflated. It had just risen 10000% in a year, and mining and VC looked like great investments by comparison. Well now mining is overdone, and VC is looking frothy.

Hopefully the BIT and ETF will be just in time to catch the Wall Street money.

This alert system may apply if fee bidding market dynamics haven't been fully implemented.

But if they have, there should never be delayed transactions, just a rise in transaction fee versus speed. I think that is much less severe and much less urgent concern.

Even a third-party centralized website where users and miners could quickly check the recent fee rates for a given desired confirmation time would work, if the clients took an API from it. In fact, something like this will almost certainly pop up if blocks start getting full and the clients haven't figured out fee markets yet, or the blocksize hasn't been raised yet.

For that matter, get nodes and miners working out payment deals as well so we can remove the blocksize limit once and for all and rely on market dynamics. But I guess this will happen naturally as we approach those critical levels, as an antifragile response.

To further elucidate the points made in the video, nominalization (a.k.a. reification, or what Mises called hypostatization, the tendency toward which he named "the worst enemy of clear thinking") is when you convert an abstract concept or action/process into a noun, and then end up treating that noun as a sort of "thing in itself" and allow it take on some properties of a physical object. As a loose figure of speech it is innocent enough, but - as is always the case - when we try to take loose phrasing from everyday talk into more rigorous contexts without cleaning it up, the result is mass confusion leading to all sorts of fallacious reasoning. As the speaker said, politicians love to make use of this confusion.

Another way to talk about this is to call any conversion of an abstract concept or action/process into a noun "nominalization," since that what it literally is, but then to call the fallacious taking-seriously of this "reification" or "hypostatization." My preferred term is reification to refer to the error.

Some classic nominalizations and corresponding reifications:



As may be evident from the examples, when you start off with a loose nominalization (using nouns because they're convenient in English) you can end up committing the fallacy of reification. How exactly does the slip happen? There is actually another semantic error at work here: equivocation, where a word is used in two different meanings at the speaker's convenience, or inadvertently.

In other words, what happens in each case is that the noun form of the word being the same as the verb form makes it especially easy to switch back and forth between them, and pretty soon the people forget that the noun they are talking about is not an entity, but actually some process that itself involves physical objects or entities: water molecules that wave, people that value gold bars, mileposts that are spaced out. It's incoherent to speak of a wave without something doing the waving, or to speak of gold having value without someone doing the valuing, or to speak of space curving if we are maintaining that space=nothingness. It becomes an implied equivocation because the meaning of "wave," "value," and "space" has subtly been allowed to change in the course of the argument. Whereas we started off taking it as obvious that some objects were waving, some people were valuing something, and some objects were spaced, we ended up silently shifting the meaning to exclude those objects and people.

Now the term "intrinsic value" might have been useful if not for this reification trap. We could use it to refer to the direct use value people place on something, as opposed to its exchange value in the market, as even Mises himself did. Unfortunately, all experience hath shewn that the word intrinsic overwhelmingly tends to lead people into the reification error described above, because this is a basic human tendency baked into the social pressure of language (things that "sound right" tend to carry a weight that feels like social authority). Intrinsic sounds like "in and of itself," with no reference to a valuator. This tendency makes using this word just asking for trouble. It invites misunderstanding time and again.

To be clearer, then, I strongly recommend avoiding the term "intrinsic value" and instead using "direct use value" or similar to distinguish from exchange value.

Wow, another one I haven't heard of, also with no Bitcoin branding. Could 2015 be the year Bitcoin goes sort of invisible?

I could buy that scenario. Since there's such a massive gulf between pure Bitcoin and pure Fed money, we might end up with several shades of gray trying to operate simultaneously for a while.

In that scenario, Coinbase would find themselves a relatively useless niche company, a bit like AOL. They would be the ones cut out of the greater loop of the burgeoning Internet of Money. You can posit that regulators would jump on board this and restrict the US Bitcoin economy to that little niche, but it'd be like if they did the same with AOL in 1995. The vast possibilities of the Internet would have moved to other countries, leaving the US behind. How long would that have lasted? How long can they take the pain of seeing that tax revenue stream grow overseas?

Whoah, I get it. I get what's going on here. They're backdooring Bitcoin into the mainstream.

Connect the dots:

1) No mention of Bitcoin on Align's website, except in the press section headlines, even though they use it. Only ever mention "the blockchain" and "blockchain technology."

2) Somehow this has escaped mention on /r/Bitcoin and elsewhere, even though it's gigantic news. They've deliberately not associated with "Bitcoin" overtly. It seems at first strange, because they could have had a bunch of easy customers from the Bitcoin community, as well as its support. Think: Overstock's Bitcoin acceptance launch where they got a bit of a sales boost. But it makes perfect sense when you realize they're gunning higher. The old paradigm is to offer service for the Bitcoin community; the new paradigm is to offer services that use Bitcoin and include no reference to it, because customers don't need to understand it, know how to secure it, or deal with it at all.

2) The recent trend of, "We don't know about this Bitcoin thing, but blockchain technology is the future" is turned on its head by Align's strategy. What was a sort of backhanded dismissal becomes a Trojan horse. Bitcoin quietly becomes the payment rails for better bank wires, stigma intact but irrelevant because no one knows they're using Bitcoin.

3) The general sense among some thinkers in the space that "when Bitcoin succeeds it'll be because people don't even know they're using it."

The implications for investment are obvious, but users of Align's service are completely removed from that. Investing in Bitcoin, to them, would be like investing in Cisco because they like buying books on Amazon.com. But Cisco still did very well because it was needed for the backbone infrastructure and investors recognized that.

Great idea! It took me some time digging around the site to get a sense of what the service does.

Bitcoin represents a fundamental change in the very fiber of the social order from which regimes are woven. I and I'm sure several other people have been predicting this for quite some time: incentives to ally oneself with the state break down when you can hold and transact money with complete secrecy.

I guess we can say that either the halvings do make a huge difference and emigration into Bitcoin is already happening to a substantial degree, presumably usually for the practical reasons I mentioned, or the halvings don't make a huge difference and emigration isn't really happening but instead people are mostly optimizing for ending up with the most fiat. If the next halving triggers another moonshoot then we'll have additional confirmation that emigration is a much bigger factor than merely people playing for fiat profit.

I certainly don't expect a long-term stable equilibrium: if Bitcoin succeeds, fiat has nowhere to go but zero. However, I'm surprised that the emigration dynamic could already be taking hold to the extent that halvings would make such an enormous difference.

Do you think the emigration dynamic is being driven by the reasons I mentioned (Bitcoin Baron's Paradox / Bitcoin is just a safer, wiser, more flexible and reliable place to keep your nest egg), or more by ideology, or something else?

I've never seen the halving-drives-bubbles argument fully explained. It seems to me that since we are talking about CCMF price jumps of at least tenfold, and the inflation rate is nowhere near that, then either most bitcoins are immovable or the halving isn't in fact that important.

For example, if we have an inflation rate of 10% per year but investment increases tenfold during the year, then we still get roughly a 9x increase in price. Now if half the coins are immovable, either because they are lost or because for some reason the holders refuse to cash any out, then the effective inflation rate looks more like 20%. If 3/4 of the coins are immobile, then 40%. And if investment only increases by say 4x per year, then I think that's only like a 2.5x price increase during the non-halving years. But 4x vs. 2.5x is still not that much of a difference.

If the halving does make a huge difference, I would have to conclude that it's because few bitcoins actually make it to market for whatever reason. Perhaps it's the Bitcoin Baron's Paradox: "After the first few million dollars, why cash out any more? Fiat currency is a downright dangerous place to park your money!" (It could get frozen, banks could fail, dollar could collapse, etc. Gold has jurisdictional risks. Bitcoin is the ideal place for savings, so even if the price rises there is no reason to cash out very much more.)

From the functionality side, this reminds me of Peter R's Altcoin Narrative Cycle.

Voluntary whitelisting will never take off. Government whitelisting might happen, but so might government bans. Both are likely to be isolated/temporary, because of the chilling effects they would have on economic growth in the countries implementing them, once Bitcoin is a little more advanced.

Peter Todd is sounding like a codehead, thinking of everything from the technical angle not actual incentives (cypher's meme: "The Geeks Fail to Understand That Which They Hath Created"). There is no slippery slope of incentives for a voluntary whitelist, and that's why it's never been done before. If thieves come to an exchange practically announcing, "THESE COINS ARE STOLEN," the exchange might see it as good PR to refuse them until the coins are better mixed, but if they do any more than that, refusing coins with some level of taint, they just destroy their own business.

There's a somewhat bombastic speech by Stefan Molyneux on /r/Bitcoin today where he points out that if people had to pay directly for the war on drugs, it would come to $XXXXX per person, and people would find their moral indignation fading away quite quickly. I think the same is true with whitelists. The momentary outrage at scammers is not realistically going to incentivize people to make actual sacrifices, especially monetary sacrifices. People might say they'd patronize BTC-e if they only take clean coins, but if accounts start getting frozen customers will make a beeline out of there.

People think they have a strong opinion when they're gabbing on a forum, but the market reveals how much they really care. It's only in government where people's voice on what they think they want, but would never be willing to pay for, comes to fruition.

We call something "a fish" or "not a fish" simply based on whether it would be useful, for our communication, to do so. We name things based on utility. If the utility picture changes, as it does with a fish who can think like a human (and therefore might be able to kill you in your sleep by splashing water on your computer and starting an electrical fire), we no longer would likely feel that the word "fish" evokes the most useful imagery for equipping someone to deal with that creature when we communicate about it. We might feel compelled to qualify it as a "superintelligent fish" or even a "human-fish." Whatever is most useful for getting the point across that you don't want to underestimate its intelligence.

Once you understand that we name things based on (methodologically individual) utility, many paradoxes are resolved. Here are two examples.

Paradox of the Heap: How many grains of sand does it take to make a heap?

Utility phrasing makes it easy. A "heap" simply means a point where you yourself find no utility in trying to keep track of individual grains in the set, either because you're unable to easily count them or because it doesn't matter to you. "Meh, it's just a heap." The answer will differ depending on the person and the context. It is no set number; it's simply when you look over and stop caring about the individuated quantity. That is why this has the appearance of a paradox and why Wikipedia doesn't even mention this obvious and fully satisfying resolution. The fundamental error in Wikipedia's presentation is to consider what a heap "really is," rather than what the term "heap" can usefully mean for each person and context, even though it is self-evident that this is how language works.

Ship of Theseus Paradox:


This is also easily and satisfyingly, though again un-excitingly, resolved by utility phrasing. "Ship of Theseus" is just a name we assign for utility purposes, basically to make life easier in our communications with ourselves and others. The name evokes certain associations for certain people, and based on that we will - in our communication efforts - call something "the Ship of Theseus" or "the original Ship of Theseus" whenever we believe that set of words will call up the most useful associations in the listener, to have them best understand our intent.

There is no such thing as a fully objective definition of the term "Ship of Theseus"; it always depends on what you're attempting to communicate to whom, and what you/they actually care about in the present context.

For example, if it matters to you that the ship was touched by Athenian hands, it wouldn't be useful to you to refer to it as the "Ship of Theseus" if all the parts had been replaced by non-Athenians. But if you simply cared about the way the ship looked and what it could do, because it has a unique shape and navicability compared with other ships, it would be useful in your mind to refer to it as the "Ship of Theseus" even if its parts had all been replaced for functionally and visually identical ones.

Once again it comes down to each person's utility of calling it one thing or another in each context. We will call the a second ship built in the image of the first a "replica" if we are speaking in a context of attributing credit for its design and original building, but simply call it "a Ship of Theseus" if we only care about its function and looks in this context, and we'll call it "the Ship of Theseus" even if it is not the original if the original has been destroyed and all we care about is the form and function, such as to answer a practical question like, "Can the Ship of Theseus sale to Minoa?"

To repeat the above point, the key error is in considering what the Ship of Theseus "really is," rather than what the term "Ship of Theseus" can usefully mean for each person and context. Even though it is self-evident that this is how language works in the first place, people are nevertheless highly prone to this kind of error (the reasons have to do with tribal instincts).