Miner cartel, Bankster cartel, or an altcoin? Your choice?

[iamnotback]

Your assertion that the chaos must be regulated

I didn't write that. You don't even comprehend what is being discussed.

You seem to be oblivious to the power-law distribution and what happened naturally in the USA in the 1800s with unregulated fractional reserve banking.

You deny the empirical evidence of what actually happens. And you refuse to respond on that point. Thus you are disingenuous.

Nothing you are assert is accepted theory and it is not based on logic.

I am providing empirical evidence. That trumps theory. You should know that if you are an academic.

[1714103681]

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[1714103681]

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[traincarswreck]

Your assertion that the chaos must be regulated

I didn't write that. You don't even comprehend what is being discussed.

Hayek and Nash each give very explicate and well reasoned arguments how the end of the monopoly on money supply could and would force fiat to Idealized not fail.

Okay but only ultimately with a world central bank. Yes I agree. But not in an unregulated chaos

Liar

[iamnotback]

Your assertion that the chaos must be regulated

I didn't write that. You don't even comprehend what is being discussed.

Hayek and Nash each give very explicate and well reasoned arguments how the end of the monopoly on money supply could and would force fiat to Idealized not fail.

Okay but only ultimately with a world central bank. Yes I agree. But not in an unregulated chaos

Liar

You don't understand what I am writing. I am not claiming that chaos in general must be regulated. I am not making any such claim. I am writing about what happens NATURALLY when fractional reserve banking is unregulated. It is a winner-take-all power vacuum as evident by what happened in the empirical example of the USA in the 1800s.

You are either very dumb or disingenuous or both.

I realize it is big shock to you that Hayek is simply wrong. As the empirical evidence contradicts his stupid theory.

Hayek's mistake is he didn't factor in the game theory environment and the power-law distribution of power and influence.

I don't give a fuck if Nash was brilliant. I am also brilliant. And everyone makes mistakes.

[traincarswreck]

You don't understand what I am writing. I am not claiming that chaos in general must be regulated. I am not making any such claim. I am writing about what happens NATURALLY when fractional reserve banking is unregulated. It is a winner-take-all power vacuum as evident by what happened in the empirical example of the USA in the 1800s.

You are either very dumb or disingenuous or both.

I realize it is big shock to you that Hayek is simply wrong. As the empirical evidence contradicts his stupid theory.

Hayek's mistake is he didn't factor in the game theory environment and the power-law distribution of power and influence.

I don't give a fuck if Nash was brilliant. I am also brilliant. And everyone makes mistakes.

I understand you perfectly. You didn't read either Nash or Hayek but you quoted a history they are well aware of, much more than you, and which they used to found their arguments on.  I need you to reference me exactly the period you are talking about, and I am going to show everyone exactly how you are mistaken, while simultaneously claiming myself Nash and Hayek, two of the greatest economical thinkers of all time are also mistaken.

Hayek didn't make a mistake and you haven't read his argument that you have an opinion about.

Here is a wiki on the panic of 1819, are you referring to this specifically?  Or perhaps a later or earlier time?  https://en.wikipedia.org/wiki/Panic_of_1819

[Carlton Banks]

Rothschild created Bitcoin.

Who cares if they did?



I've already handled this before. It's irrelevant who created it in the end, it is what it is, and it cannot be stopped.

That's the whole point. People misunderstand these megalomaniac, they see them as evil incarnate. Sure they've been sordid as hell in the past, and one could argue that this demonstrates their human fallibility, not their omniscience.



But there's one thing these uber-whales seems to get right consistently: extra long term planning, based entirely on logic. Like their inter-generational wishlist to the Santa Claus of totalitarianism

Examples of Elites planning Long-Term

Monotheistic Religions

From the Pantheon (and Paganism before it), the flocks were led to monotheism. Monotheism was simple organisational logic, it put all the wisdom and authority into a single set of stories, administered by a single, internal hierarchical structure. The Pantheon couldn't confer the hierarchical structure that Monotheism did, simply because it was not hierarchical, the anthropomorphised forces of nature that each deity represented could contradict one another in power plays, as it was a oligarchy, not a monarchy. Monotheism took the power structure and the mythology, and placed it all under a single ruler, "One nation under god".


The Book of Revelation

Written nearly 2 thousand years ago (i.e. not in the gnostic Bibles), predicted today's "mark of the beast" situation, not by divine inspiration, but by logic alone. The merchant's logic told the authors that a system where the control of who is permitted to buy or sell was the ultimate "key to the granaries". It took hundreds of years of refinement, but the ultimate such system is nearly upon us today, in the guise of the sleepwalk into the cashless society (and buttressed by ideas like the PRC's "social credit" system)


Crowleyism

Crowleyism was a smart invention of a British MI6 agent, Aleister Crowley. He basically parodied liberalism into such a cleverly devised caricature that even today people are being expected to believe it (not totally sure how widely believed it really is).

But even for those that do not believe it, Crowleyism is still very powerful, but used still used against disbelievers as a smokescreen. Classic British TV serial "The Prisoner" evokes Crowleyism subtly to associate individualism with Crowleyism (and conservatism). What did the first exhibitor of the JFK assassination Zapruder film footage underground cable news presenter Geraldo Rivera go on to cover in the 1980's? Crowleyism (by way of the "Satanic Panic"). What was Charles Manson associated with subsequent to the Tate murders? Crowleyism. Stanley Kubrick very subtly associates nationalism, liberalism and Crowleyism together in various films. What was British TV personality sir Jimmy Saville associated with shortly after the media coverage of his decades of paedophile rapes and sexual assaults? Crowleyism.

And last but not least, modern Libertarianism has already been conflated with Crowleyism by a veteran of the Libertarian circuit, Doug Casey. And the soft-fascist corporatism we know and love has been given double treatment, whereby soft-fascim is conflated with Liberalism (read the now popular "neo-Liberalism" buzzword), which in turn evokes Crowley's parody of Liberalism and Individualism.

Clever stuff. Essentially, whenever the establishment want to sweep something under the rug, or sully it, they invoke Crowleyism somehow. The world and the child-beings who inhabit it appear to accept this.


These people (like the Rothschilds) are not stupid. They plan very assiduously, and the idea that someone like the Rothschilds funded attempts to create a decentraised cryptocurrency is plainly very plausible. The cypherpunk mailing group discussions that people like Hal Finney, Adam Back and Nick Szabo contributed to were available for all to see, and the evidence that the establishment began to investigate the possibilities of cypherpunkism abounds. What does everyone think the ultra-rich powerbrokers do all day, sit around fingering each other's assholes? They plan. And if it's possible, they front-run it, so that they're always the ones who get there first, ready to take first spoils.

Is that proof that some lone individual wasn't Satoshi? No. But just blurting out "it waz The Rothschilds!!!1" is chilidish and without merit or reason. Sure they could have been behind Satoshi, they will have given themselves every opportunity. But one does not become an ultra-rich dynasty without being a realist, which means these people wear many hats, both ruthless and pragmatic alike.

[iamnotback]

I realize it is big shock to you that Hayek is simply wrong. As the empirical evidence contradicts his stupid theory.

Hayek's mistake is he didn't factor in the game theory environment and the power-law distribution of power and influence.

I don't give a fuck if Nash was brilliant. I am also brilliant. And everyone makes mistakes.

I understand you perfectly. You didn't read either Nash or Hayek but you quoted a history they are well aware of, much more than you, and which they used to found their arguments on.  I need you to reference me exactly the period you are talking about, and I am going to show everyone exactly how you are mistaken, while simultaneously claiming myself Nash and Hayek, two of the greatest economical thinkers of all time are also mistaken.

Hayek didn't make a mistake and you haven't read his argument that you have an opinion about.

Here is a wiki on the panic of 1819, are you referring to this specifically?  Or perhaps a later or earlier time?  https://en.wikipedia.org/wiki/Panic_of_1819

No you don't understand what I wrote, because you are a smart idiot.

Here it is explained in a research paper that has apparently been excised from the universe by your bankster cohorts.

Hayek's theory is too idealized and only works in glass cathedrals, not in the real world. His theory is based on fungibility and substitutability which is exactly the antithesis of the knowledge age economy we are marching into now.

Partly for this reason the second, laissez faire, Hayek is thought to be a direct consequence of the rst. But this is a non-sequitur. As we have seen, taking seriously the rst Hayek's great innovation|representing economies as information processing mechanisms and prices as the conveyors of information|pinpoints three weakness of the second Hayek. First, even supposing that a competitive equilibrium did not exhibit the usual market failures associated with environmental spillovers and economies of scale, economists have been unable to provide any general proof that prices will work as Hayek supposed, driving the uncoordinated actions of individuals towards an ecient allocation of resources. Second, if the individuals making up the economy were to take Hayek seriously, they would use the information conveyed by price changes in ways that can frequently generate speculative bubbles. And third, the market economy is made up not simply of individuals interacting with prices, but also of rms that are themselves privately owned command economies in which the information problems of central planning have exact analogues.

Thus Hayek was right about the information problems of a centrally planned economy, and about the market as an indispensable information processing mechanism. But his san- guine view that prices can be counted on consistently to convey the right information is supported by neither theory nor evidence. The collapse of this defense of laissez faire does not imply any particular alternative. But it does suggest a role for public policies to address the instability and ineciencies of market allocations, while taking realistic account of who has the relevant information and the conditions under which this information will be revealed in ways that can contribute to rather than thwart the objectives of policy. Taking Hayek seriously demands nothing less.

I wouldn't take any of these fellows lightly. They are all senior economists. But Sante-Fe institute thinking is a little different than mainstream thinking. Working with complexity takes a little getting used to.

I think it is still a working paper - not yet published. So it is subject to revision. But odds are it will end up being published soon. It's not a cast of lightweights.

Still, it doesn't mean you have to agree with them. I just wouldn't dismiss it.

Well, you were questioning the article's validity as if it were written by a pile of amateurs. I was refuting that claim.
Secondly, you wrote as if the paper were responding to the entire body of Hayek's work rather than simply responding to his assertion that decentralized markets aggregate and distribute information efficiently.

I was merely observing that it was a paper written by fancy, ivy-educated, tenured economics professors from the Sante Fe institute. Being from the Sante Fe institute, one can assume that they look at economic behavior through the lens of complex systems analysis.

Unless you are a true believer in an unbounded version of rational actor theory based on removing Weber's 3rd and 4th types of rationality (namely emotional and aktuelle), then one has to accept that there may be, or indeed likely will be, informational asymmetries built into decentralized markets.

But, ignoring that, the authors seem to attempt to show how even an instrumentally rational actor might build price-informational asymmetries into a given market. This is the reasoning behind the 2-good marketplace example. It's not purporting to explain the whole world, but rather, to explain how even perfectly rational actors might have an incentive to act in ways that build price-informational asymmetries into decentralized markets.

If this is the case, one has to question price-informational symmetry and efficiency as a fundamental argument for why decentralization of economic activity works well.

That, to me, is the point of the article. It is not to dismiss Hayek outright, but rather, to look at a fundamental theory regarding the efficiency of decentralized markets and suggest that it provides an inadequate explanation for why this works. This is why they do not imply an alternative.

My guess would be the follow-on paper/book could ask, "If not the efficiency of information aggregation, then what is a fundamental reason for the efficiency of decentralized markets?"
Is that sufficiently substantive, or would you rather I simply question your credentials and follow your reply by accusing you of logical fallacies?

I quite clearly stated that you don't have to agree with the article in my first post.

And, indeed, you do not.

But to question whether it was peer reviewed as if it were not co-authored by three men with extensive decades-long publishing histories is a disingenuous attack.

Once again, the example was simply to explain one clear instance in which price-information efficiency is dis incentivized in an instrumentally rational model. It is like the very simple David Ricardo examples given to explain comparative advantage in an instrumentally rational model (usually two farmers growing two different crops).

The purpose of the example is not to explain the world, but rather, to explain via thought-experiment how scenarios exist wherein price-information asymmetries are instrumentally rational in a decentralized marketplace.

Adding substitutions muddles up the thought experiment, but does not invalidate it. If it did invalidate the thought experiment, then one could make the same argument for thought experiments of comparative advantage and claim that it does not exist due to substitution effects across markets.

But clearly comparative advantage does work. And clearly price-informational asymmetries exist. So they are simply opening the door for an additional explanation for the efficiency of decentralized markets. I fail to see what is so wrong with this, or why you would give it an F.

[traincarswreck]

iamnotback, you cited a reddit thread, can you link me the source material please?

edit: you are citing reddit quotes my friend.

[iamnotback]

iamnotback, you cited a reddit thread, can you link me the source material please?

edit: you are citing reddit quotes my friend.

You are making noise in this thread because you don't read what is written:

Here it is explained in a research paper that has apparently been excised from the universe by your bankster cohorts.

[traincarswreck]

Right so you have no link to the source, so I can't read it, so how can I refute it?  Let me ask you, have YOU read it?  Because so far you haven't read a single argument that you refuted for example Hayek's.

And how could you possibly think citing random people on reddit makes a paper that I can't read and you can't source/link to, more credible? And what time and event in the 1800's are you constantly referring to? I want to know so I can directly refute it.

[iamnotback]

Hayek's theory is complete nonsense. He doesn't seem to understand the nature of money at all.

1. The value of money is based on public confidence, not Hayek's theory of perfect free market information. Humans are acting more like herd w.r.t. money (and speculation as well). He got that wrong, so that already shows he is a complete idiot when it comes to money. Other greats have commented on this such as Milton Friedman:

https://mises.org/library/hayeks-plan-private-money
https://en.wikipedia.org/wiki/The_Denationalization_of_Money#Criticism

2. Hayek's theory stands in opposition to the fact that the public desires a common unit-of-account, because exchange risks add costs and are a derivative contract not money. Additionally what is being proposed for Bitcoin's off chain banking is not even what Hayek proposed. Instead what will happen is users will think they are getting BTC when in fact they are being lied to and being given private banking IOUs (thus not the free market perfect information that Hayek assumes). When the bank runs come, then the public clamors for bailouts. The banksters step into the power vacuum and eventually we end up with a world private central bank, i.e. the NWO World Bank. It is quite obvious that this Bitcoin off chain banking plan (aka Lightning Networks) is a plan of the banksters who leech off humanity (no more!).

3. As @CoinCube and I have discussed many times (his research example came from evolutionary biology) that systems with too many degrees-of-freedom lose information and diverge. That is why there is a power vacuum and that is why there must be a power-law distribution in nature.

4. Even Nash admitted that the ideal money concept was unworkable in the real world.


Get off my lawn pompous useless idiot. Take your academic nonsense back to MIT, Cornell, or what ever troglodytic trove of misinformation you hail from and tell them to shove up their dumb asses. If you have a detailed argument to make, then make it. Stop obfuscating. You are wasting precious time.

[traincarswreck]

Hayek's theory is complete nonsense. He doesn't seem to understand the nature of money at all.

4. Even Nash admitted that the ideal money concept was unworkable in the real world.


Get off my lawn pompous useless idiot. Take your academic nonsense back to MIT, Cornell, or what ever troglodytic trove of misinformation you hail from and tell them to shove up their dumb asses. If you have a detailed argument to make, then make it. Stop obfuscating. You are wasting precious time.

Hayek gave a well respected treatise on the denationalization of money, which is cited by Szabo, who is pretty much the most respected thinker in bitcoin.  Your assertion that Nash spent 20 years arguing for something he didn't believe could exist is asinine. And calling me an idiot doesn't help your argument especially when you have only hand waved away 5 of the greatest philosophers of the fields of economics and crypto economics.

If you have anything of substance to offer, do so now, or forever hold your peace.

[iamnotback]

@traincarswreck that is not a substantive rebuttal. You have made no cogent response to any of the numerous points of economics I have made. You simply name drop. And I doubt the people you are name dropping would agree with you if you showed them what I am writing. Invite Nick Szabo to come here to comment if you like.

[Jogibear]

So If YOu own A large bitcoin mining rig and set it to mine a lesser value coin you could possibly control the Blockchain never mind the speed of it.
Hence transaction speed.

Great way to Delay money So if u get suckers to buy a coin across a few crypto exchanges and then shut off ur miners or switch to a different coin
Basicaly freezing a coin while all the others rise
This is busy happening with Dogecoin Price is low because alot of people are holding Doge and they hope by dropping the price people will get scarred and sell. They then pick it up for bottom dollar.

 

[traincarswreck]

@traincarswreck that is not a substantive rebuttal. You have made no cogent response to any of the numerous points of economics I have made. You simply name drop. And I doubt the people you are name dropping would agree with you if you showed them what I am writing. Invite Nick Szabo to come here to comment if you like.

Your argument is that Nash didn't believe that what he was saying WILL happen, is possible.  You argue he spent 20 years describing something he didn't even believe in. How would I refute such a nonsensical and irrational claim?

And Szabo confirmed yesterday he envisioned bitcoin to unfold as a settlement system 20 years ago and he retweeted today that quote I linked by Finney that is also in line with this.

You don't have a leg to stand on, you are simply arguing an opinion, not reading the associated literature, and referring/citing papers that don't exist.

[iamnotback]

@traincarswreck been put on Ignore for not making any substantive arguments. Meaning I won't be responding to him because I won't read what ever vacuous, diversionary name dropping tactics he is employing.

[traincarswreck]

@traincarswreck been put on Ignore for not making any substantive arguments. Meaning I won't be responding to him because I can't read what ever vacuous, diversionary name dropping tactics he is employing.

4. Even Nash admitted that the ideal money concept was unworkable in the real world.

The bold is your argument and its a ridiculous lie.

[iamnotback]

Re: Is Ethereum going to take over bitcoin in the upcoming months?

Bitcoin has utility, eth just barely has one or two uses.

What good is that utility (e.g. transferring value) if I can't use it because the fees go to $100 per transaction?

You don't think most of the places that accept crypto now will not accept ETH when nobody can use Buttcoin any more.

The current standoff means fees will just keep increasing.

This war isn't over yet.

$100.00 fee to transfer how much btc? with today's average transfer fees, it would cost $100.00 to transfer $17,203.00 worth of BTC. In my opinion that's more than reasonable.

It will increase significantly if the block size is not increased and/or some off chain solution isn't able to supplant on chain demand growth.

Ethereum is the scam coin that the banksters control.

Good luck laying down with the devil's dogs.

Sorry to be the one to bust your little fantasy, but ditto for Bitcoin.

[iamnotback]

http://unenumerated.blogspot.com/2017/02/money-blockchains-and-social-scalability.html

Whereas the main social scalability benefit of the Internet has been matchmaking, the predominant direct social scalability benefit of blockchains is trust minimization.

Eliminating trust applies to all centralized databases, not just those for monetary ledgers. The Internet is loaded to the gills with centralized databases whose closed and proprietary centralized control causes grave inefficiencies and retarded social scalability.

Bitcoin is only building a teeny, weeny tiny part of what blockchains are going to revolutionize. And Bitcoin is shooting itself in the foot by restricting itself to only a settlement layer for an archaic fractional reserve banking financial system which was only need in pre-scarcity industrial age.

Rather than trusting in the unlikely altruism of so many strangers, markets and money create many pairings of mutual benefit and thus motivate this large network of mutually oblivious people to act in our interests:

Markets include matching and interaction with any data, not just monetary data. Monetary data can't always reliably signal anything about the non-fungible creativity of the Knowledge age that overtaking the fungible laborers (and merchants) of the Industrial age.

And this was before the many successive waves of industrial revolution and globalization between 1776 and now that refined, elaborated, and extended the division of labor many times more.

[Adam] Smith goes on to describe how division of labor, and thus labor productivity, depends on the extent of the network of pairwise exchanges: “As it is the power of exchanging that gives occasion to the division of labor, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market”.  As the exchange network around a country and around the globe grows, involving a greater number and variety of producers, so grows the division of labor and thereby labor productivity.

Money facilitates social scalability by increasing the opportunities for this exchange.

Human creativity in the post-scarcity, Internet age is further maximizing division-of-labor specialization and every human is unique. Our non-fungible value is becoming ever more important in the economy and this interaction is more and more not through money as the information signaling mechanism, where knowledge interaction is the new currency. Payment systems are just but a small fraction of the value that decentralized trustlessness of blockchains will unleash.

One of the most knowledgeable observations of the price network produced by markets and money can be found in Friedrich Hayek’s essay, “The Use of Knowledge in Society”:

The various ways in which the knowledge on which people base their plans is communicated to them is the crucial problem for any theory explaining the economic process, and the problem of what is the best way of utilizing knowledge initially dispersed among all the people is at least one of the main problems of economic policy—or of designing an efficient economic system…The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process…The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; i.e., they move in the right direction….The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible…a solution is produced by the interactions of people each of whom possesses only partial knowledge.

But what Hayek's true statement doesn't point out is that same process of decentralized information flow is occurring throughout the Internet often without any monetary component involved. We are moving away from a monetary driven knowledge system and into the knowledge age. This is crucial and it is going to blindside those archaic economists who are not paying attention to the sea change underway. As Nash wrote, humans have a highly non-linear reaction (utility) to monetary opportunity costs. The reason is because humans also value other things, not only money. Money is just a signaling system for the things humans value, but increasing many of the things human value can't be purchased with money, i.e. intellectual accomplishment and peer synergy and adulation. Especially as the economy moves further into the post-scarcity knowledge age era, then more and more of the value in the economy will come from non-monetary exchange, e.g. when I interact in an open source project I am exchange massive amounts of value but doing so without ever monetizing the exchange. In fact, it is impossible to monetize that exchange and more and more that paradigm of knowledge exchange will supplant monetary exchange. This is known as the Gift economy which is further explained below...

Eric Raymond (the creator of the term "open source") wrote:

2. Beyond Geeks Bearing Gifts

The experience of the open-source culture has certainly confounded many of the assumptions of people who learned about software development outside it. ``The Cathedral and the Bazaar'' [CatB] described the ways in which decentralized cooperative software development effectively overturns Brooks's Law, leading to unprecedented levels of reliability and quality on individual projects. ``Homesteading the Noosphere'' [HtN] examined the social dynamics within which this `bazaar' style of development is situated, arguing that it is most effectively understood not in conventional exchange-economy terms but as what anthropologists call a `gift culture' in which members compete for status by giving things away. In this paper we shall begin by exploding some common myths about software production economics; then continue the analysis of [CatB] and [HtN] into the realm of economics, game theory and business models, developing new conceptual tools needed to understand the way that the gift culture of open-source developers can sustain itself in an exchange economy.

In order to pursue this line of analysis without distraction, we'll need to abandon (or at least agree to temporarily ignore) the `gift culture' level of explanation. [HtN] posited that gift culture behavior arises in situations where survival goods are abundant enough to make the exchange game no longer very interesting; but while this appears sufficiently powerful as a psychological explanation of behavior, it lacks suffiency as an explanation of the mixed economic context in which most open-source developers actually operate. For most, the exchange game has lost its appeal but not its power to constrain. Their behavior has to make sufficient material-scarcity-economics sense to keep them in a gift-culture-supporting zone of surplus.

Therefore, we now will consider (from entirely within the realm of scarcity economics) the modes of cooperation and exchange that sustain open-source development. While doing so we will answer the pragmatic question ``How do I make money at this?'', in detail and with examples. First, though, we will show that much of the tension behind that question derives from prevailing folk models of software-production economics that are false to fact.

(A final note before the exposition: the discussion and advocacy of open-source development in this paper should not be construed as a case that closed-source development is intrinsically wrong, nor as a brief against intellectual-property rights in software, nor as an altruistic appeal to `share'. While these arguments are still beloved of a vocal minority in the open-source development community, experience since [CatB] has made it clear that they are unnecessary. An entirely sufficient case for open-source development rests on its engineering and economic outcomes -- better quality, higher reliability, lower costs, and increased choice.)

Traditional computer security is not very socially scalable. As I describe in The Dawn of Trustworthy Computing:

When we currently use a smart phone or a laptop on a cell network or the Internet, the other end of these interactions typically run on other solo computers, such as web servers. Practically all of these machines have architectures that were designed to be controlled by a single person or a hierarchy of people who know and trust each other. From the point of view of a remote web or app user, these architectures are based on full trust in an unknown "root" administrator, who can control everything that happens on the server: they can read, alter, delete, or block any data on that computer at will.  Even data sent encrypted over a network is eventually unencrypted and ends up on a computer controlled in this total way. With current web services we are fully trusting, in other words we are fully vulnerable to, the computer, or more specifically the people who have access to that computer, both insiders and hackers, to faithfully execute our orders, secure our payments, and so on. If somebody on the other end wants to ignore or falsify what you've instructed the web server to do, no strong security is stopping them, only fallible and expensive human institutions, which often stop at national borders.

Many server computers are not valuable enough for insiders or outsiders to attack. But an increasing number of others contain valuable concentrations of resources, motivating attack. Centralized root-trusting security scales poorly.

Yes Nick. You've got it. Blockchains applied to all data stored on servers, not just payments. But did you infer that?

In computer science there are fundamental security versus performance tradeoffs. Bitcoin's automated integrity comes at high costs in its performance and resource usage. Nobody has discovered any way to greatly increase the computational scalability of the Bitcoin blockchain, for example its transaction throughput, and demonstrated that this improvement does not compromise Bitcoin’s security.

It is probable that no such big but integrity-preserving performance improvement is possible for the Bitcoin blockchain; this may be one of these unavoidable tradeoffs.

That is correct. An unlimited transaction scaling on chain design sacrifices some of the security properties, but they remain probabilistic and as Nick has also noted that all security is probabilistic even Bitcoin. There is no such thing as absolute security guarantees as Nick noted.

For $billion transactions, you need Bitcoin's security. But for $10 transactions, society can accept security that is almost as good.

Mathematically provable integrity would require full broadcast between all nodes.  Bitcoin can’t achieve that but to even get anywhere close to a good approximation of it requires a very high level of redundancy.  So a 1 MB block consumes far more resources than a 1 MB web page, because it has to be transmitted, processed, and stored with high redundancy for Bitcoin to achieve its automated integrity.

As Nick has stated as quoted above, even Bitcoin had to sacrifice some security.

These necessary tradeoffs, sacrificing performance in order to achieve the security necessary for independent, seamlessly global, and automated integrity, mean that the Bitcoin blockchain itself cannot possibly come anywhere near Visa transaction-per-second numbers and maintain the automated integrity that creates its distinctive advantages versus these traditional financial systems. Instead, a less trust-minimized peripheral payment network (possibly Lightning ) will be needed to bear a larger number of lower-value bitcoin-denominated transactions than Bitcoin blockchain is capable of, using the Bitcoin blockchain to periodically settle with one high-value transaction batches of peripheral network transactions.

But Lightning Networks enables fractional reserve banking in BTC, which is a horrific thing that will harm Bitcoin and make it incompatible with the Knowledge age.

The Knowledge age will reject that yoyo of booms and busts, fraud, and bailouts of fractional reserve banking. It would ultimately require a world central bank, which is entirely unacceptable to the meritocracy in the Knowledge age. And besides, money just isn't the most important signal of value any more.

Sorry banksters. Your time is over. Goodbye.

All of the following are very similar in requiring an securely identified (distinguishable and countable) group of servers rather than the arbitrary anonymous membership of miners in public blockchains. In other words, they require some other, usually far less socially scalable, solution to the Sybil (sockpuppet) attack problem:

...

We need more socially scalable ways to securely count nodes, or to put it another way to with as much robustness against corruption as possible, assess contributions to securing the integrity of a blockchain. That is what proof-of-work and broadcast-replication are about: greatly sacrificing computational scalability in order to improve social scalability.

Nick got it. Lightning Networks isn't socially scalable.

These initial Internet efforts have been very centralized. Blockchain technology, which implements data integrity via computer science rather than via “call the cops”, has so far made possible trust-minimized money -- cryptocurrencies – and will let us make progress in other financial areas as well as other areas where transactions can be based primarily on data available online.

This is not to say that adapting our institutions to our new capabilities will be easy, or indeed in particular cases anything short of difficult and improbable.

Amen Nick. Seems you do understand. I was told by some other fools that are dropping your name, that you don't understand. But I see that you do.

Nick Szabo admits that LN is not socially scalable. @traincarswreck is lying when he drops Szabo's name.

Thanks.

Can you quote the exact part where he says this?  I couldn't find it.  

He implied it by the context and what LN is (and that LN is not trustless):

All of the following are very similar in requiring an securely identified (distinguishable and countable) group of servers rather than the arbitrary anonymous membership of miners in public blockchains. In other words, they require some other, usually far less socially scalable, solution to the Sybil (sockpuppet) attack problem:

...

We need more socially scalable ways to securely count nodes, or to put it another way to with as much robustness against corruption as possible, assess contributions to securing the integrity of a blockchain. That is what proof-of-work and broadcast-replication are about: greatly sacrificing computational scalability in order to improve social scalability.

Nick got it. Lightning Networks isn't socially scalable.

[dinofelis]

@dinofelis, but what about his argument that unregulated fractional reserve banking without a central bank will be some panacea? He is citing Hayek and I am saying Hayek's theory is nonsense.

I'm a great admirerer of the Austrian school, even if I think that some of their views are outdated.  But I'm also convinced that there is nothing fundamentally wrong with fractional reserve banking.  The reason why people think it is wrong is because they don't really understand what it is about (and everything is done to confuse the issue, true).

What is fractional reserve banking ?   It is issuing a DIFFERENT ASSET that is kept on-par with a base asset through a fund that serves as a form of collateral for individual transactions.  People, however, are made to confuse the new asset with the underlying base asset, and this is where the system looks like cheating.

If you go to a bank X and have a bank account there in $, you don't hold "dollars".  You hold "bank X dollars", an asset that bank X issues.  An "alt coin".   In order for this to be CREDIBLE, bank X has to have a fund, so that it has enough reserves to settle with other banks, so that bank X dollars are also accepted in bank Y.  So what bank X has to do, is to make sure that the INBALANCE between bank X and all other banks, never becomes larger than its "collateral for inter-bank settling", its reserve of base dollars.

If, statistically, bank X dollars are about as much versed to bank Y, than bank Y dollars are versed to bank X *it doesn't matter how many X dollars bank X and Y dollars bank Y have brought in circulation* ; they can always settle with a small mutual collateral in base dollars.  But of course, for this to happen, bank X and bank Y must have about the ratio of scarcity of their X and Y dollars.  A big bank can emit more dollars than a small one, because it has more demand, more customers.
A bank that emits too much money will see more of its dollars go to the neighbours, than it will receive from the neighbours, and hence, will have to deplete its stash of base dollars in settlements.

Once the settlements are exhausted, its bank dollars will not be accepted any more by other banks, and hence, the market value of its dollars plummet.  *there is nothing wrong with that*.  Its customers were holding a coin that simply wasn't valuable !  They shouldn't complain !  They only think they have been cheated upon because they lived in the illusion to hold "real base dollars", while they only held Bank Y coins, that were kept on-par with base dollars as long as the bank had sufficient collateral to settle with neighbouring banks.

So, in as much that people realize that when they have money at a bank, they don't possess "base money",  but only "bank money", and if they can have a CLEAR VIEW ON THE EMISSION of the bank money, they take the risk, or they don't.  They buy litecoin or they buy monero.  They buy citibank dollars or they buy HSCB dollars.  Knowing that these dollars are only kept on par with US FED dollars as long as the collateral reserves last.  Which can be considered an acceptable, or unacceptable risk.

By letting go broke banks that emit too much dollars, (and letting go broke their customers too), this system auto-regulates and kills of the most greedy ones regularly.  The only problem is the gullible masses that will complain that they are broke and should starve to death because of their ignorance.... As long as people will want to be compassionate (or pretend to be so), such autoregulating systems will always end up put a burden on the reasonable, to let the greedy reap in benefits when it works, and to let the reasonable pay for their mistakes when it goes wrong.

I don't know how valid the following analogy is, but you could see fractional reserve banking as bitcoin whales making new altcoins of which they control the minting, and they pump (with their bitcoin stash) the price of their altcoin to a given level.  As long as they have enough bitcoin stash to pump the price, this alt coin lives on happily a stable price level.  This can last very long, even if the market cap of the alt coin is way way larger than the bitcoin stash of the whale.

[traincarswreck]

Eliminating trust applies to all centralized databases, not just those for monetary ledgers. The Internet is loaded to the gills with centralized databases whose closed and proprietary centralized control causes grave inefficiencies and retarded social scalability.

Bitcoin is only building a teeny, weeny tiny part of what blockchains are going to revolutionize. And Bitcoin is shooting itself in the foot by restricting itself to only a settlement layer for an archaic fractional reserve banking financial system which was only need in pre-scarcity industrial age.

I don't think you actually read this article.  The conclusion of it directly refutes every point you make:

Reverse-engineering our highly evolved traditional institutions, and even reviving in new form some old ones, will usually work better than designing from scratch, than grand planning and game theory. One important strategy for doing so was demonstrated by Satoshi – sacrifice computational efficiency and scalability -- consume more cheap computational resources -- in order to reduce and better leverage the great expense in human resources needed to maintain the relationships between strangers involved modern institutions such as markets, large firms, and governments.

The reason is because humans value other things, not money.

There is no one that will agree with you that humans don't value money, its the most ass-backwards thing I have ever heard someone assert.

Eric Raymond (the creator of the term "open source") wrote:

Yes he wrote a quote that you provided, but you didn't give any reason you provided it.

That is correct. An unlimited transaction scaling on chain design sacrifices some of the security properties, but they remain probabilistic and as Nick has also noted that all security is probabilistic even Bitcoin. There is no such thing as absolute security guarantees as Nick noted.

Nick is not advocating to sacrifice the security he is explaining why Satoshi is a genius for sacrificing efficiently and availability but NOT security.

For $billion transactions, you need Bitcoin's security. But for $10 transactions, society can accept security that is almost as good.

No, no one with pull in the industry is bending on security so you can have a coffee money.

Even Bitcoin had to sacrifice some security.

No it never did, and never will.  You are asserting this silly claim.

But Lightning Networks enables fractional reserve banking in BTC, which is a horrific thing that will harm Bitcoin and make it incompatible with the Knowledge age.

The Knowledge age will reject that yoyo of booms and busts, fraud, and bailouts of fractional reserve banking. It would ultimately require a world central bank, which is entirely unacceptable to the meritocracy in the Knowledge age. And besides, money just isn't the most important signal of value any more.

As I linked to in the other thread Szabo "tipped his hat" to me today for bringing to his attention a quote by finney which perfectly refutes your assertion:

https://twitter.com/NickSzabo4/status/846492284036145152

Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.

I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.

So Szabo and Finney disagree and you have twisted Szabo's conclusion to be exactly opposite of his conclusion THAT I QUOTED AT THE START OF THIS POST.

Sorry banksters. Your time is over. Goodbye.

Because you say so but every intelligent person that matters disagrees.

Nick got it. Lightning Networks isn't socially scalable.

I took a snapshot of Szabo's twitter that proves you are full of shit.

Amen Nick. Seems you do understand. I was told by some other fools that are dropping your name, that you don't understand. But I see that you do.

It was Szabo that dropped MY name when he tweeted a Finney quote that shows you have absolutely no idea what you are talking about.

He implied it by the context and what LN is (and that LN is not trustless):

YOU are implying it, Szabo and Finney both CLEARLY support micro-transactions/2nd layer solutions and a fractional banking style solution.