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Author Topic: 8 Bitcoin Weaknesses that Affect the Economy  (Read 2193 times)
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August 13, 2011, 01:22:14 AM


>Op is an obvious troll.

When you don't agree with what someone says,
just label them a troll,
It's easy, just try it.
It saves you from having to come up with an intelligent response.
Simple, quick and easy.

>Some points even contradicted each other.

Just spouting that claim doesn't make it so.

>Other are just ridiculous (like number 2).

That's you're opinion.
I think you'll find many other people aggravated with having to deal with numerous addresses.
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August 13, 2011, 01:30:24 AM


> Mom, imagine your Bitcoin wallet is a stack of envelopes ...

Ok, yours was even funnier than mine. Smiley

> Regarding #3, personally, I think a few people with an ENORMOUS amount of money invested in a project have an ENORMOUS incentive to see the project succeed,

That's true, as long as they live long and prosper, and don't turn to the dark side Wink

>In other words, had bitcoin started the way you suggested, we'd still have a few nerds with a little bit of cash

Or we'd have many with a little bit of cash. Bitcoin is attracting miners even at this extreme difficulty.
But it's not about mining, it's about commerce.
Having a handful of people that control a significant percentage of the entire money supply is not good.
I am not saying they shouldn't have made some money, but they sure took advantage of the position, and you can't blame them, but it didn't have to be that way and it's something the bitcoin economy will have to deal with, and it's not a selling point to the average joe.

>As for #4, Bitcoin is doing just fine on Android, and that OS has more users than iPhone, so even if Apple never allows any Bitcoin apps, it'll only hurt them (more) in the end.

I just used iPhone as a term to refer to people who can't or don't want to deal with anything technical not just those specific users.
Like the first MAC having only one button on the mouse. Two buttons were deemed too confusing.
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August 13, 2011, 01:49:41 AM

@ kjj
> 2. Nothing prevents anyone from using a single address for everything. 

If you do that anyone can see all your bitcoin transactions in the block chain. The creators recommend using different addresses.

And for very good reasons.  But this is a trade off, a decision that each person gets to make on their own, it isn't forced on anyone.

>Oh, and I have never seen any indication that the multiple addresses scheme has ever caused any real problems for anyone, ever. 

Just because you haven't seen a problem with it doesn't mean there isn't one.

And just because you say so doesn't mean there is one.

>Oh, and Congress/the Fed has the ability to create new money out of thin air, without limit, so whatever problems you think this might cause for bitcoin are already true in the real world.

Yes, that's true. But wasn't one of the selling points of bitcoin that it's not like them? If you have a tiny handle full of people who control a significant percentage of the total money supply, a supply which is limited, and in fact will always be shrinking due to bitcoin loss.
Picking a catastrophic monetary system such as the Fed and saying bitcoin is better than that, isn't saying much.

Yup, they both suck, but you have to pick one.  Either your currency can be limited, in which case some people will accumulate it to the point that it could be unhealthy for the system.  Or your currency can be unlimited, which has all the same problems, plus a bunch of new ones.

>5. In the real world, you have two choices, instant and horribly inconvenient (cash), or slow and convenient (everything else). 

Well a credit/prepaid credit/debit card is fast and convenient.

No, cards are not fast.  They just look that way if you've only ever been on one side of them.  Charges can be reversed at pretty much any point in the future.  Months or years after the day you thought the deal was done.  A bitcoin transaction is fast in the sense that it is nearly irreversible a second after it is made.

>With bitcoin, you can make the fast/easy/cheap tradeoff on your own terms.

I don't know how you can do that without using a third party. Which again is the antithesis of the design of bitcoin, no central authority. I think no central authority is good. Because you can see what can happens with centralization, as in the case of mybitcoin.

No third parties are needed in the bitcoin system, but the bitcoin system can't do everything all at once.  There is room for third parties that do other things.  The real lesson from mybitcoin is that sometimes you get what you pay for.  Oh, and having third parties is not even in the same neighborhood as having a central authority.  You don't pretend that VISA is the central authority for dollars, so why do you pretend that they would be if they mediated transactions denominated in bitcoins?

>6. Miners and relays are allowed to set their own local policy for including/relaying transactions.  Oh, and if you really do want micropayments, just make sure your client is connected directly to one of the several mining pools that have a policy of including all valid incoming transactions.  And if you want to help make micropayments more useful for the world, set your own node to relay everything and publish the address so others can use it.

Can you explain how to do that? When I try to send 0.00008 the client demands a transaction fee of 0.001.
I can see why they are doing it, they want to prevent over load. If millions of micropayments were being done everyday the block chain would grow enormously.

I know that there was at least one pool in the past that had their policy set like that, but I can't find any doing it now.  Then again, I didn't look very hard.  If it turns out that there aren't any, you should start one as a public service.

>7. Many of us have studied plenty of economies that had inflation. 

Ok, but that's not what I asked. Many have studied the mating habits of the wildebeast. What does that have to do with deflation?
I said the best is stable, neither deflating nor inflating.

> perpetual inflation, because they always end.  Always.  And usually with a horrible mess and thousands dead.

I agree with that, I never proposed inflation.

Stability is an illusion.  It doesn't exist.  You might as well put your hopes on trading unicorn horns as currency.  The closest we can get is a currency with a fixed issue and gradual decline through loss.  All of the other options involve stealing from someone (or from everyone).

The closest we've ever come to having deflationary currencies in the real world is times when weak and fearful governments have kept their hands off the printing presses for a while as technology works it's unstoppable magic of making everything cheaper in real terms.  These periods usually end within about 60 years as the people with firsthand memories of the bloodshed of the last revolution die off.  By then the new government is powerful, a natural consequence of not fucking with the money, and the leaders feel themselves wiser than any that have come before, so they know they can print "just a little bit more, just this once".  Next thing you know, they are right back where they started.  History is the retelling of this cycle over and over again with different accents.

>8. Wait a second.  Wasn't your first point that bitcoin isn't anonymous? 
> Also, everything you say here is true right now in the real world.  It is just that in the real world, the costs of being careless are not paid by the careless, but by everyone, by way of higher prices and fees at vendors, banks and credit card companies.

Yes, I agree. Unfortunately it's a major problem with bitcoin. Look at the ripoffs that have happened already and it's only in its infancy. It's unavoidable. Any cash like currency will have to live with this problem.

No one looks at an infant and says "Just think how much it is going to suck changing those diapers when this kid is 20".  Most of the problems with bitcoin, to the extent that they actually are problems and not differences of opinion, are caused by the newness of the system.  They aren't harbingers of doom to come as it matures.

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