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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1805789 times)
cypherdoc
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October 01, 2014, 05:14:30 PM
 #13121

Moreover, as suggested above, this is another attempt at suggesting other applications of the distributed ledger are more useful than the money application which is patently false.



imo, the money function is paramount and foremost, which is why i often say "The Blockchain may only ever be applicable to Bitcoin as Money".
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cypherdoc
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October 01, 2014, 05:15:43 PM
 #13122

Dow -222
oda.krell
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October 01, 2014, 05:18:48 PM
 #13123


Playing devil's advocate, for a moment (2nd time today, I just notice)

Not challenging the 'minimum valuation required to perform as medium of exchange' argument. But why can't the ledger be separated from the currency  function? For a number of imaginable functions in the future, a minimal share of the supply would be enough to perform the ledger function (e.g. contracts).

In order not to gloss over this: there's still the valuation through required security. If contracts on blockchain have a certain total value, the network needs to be at least protected to make an attack economically unfeasible. Since miners are economically motivated as well, this will provide a security-based minimum valuation of Bitcoin in the process.

Still, the two values need not be the same, so the question remains: why can't the 'ledger' function not be separated from the 'currency/money' function?

You could separate the currency from the ledger, but to what end? Seems to me like that would be making the system and incentives needlessly complicated and would still require you to purchase tokens in order to pay your way into the ledger. In some ways, that is exactly what Ethereum has done. Either way the tokens are still required to make the ledger function, so why make them separate? Perhaps someone has an idea as to why this would be desirable?

My mistake... could have phrased that more clearly, I guess:

I don't suggest we "split up" Bitcoin. My question was, "what prevents the rest of the world from adopting Bitcoin, the distributed ledger, but (mostly) ignoring Bitcoin, the currency"?

The usual argument goes "the two functions cannot be separated, so the above is impossible". I'm asking, why? To me it looks like a possibility, and the implications for total valuation in the long term would be drastic.

Because there would be no incentives for the miner to secure and maintain that ledger?

Maybe I have your argument wrong but this is how I understand it

Again, apologies. Maybe not phrased clearly enough.

The side remark in my original post ("In order not to gloss over this") was meant to address exactly this point: even if the world only makes use of the ledger function of Bitcoin (and as such, no significant valuation floor is provided by that use), keeping the "ledger only" network secured will provide such a floor.

However, valuation in that world could be substantially lower than in the one that includes usage cases medium of exchange / store of value.

a) Valuation from the above two usage cases is missing.

b) Effort needed to provide security of the network could well be not in a linear relation to total value of ledger usage:
- double spends are less of a concern if contracts are to be settled (confirmation time less of a problem)
- there is more than just a monetary requirement to overcome to successfully mount an attack on a network the scale of Bitcoin (hardware procurement, mounting the attack without raising suspicion)

The point I'm getting at is that the total value of contracts settled through the ledger can be higher than the total cost to secure the network, as long as the cost to mount a successful attack on the network is prohibitively high for any individual actor.

So the total valuation / market price per unit could well be below the current (optimistic) estimates that include the medium of exchange / store of value usage cases, even though the security requirements for the ledger usage alone provides some valuation.

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Electrum is an open-source lightweight client: user friendly, extremely fast, and one of the safest ways to store and use your bitcoins.
Executables are available on the Electrum homepage, so you can get a Bitcoin wallet up and running on your own computer in a few minutes.
justusranvier
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October 01, 2014, 05:21:46 PM
 #13124

"The Blockchain may only ever be applicable to Bitcoin as Money".
I think you can make an even stronger statement:

"A distributed consensus ledger can only survive if it is successful as money."

Note that Bitcoin did not solve the Byzantine Generals Problem because that problem is unsolvable. Bitcoin made it so that any successful attack is uneconomical. That only works if bitcoins are valued as money.

This means anything that tries to replace Bitcoin's functionality will either do so by being better money or else won't be a distributed consensus ledger.
cypherdoc
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October 01, 2014, 05:41:55 PM
 #13125

"The Blockchain may only ever be applicable to Bitcoin as Money".
I think you can make an even stronger statement:

"A distributed consensus ledger can only survive if it is successful as money."

Note that Bitcoin did not solve the Byzantine Generals Problem because that problem is unsolvable. Bitcoin made it so that any successful attack is uneconomical. That only works if bitcoins are valued as money.

This means anything that tries to replace Bitcoin's functionality will either do so by being better money or else won't be a distributed consensus ledger.

i think we're making the same argument only in slightly different ways.  i've already expounded on the details as to why i believe this in past posts.

also, i think your statement is only stronger b/c you left out the word "may", whereas i intentionally include it as i can't be totally sure.
cypherdoc
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October 01, 2014, 05:42:17 PM
 #13126

Dow -255
justusranvier
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October 01, 2014, 05:49:17 PM
 #13127

also, i think your statement is only stronger b/c you left out the word "may", whereas i intentionally include it as i can't be totally sure.
That is precisely why it is stronger.

Given that we know the BGP is mathematically unsolvable, I'm sure we can't do better than an economic solution.
cypherdoc
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October 01, 2014, 05:52:02 PM
 #13128


Given that we know the BGP is mathematically unsolvable

i've heard this a few times already.

can u give a simple layman's description to why this is?
cypherdoc
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October 01, 2014, 05:56:25 PM
 #13129

https://twitter.com/cypherdoc2/status/517372347356315652
justusranvier
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October 01, 2014, 06:00:07 PM
 #13130

can u give a simple layman's description to why this is?
I can not, but mathematicians I trust tell me this is the case.

There is this site though:

http://the-paper-trail.org/blog/a-brief-tour-of-flp-impossibility/
cypherdoc
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October 01, 2014, 06:00:28 PM
 #13131

i love the smell of fear in the morning:

cypherdoc
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October 01, 2014, 06:13:22 PM
 #13132

another potential support breaker; oil

Peter R
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October 01, 2014, 06:23:09 PM
 #13133


I don't suggest we "split up" Bitcoin. My question was, "what prevents the rest of the world from adopting Bitcoin, the distributed ledger, but (mostly) ignoring Bitcoin, the currency"?


Nothing prevents it.  And I hope we see greater use of the blockchain as a global trustless ledger moving forward (e.g., colored coins, oracle-based sidechains, etc.). 

But it's important to remember that the only asset that can exist on that ledger free from counter-party risk are bitcoins.  In times of crisis in this blockchain-based future you're imagining, market participants will tend to trade out of assets with counterparty risk, as well as out of oracle-based sidechains, in favor of the one asset that is itself its own backing: bitcoin.  I image bitcoin then as an attractor within a complex dynamical system; there's a constant flow of capital in and out of various blockchain assets, but these just circle around bitcoin.  Bitcoin naturally becomes the reference point1 from which to measure the value of everything else.   In other words, bitcoin becomes money.

1And the value of bitcoin is tethered to the cost of real resources due to the great physical efforts (mining) required to produce them.

Run Bitcoin Unlimited (www.bitcoinunlimited.info)
cypherdoc
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October 01, 2014, 07:15:54 PM
 #13134

https://twitter.com/cypherdoc2/status/517392355000070145
rocks
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October 01, 2014, 08:05:44 PM
 #13135

"The Blockchain may only ever be applicable to Bitcoin as Money".
I think you can make an even stronger statement:

"A distributed consensus ledger can only survive if it is successful as money."

Note that Bitcoin did not solve the Byzantine Generals Problem because that problem is unsolvable. Bitcoin made it so that any successful attack is uneconomical. That only works if bitcoins are valued as money.

This means anything that tries to replace Bitcoin's functionality will either do so by being better money or else won't be a distributed consensus ledger.

Most early Bitcoin adopters agree that Bitcoin's properties make it money and that "BTC as valuable money" is necessary for the blockchain to function.

An issue for the next phase of adoption though is the next set of adopters do not agree with this largely due to different political views on what constitutes money. Most people I know believe money can only be defined by a government and only functions if it is "managed" by a central body with the power to "expand supply to grow with the economy". (Nevermind this is never actually implemented in practice.) And so refuse to trust in anything else.

The argument that Bitcoin is money is not going to drive adoption, that only served to kick start adoption with politically aligned individuals.

Instead Bitcoin's usefulness as money will have to be the next driver for adoption. Either people find it easier to use online, or merchants offer BTC discounts, or people use Bitcoin to engage in illegal forms of trade, or automated services (bots) find BTC useful to trade, etc. This is where Bitcoin as a superior technology over fiat (a hundred year old technology) becomes a dominate factor.
iCEBREAKER
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Crypto is the separation of Power and State.


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October 01, 2014, 08:53:56 PM
 #13136

there's no way any of the ETF's will allow settlement for retail investors with the underlying, be it gold or BTC.

Sprott's bullion trusts (EG PHYS) trade at a premium over paper-backed ones because they feature settlement in underlying good.

Perhaps a BTC trust may become available as well.  Easier to audit them than counting bars in a vault!

Must...resist...buying...Hecla...at...52 week...lows....

The difference between bad and well-developed digital cash will determine whether we have a dictatorship or a real democracy.  David Chaum 1996
Fungibility provides privacy as a side effect.  Adam Back 2014
"Monero" : { Private - Auditable - 100% Fungible - Flexible Blocksize - Wild & Free® - Intro - Wallets - Podcats - Roadmap - Dice - Blackjack - Github - Android }


Bitcoin is intentionally designed to be ungovernable and governance-free.  luke-jr 2016
Blocks must necessarily be full for the Bitcoin network to be able to pay for its own security.  davout 2015
Blocksize is an intentionally limited resource, like the 21e6 BTC limit.  Changing it degrades the surrounding economics, creating negative incentives.  Jeff Garzik 2013


"I believed @Dashpay instamine was a bug & not a feature but then read: https://bitcointalk.org/index.php?topic=421615.msg13017231#msg13017231
I'm not against people making money, but can't support questionable origins."
https://twitter.com/Tone_LLT/status/717822927908024320


The raison d'être of bitcoin is trustlessness. - Eric Lombrozo 2015
It is an Engineering Requirement that Bitcoin be “Above the Law”  Paul Sztorc 2015
Resiliency, not efficiency, is the paramount goal of decentralized, non-state sanctioned currency -Jon Matonis 2015

Bitcoin is intentionally designed to be ungovernable and governance-free.  luke-jr 2016

Technology tends to move in the direction of making surveillance easier, and the ability of computers to track us doubles every eighteen months. - Phil Zimmerman 2013

The only way to make software secure, reliable, and fast is to make it small. Fight Features. - Andy Tanenbaum 2004

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marcus_of_augustus
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October 01, 2014, 09:04:04 PM
 #13137

there's no way any of the ETF's will allow settlement for retail investors with the underlying, be it gold or BTC.
This is why any retails who buy a Bitcoin ETF are fools.

All they'll accomplish is give Wall Street their money so somebody else can have bitcoins.
Is that what you mean? Not everyone has a lot of cash to buy bitcoins. Instead they have funds locked into tax shelters and a Bitcoin ETF might be a good option.

1. Set up a Self-Directed IRA
2. Have the IRA transfer funds to an LLC of which you are the manager
3. Buy bitcoins (take possession on behalf of the LLC)
4. Store securely via your preferred method.

EDIT: For clarification, the IRA would invest in the LLC by buying all the shares/units. The LLC then, in turn, invests in bitcoin and takes possession.

We need a s/ware template that can do this all electronically out of the box, like a digital asset trust. Maybe even issue the shares on the blockhain.

justusranvier
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October 01, 2014, 09:06:54 PM
 #13138

Most people I know believe money can only be defined by a government and only functions if it is "managed" by a central body with the power to "expand supply to grow with the economy". (Nevermind this is never actually implemented in practice.) And so refuse to trust in anything else.
Most people know more about how electricity works than they understand how money works (this includes the people who issue and control the money).

We know that electricity works in spite of how few people understand it.

Bitcoin will be the same. It will be adopted because it works long before people really understand how and why it works.
smooth
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October 01, 2014, 09:25:54 PM
 #13139

there's no way any of the ETF's will allow settlement for retail investors with the underlying, be it gold or BTC.
This is why any retails who buy a Bitcoin ETF are fools.

All they'll accomplish is give Wall Street their money so somebody else can have bitcoins.

Not necessarily fools, it just depends what they are trying to accomplish. If they are trying to track the price of Bitcoin, the speculative asset, with a convenient mechanism for liquidity, custody, accounting, tax reporting, etc. then the ETF may work quite well, and someone buying it for that purpose is not a fool. If they are trying to insulate themselves from severe financial crises, it likely doesn't, and someone buying it for that purpose is a fool.
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October 01, 2014, 09:31:20 PM
 #13140

All of financial history is littered with powerful demonstrations of how capital seeks the best form of money necessary to route around friction, capital controls, bad laws, regulatory overreach and capture. The crescendo of complexity of all these friction-inducing factors building in the current financial system makes Bitcoin inevitable. In fact, the harder they try to stop it the more desirable it will become to the market.

In the same way that they are trying to outlaw privacy on your computing devices, such that any sane individual becomes a criminal, then an effective outlawing of financial privacy will make all users of good money criminals. At that point, nobody has anything to lose by disregarding the financial regulations and bitcoin is the most frictionless way to route around a damaged, overly-complex failing system, to date.

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