Try to answer the difficult questions...

[Wandererfromthenorth]

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be  valuable?


What do you think? Yes? No?
Why?



VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consist in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain  (https://twitter.com/nvk/status/522115773918359552)


But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?


Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

[Wandererfromthenorth]

Just to add something:


I think the question is important because these technologies are being built today (as opposed to say 2011-2013 where "there was only bitcoin and the blockchain"), and it is naive to think that more of them won't be built in the future.


It is important because if a distributed ledger system is dissociable from the idea of a cryptocurrency, you have to find a better reason for your cryptocurrency to exist and have a price than "because the blockchain!" or "because cheap, global, instant money transfers!".

[criptix]

I hope you are not short on marging - prepare to get
wiped out

[okthen]

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be  valuable?


What do you think? Yes? No?
Why?



VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consists in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain  (https://twitter.com/nvk/status/522115773918359552)


But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?


Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

Those who pledge for bitcoin do so not only because it is faster, easier and all the advantages that the blockchain brings us, but also due to it's decentralization and gold-like properties.

It can be finally the way to retreive the real ownership of money, that we had before gold pattern was discontinued.

[inca]

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be  valuable?


What do you think? Yes? No?
Why?



VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consists in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain  (https://twitter.com/nvk/status/522115773918359552)


But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?


Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

How do you secure this mythical distributed blockchain allowing frictionless transfer of any assets?

I am not sure why you cannot see the value in the bitcoin blockchain. There are literally hundreds of other chains out there and the vast majority are worthless. The btc chain has value because people give it value. It had value with virtually no utility - simply as a transferable digital asset. Now its utility is going through the roof and the original monetary fundamentals of the currency remain as valid today at 300 dollars as they were two years ago at 30 dollars. Algorithmically limited by design.

I see a future with many digital chains which can interact, but there will always be a place for a digital gold-like asset such as bitcoin. I hope you aren't caught shorting bitcoin right now.

[podyx]

Eventually, we're gonna need a new currency and it's gonna, most definately, be a cryptocurrency.

[michaelGedi]

OP - I see your point, and I believe it is possible that it would deplete the value of bitcoin. I'm guessing this would be due to less exposure for bitcoin (less participants), less transactions through bitcoin network, and less people holding the currency for it's use in these blockchain based products.

I'm sure other incentive based decentralised asset transfer systems can exist in the future, whether they get used or not can all depend on how they are developed and marketed.

The thing with bitcoin is that there is not central PR company with all the money and the clout to get things moving. Advertising etc...

When Joe B discovers a cool and easy way to send stuff online with a slick and secure looking front end, he won't care if it's bitcoin or some other mechanism if they are doing the same job.

[Raystonn]

I can give an example of what the OP is talking about.  Think of a colored coin or Counterparty asset that represents USD.  It is built on top of the Bitcoin blockchain, and can transfer USD$1,000,000 as a 0.0001 BTC token.  The only problem, and this may be a big one, is in securing this transaction.  The Bitcoin network sees this as the sending of 0.0001 BTC, nothing more.  It's the colored coin or Counterparty layer on top of Bitcoin that interprets it as something more.  So any security features that rely on amount of Bitcoin being sent, such as how many confirmations to wait for, will be rendered unsafe.  Your seemingly small 0.0001 BTC transfer may have needed only 0 or 1 confirmations, but the fact that it actually represents USD$1,000,000 means it would be well worth the effort to perform a double spend with so few confirmations.

To summarize, you run the risk of having less security when you override the meaning of a BTC transaction.

[Wandererfromthenorth]

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be  valuable?


What do you think? Yes? No?
Why?



VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consists in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain  (https://twitter.com/nvk/status/522115773918359552)


But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?


Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

Those who pledge for bitcoin do so not only because it is faster, easier and all the advantages that the blockchain brings us, but also due to it's decentralization and gold-like properties.

It can be finally the way to retreive the real ownership of money, that we had before gold pattern was discontinued.

Ok, that's the "Bitcoin will be the new gold 2.0 store of value" scenario. I might have doubts about gold bugs switching to bitcoin or adding it to their portfolio but fair enough.
The problem with this idea is that a lot of people that are bullish on bitcoin long term are arguing that bitcoin or cryptocurrencies are great because they can be used for remittances, to cut billions in fees, to allow the unbanked to have access to financial services, smart contracts etc.
The problem with that is that if a distributed ledger system that works without a cryptocurrency exists, these native tokens are not needed, and that would deplete the value of any crypto.

So a lot or reasons why your cryptocurrency should be valuable suddenly disappear.

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be  valuable?


What do you think? Yes? No?
Why?



VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consists in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain  (https://twitter.com/nvk/status/522115773918359552)


But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?


Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

How do you secure this mythical distributed blockchain allowing frictionless transfer of any assets?

I am not sure why you cannot see the value in the bitcoin blockchain. There are literally hundreds of other chains out there and the vast majority are worthless. The btc chain has value because people give it value. It had value with virtually no utility - simply as a transferable digital asset. Now its utility is going through the roof and the original monetary fundamentals of the currency remain as valid today at 300 dollars as they were two years ago at 30 dollars. Algorithmically limited by design.

I see a future with many digital chains which can interact, but there will always be a place for a digital gold-like asset such as bitcoin. I hope you aren't caught shorting bitcoin right now.

You are referring to its "monetary fundamentals", so about the "gold 2.0" scenario I was talking about. I personally don't agree with it, but as I said, fair enough.

Correct me if I'm wrong but Ethereum and Ripple and not dependent on their native cryptotokens for their network to work. The price of their tokens (ether and XRP) could be a fraction of a cent and the distributed ledgers/blockchains would remain intact. They are not even necessary to be effectively used in order to benefit from the respective networks ledgers to move fiat currencies around/smart contracts.
With bitcoin this is not the case.

Also, recently Eris industries is going ballistic on twitter talking about how they try to get away with the problem of needing a native token for a blockchain.

https://twitter.com/Eris_Ltd
https://twitter.com/prestonjbyrne/status/576456037466767360
https://twitter.com/eris_ltd/status/577235397891219456

I'm not necessarily a proponent of these technologies yet, I'm just saying that they are being built.

The point of my original question is that technology advances pretty fast and the possibility of the existence of an alternative blockchain/consensus ledger where a cryptotoken is not needed NEEDS to be considered, because that scenario would severely deplete any cryptocurrency of its possible inherent value/utility (or would it? that was my question).

Eventually, we're gonna need a new currency and it's gonna, most definately, be a cryptocurrency.

But why? A cryptocurrency is inherently volatile. Something that starts at a few million/billion marketcap and it's supposed to be a global currency is NOT gonna get stable anytime soon. For decades and decades it would still be too volatile and unusable as a currency.  

Why a cryptocurrency? Why do we need another currency?
Are you using bitcoin as a currency yourself or just to hodl it to dump it higher?  

OP - I see your point, and I believe it is possible that it would deplete the value of bitcoin. I'm guessing this would be due to less exposure for bitcoin (less participants), less transactions through bitcoin network, and less people holding the currency for it's use in these blockchain based products.

I'm sure other incentive based decentralised asset transfer systems can exist in the future, whether they get used or not can all depend on how they are developed and marketed.

The thing with bitcoin is that there is not central PR company with all the money and the clout to get things moving. Advertising etc...

When Joe B discovers a cool and easy way to send stuff online with a slick and secure looking front end, he won't care if it's bitcoin or some other mechanism if they are doing the same job.

Good post, agreed.
The PR thing is the other side of the "decentralization" coin I guess  

[Miz4r]

Ok, that's the "Bitcoin will be the new gold 2.0 store of value" scenario. I might have doubts about gold bugs switching to bitcoin or adding it to their portfolio but fair enough.
The problem with this idea is that a lot of people that are bullish on bitcoin long term are arguing that bitcoin or cryptocurrencies are great because they can be used for remittances, to cut billion in fees, to allow the unbanked to have access to financial services, smart contracts etc.
The problem with that is that if a distributed ledger system that works without a cryptocurrency, these native tokens are not needed, and that would deplete the value of any crypto.

So a lot or reasons why your cryptocurrency should be valuable suddenly disappear.

I think just the gold and money 2.0 properties are enough for Bitcoin to remain valuable, even if it's stripped of all other potential use cases. But I'm doubtful a distributed ledger system will actually work without an underlying token of value like Bitcoin, could you explain how you think that would work?

[oda.krell]

Not going to take personal offense at your question like some others do but:

... a distributed ledger system ...

But what if we had a system that works with decent security that doesn't rely on that cryptotoken?

... is the answer already to your own question. Of all the proposals anyone ever came up with (to my knowledge), you can satisfy two of the following three conditions, but not all three of them at the same time: secure, decentralized, for free^*.

There's maybe a discussion to be had if PoW is the final correct choice for the main player in crypto (Note: I still think it is, roughly, because of hardware cost binding miners to the blockchain, and only one blockchain at a time), but that's more specific already than the objection to your idea:

Describe please how a decentralized ledger without a native token incentivizes participation?

Sure, participation (of miners) could be funded by outside capital, but then the question becomes, how to distribute it? How to see which outside actor has which share of the funding? Such a system sounds a lot like political party funding in the US, and I would describe that as 'partisan' and 'toxic' long before I would use the term 'decentralized'.

In the end, any proposal I've heard or can come up with myself either violates the decentralization constraint, or it becomes so complex that it essentially recreates the native token system of the blockchain. But that one exists already





^* I know, the point can be made (and would be correct) that e.g. a centralized system like Visa is anything but cheap. The point is, in principle, if security rests on one entity with absolute power, this removes the broader system of financial incentives you need for a decentralized setup like crypto.

[manselr]

Eventually, we're gonna need a new currency and it's gonna, most definately, be a cryptocurrency.

Some people say Bitcoin may become the next gold standard, not necessarly replacing national currencies. In any case, Bitcoin is 100% guaranteed going to be increasingly relevant and valuable in the future.

[croato]

Blockchain is sure great invention but decentralisation of money is lot bigger than that in my opinion and it guaranties Bitcoin succes in long run.

[pawel7777]

Describe please how a decentralized ledger without a native token incentivizes participation?

Sure, participation (of miners) could be funded by outside capital, but then the question becomes, how to distribute it? How to see which outside actor has which share of the funding? Such a system sounds a lot like political party funding in the US, and I would describe that as 'partisan' and 'toxic' long before I would use the term 'decentralized'.
...

The function of native tokens is not just to incentivise miners, but also to prevent spamming blockchain with infinite-loop transactions/contracts (afaik).

[Wandererfromthenorth]

Not going to take personal offense at your question like some others do but:

... a distributed ledger system ...

But what if we had a system that works with decent security that doesn't rely on that cryptotoken?

... is the answer already to your own question. Of all the proposals anyone ever came up with (to my knowledge), you can satisfy two of the following three conditions, but not all three of them at the same time: secure, decentralized, for free^*.

There's maybe a discussion to be had if PoW is the final correct choice for the main player in crypto (Note: I still think it is, roughly, because of hardware cost binding miners to the blockchain, and only one blockchain at a time), but that's more specific already than the objection to your idea:

Describe please how a decentralized ledger without a native token incentivizes participation?

Sure, participation (of miners) could be funded by outside capital, but then the question becomes, how to distribute it? How to see which outside actor has which share of the funding? Such a system sounds a lot like political party funding in the US, and I would describe that as 'partisan' and 'toxic' long before I would use the term 'decentralized'.

In the end, any proposal I've heard or can come up with myself either violates the decentralization constraint, or it becomes so complex that it essentially recreates the native token system of the blockchain. But that one exists already





^* I know, the point can be made (and would be correct) that e.g. a centralized system like Visa is anything but cheap. The point is, in principle, if security rests on one entity with absolute power, this removes the broader system of financial incentives you need for a decentralized setup like crypto.

Well even if we don't have today a network that works fine without a native token doesn't mean that it won't be built in the future.

But actually, these technologies are starting to appear.

Eris industries claim that they can build blockchains to be used for smart contracts without any cryptotoken at all and that anybody can use them  today, right now.
https://erisindustries.com/

Then we have Ripple and Ethereum where the tokens "are there" but more as a anti-spam mechanism, meaning that the network is not dependent  on the token (token is not necessary to be used by participants, is not the main point, and its price can be whatever, as opposed to bitcoin in the bitcoin blockchain).

So the trend seems to be cryptocurrencies -> distributed ledgers.
Where the tokens (the cryptocurrencies) are less and less relevant and necessary, until they are not even needed at all.


You say that you haven't found a proposal that doesn't violate the constraints "decentralised, cheap, secure".

Ok for "secure" or "cheap", but regarding "decentralised": Why does the network have to be 100% decentralised?
VCs, banks or whatever are interested in bitcoin and crypto not because it's decentralised, but because it allows fast, global, cheap payments (at least that's what they think, because it's not that simple...) and allows applications like smart contracts and all that. Decentralisation is only one way to get there.
If some components of the network are centralised, it's not a problem, and it might even be preferred by them.
In the end it all comes down to what the world will find more useful and what it will actually adopt.


100% decentralisation has more to do with ideology than actual usefulness IMHO.

[futureofbitcoin]

100% decentralisation has more to do with ideology than actual usefulness IMHO.

EXACTLY! I tried to get this point across so many times, to no avail. Everyone on this forum seems to think that decentralization will bring about some magical utopia, and that a government/centralized crypto cannot work because it's not decentralized. I think they need a reality check.

[Miz4r]

100% decentralisation has more to do with ideology than actual usefulness IMHO.

EXACTLY! I tried to get this point across so many times, to no avail. Everyone on this forum seems to think that decentralization will bring about some magical utopia, and that a government/centralized crypto cannot work because it's not decentralized. I think they need a reality check.

The current centralized financial system has kinda proven already that it doesn't work, this is entirely the reason why Bitcoin was invented in the first place. You may want to cling on to a failing system and a ship that's slowly sinking, but I think we need to improve and do better than that. It's called innovation and progress, not magical utopia.

[Wandererfromthenorth]

100% decentralisation has more to do with ideology than actual usefulness IMHO.

EXACTLY! I tried to get this point across so many times, to no avail. Everyone on this forum seems to think that decentralization will bring about some magical utopia, and that a government/centralized crypto cannot work because it's not decentralized. I think they need a reality check.

The current centralized financial system has kinda proven already that it doesn't work, this is entirely the reason why Bitcoin was invented in the first place. You may want to cling on to a failing system and a ship that's slowly sinking, but I think we need to improve and do better than that. It's called innovation and progress, not magical utopia.

IMHO centralised finance works just fine, but for example money doesn't move as quickly and cheaply as information (yet) and some processes could be more automated so it might use some of the crypto technologies like distributed ledgers to achieve that. The contribution of crypto to the world should end pretty much right there.
Expecting that a currency like bitcoin will replace fiat is not just optimistic, it's delusional and undesirable.
It would bring only more problems, if anything.

Looks like a bitcoin core developer agrees on "centralised finance is more efficient"
https://twitter.com/petertoddbtc/status/513195104023359488

100% decentralisation = ideology.
You might agree with it or not, but don't expect it to conquer the world.

[futureofbitcoin]

100% decentralisation has more to do with ideology than actual usefulness IMHO.

EXACTLY! I tried to get this point across so many times, to no avail. Everyone on this forum seems to think that decentralization will bring about some magical utopia, and that a government/centralized crypto cannot work because it's not decentralized. I think they need a reality check.

The current centralized financial system has kinda proven already that it doesn't work, this is entirely the reason why Bitcoin was invented in the first place. You may want to cling on to a failing system and a ship that's slowly sinking, but I think we need to improve and do better than that. It's called innovation and progress, not magical utopia.

On the contrary, it has worked well for centuries, and continues to work well for the vast majority of the world.

That said, can it be better? Most definitely. There are many things that can be improved with the current financial system. I'm just not sure decentralization is one of them.

Your argument is akin to saying "Well, cars have proven that they don't work, since traffic accidents happen everyday. That's why we need to replace round wheels with triangular wheels."

Well, you managed to identify a problem, but you didn't identify correctly the cause of the problem, thus you can't provide the correct solution.

Again, I'm a bitcoin bull, but I'm not a fiat-government-centralization hater.

[Miz4r]

100% decentralisation has more to do with ideology than actual usefulness IMHO.

EXACTLY! I tried to get this point across so many times, to no avail. Everyone on this forum seems to think that decentralization will bring about some magical utopia, and that a government/centralized crypto cannot work because it's not decentralized. I think they need a reality check.

The current centralized financial system has kinda proven already that it doesn't work, this is entirely the reason why Bitcoin was invented in the first place. You may want to cling on to a failing system and a ship that's slowly sinking, but I think we need to improve and do better than that. It's called innovation and progress, not magical utopia.

On the contrary, it has worked well for centuries, and continues to work well for the vast majority of the world.

That said, can it be better? Most definitely. There are many things that can be improved with the current financial system. I'm just not sure decentralization is one of them.

Your argument is akin to saying "Well, cars have proven that they don't work, since traffic accidents happen everyday. That's why we need to replace round wheels with triangular wheels."

Well, you managed to identify a problem, but you didn't identify correctly the cause of the problem, thus you can't provide the correct solution.

Again, I'm a bitcoin bull, but I'm not a fiat-government-centralization hater.

Well as long as the general population doesn't mind to serve as collateral for the too big to fail financial institutions I guess it's kind of working. But this will fail eventually even if it takes a long time, and it has failed many times already in recorded history. These things just happen over several generations so most people don't notice it or think it's normal and part of human life.