The comparisons between Bitcoin and IP as in the internet are always infuriating because of their insulting simplicity and ignorance.
Bitcoin and block-chain technology may well prove to be analogous to Gopher, an experiment that seemed like a good idea at the time but was ultimately crushed by a superior idea, the then World Wide Web with HTTP. It's too early to say.
The other thing to keep in mind is IP is a language, it's not a currency. IP addresses might be a sort of currency today, but during the explosive growth of the internet these were pretty much free, all you had to do was ask and you were given thousands of them.
Imagine what the internet would be like if you had to "mine" IP addresses. If a handful of early adopters controlled 80% of the IP space, if they were the ones now charging rent to those seeking to utilize that space, would there be such rapid uptake? Would you be happy leasing your IPs from some third party who was simply fortunate enough to be there first and stake a claim?
The thing that's made the internet so prevalent, so pervasive, is how little friction there is on using it. In many cases using IP was significantly less fuss than going with competing protocols. Bitcoin is not always easier than the alternative, it's not always better, it's just different and that's not necessarily a good thing.
> If a handful of early adopters controlled 80% of the IP space, if they were the ones now charging rent to those seeking to utilize that space, would there be such rapid uptake? Would you be happy leasing your IPs from some third party who was simply fortunate enough to be there first and stake a claim?
This is effectively exactly what happened with IP. There are a bunch of (many now-defunct) companies allocated huge portions of the IPv4 space, and they get to sell those addresses to people that need them. It's not ideal, but you can hardly claim that it has hurt adoption.
I think the ownership distribution issue is the least of Bitcoin's problems. There will always be people who are rich for no justifiable reason.
The impact so far has been minimal despite the constraint of supply, the cost of IPs is still marginal. It's also a situation that has unfolded recently, long after the rampant success of the platform.
It's also possible to make more efficient use of limited addresses now either through NAT, or IPv4 to IPv6 bridges, where once again IPv6 permits large numbers of addresses to be issued with zero cost.
> There will always be people who are rich for no justifiable reason.
There are a lot of people that profited in a huge way on early internet plays "for no justifiable reason", but that didn't hinder growth because it didn't constrain supply. Someone hoarding Bitcoin does.
And someone hoarding Bitcoin can seriously disrupt the Bitcoin economy by releasing it in massive amounts at a later point. Even an uncoordinated (deliberately) collection of hoarders can screw it all up, see market crashes. Bitcoin, having little in the way of a stable economy to be valued on, is too closely tied in value to its current exchange rates. This leads to it being more of a commodity (like stocks) than a currency. So if someone sees the price drop, they sell (at the now reduced price), which triggers others to sell, and others still.
This is not the mark of a stable currency or even a potentially stable one. Until a significant population can conduct the vast majority of their business in BTC, it's not a viable currency.
Yeah, it's things like that which make the dynamics entirely different. If someone flooded the market with IP addressees there wouldn't be people losing their minds about the collapsing value of their holdings, they'd be celebrating.
Interesting. Naive "econ 101-ism" would suggest that Bitcoin's marketplace is "better," with its finer-grained and more evenly publicized price discovery, (i.e. efficient markets.) But it seems this situation is worse for Bitcoin itself, since mass-involvement in price discovery can induce bubbles and panics, and therefore less confidence in the underlying product/service.
The thing that was so revolutionary and powerful about the internet was the elimination of scarcity. No longer were things walled off behind pay-by-the-minute systems (Compuserve) or provided on a cripplingly expensive subscription basis (LexisNexis), instead it was made free, open, and accessible to everyone with a way to connect to it.
Bitcoin seems to be following the "classical" economic model where preserving scarcity is paramount, it only has any value whatsoever because of the artificial constraints placed on the currency. If Bitcoin's transaction ledger was instead simply a record of exchanges (e.g. A paid B $40, C paid D £30) and worked as a proof-of-payment system it would probably be more successful.
Locking people into Bitcoin as both a transaction tracking system and a currency will likely be its downfall. Consider a free-market alternative: Anyone can provide their own currency or facilitate conversion to an existing fiat currency, but they can use the blockchain to manage transactions and resolve disputes. Blockchain participants (miners) are rewarded for their contributions by a small share of the transactions performed in whatever currency was transacted. They're free to be selective about which transactions they're willing to process: It's a truly free market.
There's no incentive to destabilize the blockchain, history can't be re-written, double-spends can be ignored by the parties providing the endpoint of the transaction. There's no stored value at all to steal. There's also no way for a single entity to dominate the network and dictate terms, a significant problem now with Bitcoin being driven by mega-miners in China with peculiar requirements that are often contradictory to the long-term health of the network.
I like the idea of preserving public records with a block chain. However if the 'currency' of that block chain is in fact based on it tracking other assets as securities then it calls for a constant need to evaluate the actual value of those backing securities. This makes it so that there is not one value (BTC or equivalent) but instead a portfolio of assets (like stocks/bonds).
Archive.org concept + Backblaze storage appliances + replication. Way more efficient than Bitcoin or a blockchain in preserving public records. Also, has been working for some time in real world under large usage even without the Backblaze boxes. :)
This is part of how the Ripple network was supposed to work, IIRC. You can issue an IOU in any currency, and it is up to the receiver to determine who they trust and what currencies they'll accept.
It hasn't been much in the news lately due to the lack of going-ons / spectacular implosions compared to the larger networks.
If Bitcoin were simply a ledger without the currency the carefully balanced incentives to run the network wouldn't be there. Similarly, if there was no stored value to steal then we wouldn't have digital money, but a tokenization system that still entirely relies on the existing system. This is in large part how Ripple already works, except with an intermediate currency XRP for technical reasons. It's also an extremely strong deterrent to various forms of denial of service on the ledger itself as a crucial but auxiliary purpose.
Whoever said that there can only ever be one blockchain? Blockchain technology is like early networking tech as a field, the Bitcoin blockchain is like one server.
> If a handful of early adopters controlled 80% of the IP space, if they were the ones now charging rent to those seeking to utilize that space, would there be such rapid uptake?
The analogies are certainly breaking down here. Bitcoin's volatility is a major impediment to masses using it to store value, probably one of the main impediments. Early adopters driving scarcity impacts the exchange rate but not adoption. Satoshis don't map well at all to IP addresses, regardless of how much or little they're valued.
I don't understand, at TipRanks (our FinTech startup) we have been busting our asses off to get a steady revenue stream and partners. We've been at it for years and we finally have something we're proud of and works well - but it was certainly not what I remember the .com bubble days as.
We won a lot of big awards like Finovate (twice!) and Benzinga awards and we won sevaral events (like a large IBM Watson one) - but that doesn't translate directly to success. We're only now starting to see "real" success 4 years in but we're in no illusion that 'we made it' or anything like the "good ol'" .com bubble days.
Working with banks is hard, working with brokers is hard, working with financial institutions is hard - contracts take over a year to sign and consumers are very skeptical when you ask for their money.
A lot of the press and mindshare goes to the public blockchains like Bitcoin, but a ton of investment and work is being done on decentralized ledgers and solutions for financial institutions.
Digital Asset Holdings[1], for example, is building a distributed ledger for Australian Securities Exchange (ASX) to process post-trade settlement using HyperLedger.
>decentralized ledgers and solutions for financial institutions
So is it decentralized or is it centralized to a company? You can't have both. It also isn't decentralized if you can mute/alter transactions. You're assuming people will allow you to use their computers/servers for free to run your transactions.
Post-trade settlement is a very manual and time consuming process, a new solution built on a distributed ledger has the potential to drastically cut costs and reduce settlement time.
Some comparisons in the article are outright preposterous. If a Cisco for the blockchain emerges, it centralizes infrastructure and negates the benefits of using the blockchain.
The Blockchain is supposed to leapfrog the status quo, directly jump to SDN vs go through the Cisco --> SDN cycle again, metaphorically speaking
I can't really speak to comparisons in fintech or blockchain-related technologies as I'm no expert in this field...But i do agree in the general case that more attention should be placed on the infrastructure as opposed to only edge/applications.
Stopped reading at: "I think that as a community we need to increase our collaboration and diligently eliminate bugs and bad designs without slowing down innovation and research."
Why? It's true. Most tend to go to one extreme of the quality spectrum or another. A small number of companies and people find middle grounds that knock out serious problems while maintaining time to market. Then, can keep fixing stuff in reasonable time before it becomes a big problem due to design & policies being made to do that. These groups trying to go all in on unproven stuff really should dial down the innovation a little bit for caution and peer review in its place. Smaller-scale experiments before the big ones (eg DAO), too.
A middle ground wasn't advocated, he was basically saying "let's keep the pace of innovation constant, but improve quality". Putting incremental effort into quality and testing probably requires you slow down your rate of experimentation, no?
Well, sure. How much depends on what you're working with. Adding a single design or code review step in an otherwise feature-driven company is shown to knock out all kinds of issues. DAO came down pretty quickly. That much time for review with some bug bounties might have prevented some issues it had. They could still be developing on it in the process. Just not putting money in for real until it passed what peer review they could get.
Of course, it's an example where there's all kinds of potential for problems that could take a serious amount of time to work out. Can't keep innovation pace high with something like that plus ensure quality. So, the trick is usually to leverage as much proven stuff in one's innovation as possible. Easy to do with software at least.
As a means to 'store wealth' - not really. There are 100 other things that make more sense than bitcoin.
As a 'medium of exchange' - it will never be a common currency so it has no real value there. (A shopkeeper cannot price his 5% margin Milk in Bitcoins as the price fluctuates too much vis-a-vis the dollar, which he must also price his milk in).
The only real advantage of Bitcoin is total privacy, which 99.9% have no problem with, only people doing illegal things generally need this.
The small benefit of the fact you can bypass credit card charges etc. is entirely offset by the lack of de-facto security in Bitcoin - although it is 'technically secure' - for the laymen, using it and securely storing 'bitcoins' is not straightforward. That major Bitcoin repos have been hacked is evidence of that.
The banks are into 'block chain' because they saw how quickly Bitcoin spread - and they can't afford to not be part of a wave if it happens, but it won't.
It's funny that so many of bitcoins backers have absolutely no understanding of finance, currency, monetary policy etc..
It's also funny how ideological people are about bitcoin:
" I thought that Bitcoin was similar in many ways to the Internet. The metaphor that I used was that Bitcoin was like email - the first killer app - and that the Bitcoin Blockchain was like The Internet - the infrastructure that was deployed to support it but that could be used for so many other things. I suggested that The Blockchain was to finance"
This is not particularly rational.
What we need are strong, well backed, resilient and responsibly managed currencies.
The only real systematic problem with today's currencies are:
A) the oligcarchy of payment systems like visa grafting 1%-ish off the top and
B) monetary policy decisions that ultimately favour the banks.
It would be nice to get rid of A, but with bitcoin there is no 'monetary policy' and that's a much worse position than having central banks with the ability to do some degree of intervention, even if it's not perfect.
The article is a good example of this - everyone talks about technology, but don't bother to even mention finance, likely because they don't have a clue.
Fintech of the blockchain sort is in a 'bubble' because bitcoin does not solve any 'problem' for 99% of people.
Even in 3rd world countries with scam currencies, the solution will migrate towards simply using the currency of the nearest nation with a credible currency, namely dollars, Euros, and possibly in the future, RMB.
> As a means to 'store wealth' - not really. There are 100 other things that make more sense than bitcoin.
Not much. Wealth storage medium has to be rare (with predictable rarity), easily divisible, easily transferable, easily verifiable against forgery. Bitcoin fits the bill perfectly. It's hard to invent better medium of storage.
> As a 'medium of exchange' - it will never be a common currency so it has no real value there.
It _is_ a common currency _now_. I earn my living in Bitcoin. I can spent it easily through BTC-linked debit cards. Today morning I bought a pack of milk with such card, and it was debited in BTC. In the country I live in, some municipal payments and bills can be paid by Bitcoin _directly_.
> The only real advantage of Bitcoin is total privacy
Bitcoin is 100% transparent. All transactions and balances are visible to everyone. When the money source is established, it almost impossible to "launder" it, as it is fully trackable. As of now, there is almost zero privacy (not that it is a good thing). You still can buy Bitcoins for cash in some dark alleys, but the price will be worse, and amounts are limited. Whatever privacy protections Bitcoin had in its beginnings, now almost completely eliminated. It is tax collectors' dream.
"Wealth storage medium has to be rare (with predictable rarity), easily divisible, easily transferable, easily verifiable against forgery. Bitcoin fits the bill perfectly. It's hard to invent better medium of storage."
No - this is completely false. All of it.
Owning bitcoins is effectively speculative. It fluctuates wildly against all other currencies, commodities. It has no basis for appreciation, or predictability.
Your position is totally upside down - it's hard to imagine a worse store of value than Bitcoin.
+ Real estate, commodities, government bonds, equities, standard currencies are all 1000x better than 'Bitcoin' as a 'store of value'.
"It _is_ a common currency _now_. I"
NO. It is not. Can you pay your rent in Bitcoin? Can you buy milk? Can you walk down to any car dealer and buy a car? Can you report your earnings in bitcoin? Can you pay your taxes in bitcoin? Less than 0.01% of goods in the USA can be bought with 'bitcoin'- it is not a currency either in the technical or common sense.
Bitcoin is not 'legal tender' or 'de-facto tender' in any economy of the world, ergo, it is not a currency.
Why are you paid in bitcoin? Why not gold? Why not Diamonds? Why not porc-futures or T-Bonds? You have to transfer your Bitcoins/gold/diamonds/corn-shares into a real currency in order to use it. It seems pretty crazy to be 'paid in bitcoin' unless you were trying to skip on taxes. Otherwise (assuming you live in the USA) - you should rationally want to be paid in USD. Rationally - it makes more sense to be paid in almost any currency over Bitcoin. Dollars, Swiss Francs, Danish Kroner, Euros, RMB - they all make 'more sense' to be paid in than Bitcoin even for a US resident.
"Bitcoin is 100% transparent. "
Technically - I agree with you - but in practice, it is not, because it is not tracked or regulated, ergo, it is effectively anonymous, which is why so many 'black market' sites use bitcoin as a medium of exchange.
In fact - without 'black market' exchanges, bitcoin would probably not exist.
There is absolutely no reason whatsoever to use bitcoin.
Also - I suggest you might not know what a 'store of value' or a 'currency' is, these are established financial concepts.
Most people behind bitcoin has no grasp of what currency is. They often compare it to 'internet technology' like IP. The lack of financial literacy among the Bitcoin bloggers is staggering.
There is almost nowhere in the US that you can 'buy milk or pay rent' in Bitcoins.
It's a useless, fantasy currency - and you have to find some other believer in fantasy currency, hope that there is some liquidity - exchange your fantasy money for real money in order to buy real things.
Diamond/gold/porc-future prices won't go to zero overnight, and there is a global market for them. They are at least 'somewhat liquid'
There is absolutely no reason to want to be paid in Bitcoin.
And there are many reasons to not want to be paid in Bitcoin such a price volatility, liquidity, the 'exchange tax' (you'll have to pay a % cut to transfer your money into USD), and the risk of your bitcoins being stolen in one way or another (hackers etc). Your regular bank account is de-facto insured.
Every other currency makes much more sense in every way than Bitcoin.
'Bitcoin' is not a study in finance or commerce, or really even technology - it's a study of human nature, why people believe certain things, and are addicted to waves of new ideas.
"If you were in Venezuela and everywhere accepted bitcoin, would you rather have bitcoin or Venezuelan bolivars?"
If Bitcoin were the de-facto currency of Venezuela, sure bitcoins would make sense. But it's not, so it doesn't.
Moreover, there is no reason for anyone in Venezuela to use Bitcoin when they can much more easily and rationally use USD.
Like I say - the rational alternative for a bad currency is a strong currency of a nearby entity. In Venezuela, the default 'hard currency' is dollars. In Algeria it's Euros.
Agree with this. I like the libertarian and anti-government propaganda behind bitcoin, but I suspect few people understand the true benefits of a currency that doesn't fluctuate wildly. Federal institutions of stable democracies like the US, EU, India etc. strive to achieve this stability and its no easy feat. I'm not sure how a currency without a regulating institution would fare but the recent news around bitcoin, ethereum etc doesn't sound very encouraging (although I'm happy with both currencies existing simultaneously).
> I suspect few people understand the true benefits of a currency that doesn't fluctuate wildly.
I suspect most people understand the true benefits of it. But most people in the US and (Western) Europe have enjoyed the benefits of very stable currencies (measured in decades). Compare this to countries like Argentina which saw 26.7% inflation just last year. See the price correction happen where your grocery store suddenly jumps up the prices on your food from $10 to $12 just to account for inflation. Then wait for your paychecks to catch up. Then your employer is stuck deciding if they have to let people go (may not be simple in some countries) or desperately seek other cost savings and methods of revenue increase. This leads, potentially, to further price increases on consumer goods, requiring further pay increases to be able to maintain basic consumption, leading to more pressure on employers, etc.
Deflation has its own downward spiral once it gets past a small percentage.
The 'solution' to bad currency policy is simply to use a currency that is well managed.
Some small Caribbean islands use USD exclusively.
After their national crises, Iceland almost switched to using Canadian dollars.
The 'black market' economy in Venezueala works on USD, as it does in many parts of the world.
So long as they are established currencies with widespread use and liquidity - we don't need bitcoin.
The most 'legit' currency in the world today is probably the Euro. It's the only currency backed by real assets. The reason for this is because no European country can fully trust the other. Ergo - hard currency.
Next would be Scandinavian countries, Canada, UK etc.
The Fed is not the most trusted entity, but due to the massive and widespread adoption of the USD, they have a kind of 'seignorage' and strategic backing (Oil prices etc.) - and so it's kind of 'de facto' a very good currency.
The Yen would be up there as well but the Bank of Japan has been doing crazy things to fight deflation and so it's risky for outsiders to own.
"The ECB has more credibility than the Fed? Can you please share some of whatever you just smoked?"
Are you kidding?
The Euro is backed by assets.
The USD is backed by US Treasuries - i.e. the faith that the US government can repay it's bonds.
That alone makes Euros more 'solid' than USD.
In 2008, the Fed absorbed Trillions of dollars of worthless real-estate assets onto it's balance sheet at par value - so as to get the toxicity off banks balance sheets. One day (hopefully when those assets have recovered) the banks may have to take those assets back, but this remains to be seen. This might be the greatest incidence of financial fraud in the history of the world.
The ECB has much stricter policy because Euro states don't trust each other. Do you think that Germany will allow 'money printing' to give Greece cheap loans? Or Poland? Of course not. The only way that the Euro could work is if it's a fairly strict currency.
The Euro is a very strong currency. (back by assets)
The Dollar is a medium strong currency. (backed by a government, with some odd manipulations)
The RMB is a fantasy currency (worth whatever the CCP says it's worth).
You didn't define what those assets are, you didn't acknowledge that central bank solvency works nothing like a regular corporation, you called QE "money printing" rather than an asset swap (showing your lack of practical knowledge even more), you redefined the meaning of fraud, and you act like the most powerful government in the world demanding its citizens pay a yearly sum in those same dollars isn't a form of backing. You fail to acknowledge the ECB serves the same mechanical function as the Fed, you fail to acknowledge that central banks are a slave to demographic forces and thus the supply/demand for capital (aka money) and try to follow a natural rate, and you fail to understand the most basic functioning of modern currencies in the most mechanical ways - ways that are openly explained by the same aforementioned central banks in white papers on their websites. You also act like their function as a lender of last resort in the event of runs on banks caused by maturity mismatches that tend to happen once every few generations isn't explicitly and historically one of the primary reasons for their continued existence - your "purge the system" rhetoric aside, society seems to be ok with the banking sector not getting wiped out when things like that happen, because most people aren't naive enough to think anything good comes from total economic collapse. In fact, the same country you seem to hold up as a bastion of responsibility ended up with a collapsed economy within living memory, but no, it all turned out for the better... Yeah, I wonder why Europeans ex-Germans are pretty sick of German economic logic. (Brexit.)
As for relative credibility, at least the Fed didn't try to raise rates in 2010/2011, causing a further recession and much of the ongoing troubles there. German arrogance and 19th century moralizing-economic thinking is actually one of the major forces holding the continent back, while the US continues to shine.
" You also act like their function as a lender of last resort in the event of runs on banks caused by maturity mismatches that tend to happen once every few generations isn't explicitly and historically one of the primary reasons for their continued existence - your "purge the system" rhetoric aside,"
Listen buddy - you have absolutely no idea what you are talking about, okay?
Not only that - you don't make any sense - and you don't have a grasp of language either.
"I act like" ?
"My purge system rhetoric" ?
Every statement in your comment is not only wrong - they make no sense.
The Euro is widely recognized as a stronger currency than the USD at least in the technical sense. There are more shenanigans at the Fed than at the ECB. This is not a secret.
What are these assets that you talk about? The Euro is not backed by Gold or any other physical asset; in fact, it seems to be even more nebulous than the USD.
"What are these assets that you talk about? The Euro is not backed by Gold or any other physical asset; in fact, it seems to be even more nebulous than the USD."
The Euro is backed by 'high quality' assets such as real estate.
When a bank wants Euros, they put up assets as collateral for it.
In recent years, there has been a lot of debate because of the 'lowering the quality' of such assets, which is kind of a form of QE.
You want the details? Here are the exact details of what you can exchange for credit if you are a bank in the Eurozone:
I feel a need to disagree. Large companies or states very likely have the means of associating the flow of transactions to other metadata and thus revealing whom is doing what within Bitcoin.
Only in cases of careful opsec practice could someone mine clean coins which don't have a clear owner identity and thus transfer / accumulate secret wealth. However once there is a pattern or even direct connection to that wealth you've undone the isolation work.
"And against Bitcoin. I don't like your favorite TV show but I don't care that you do..."
+ The value of bitcoin to society is something we can try to established objectively. It has nothing to do with 'who likes what TV'.
"You go find one of those and let us know."
+ Ok: USD, Euro, CDN, Pound, Swiss Franc, Swedish and Danish Kroners. To start. There are tons of well managed currencies.
"There's a policy, you just can't tweak it. By design."
+ There is no 'policy' and no flexibility, which is very bad. It's better than 'bad policy' admittedly, but worse than 'no policy'.
"You list a bunch of reasons why it's useless but in the end your real complaint is that you can't vote to print more."
+ The ability to adjust interest rates given the economic circumstance is extremely powerful. Yes, it can be abused, but it's like anything. There are ZERO successful civilizations that have been built on perfectly strict currencies, and the US would have been bankrupt several times were it not for the ability to make monetary policy decisions.
Its a system of information, to discard the blockchain technology outright on perceived downsides is foolish. I'm not a huge fan, but it does have real world usage.
Bitcoin and block-chain technology may well prove to be analogous to Gopher, an experiment that seemed like a good idea at the time but was ultimately crushed by a superior idea, the then World Wide Web with HTTP. It's too early to say.
The other thing to keep in mind is IP is a language, it's not a currency. IP addresses might be a sort of currency today, but during the explosive growth of the internet these were pretty much free, all you had to do was ask and you were given thousands of them.
Imagine what the internet would be like if you had to "mine" IP addresses. If a handful of early adopters controlled 80% of the IP space, if they were the ones now charging rent to those seeking to utilize that space, would there be such rapid uptake? Would you be happy leasing your IPs from some third party who was simply fortunate enough to be there first and stake a claim?
The thing that's made the internet so prevalent, so pervasive, is how little friction there is on using it. In many cases using IP was significantly less fuss than going with competing protocols. Bitcoin is not always easier than the alternative, it's not always better, it's just different and that's not necessarily a good thing.